UPDATED: Mar 13, 2020
It’s all about you. We want to help you make the right coverage choices.
We strive to help you make confident insurance decisions. Comparison shopping should be easy. We partner with top insurance providers. This doesn't influence our content. Our opinions are our own.
If you have been shopping around for an auto insurance policy because you bought a new car, or you simply would like to find cheaper coverage for your old car, you would have inevitably come across the term Personal Injury Protection (PIP). Looking further into the topic, you’d discover that PIP covers medical expenses arising from car accidents regardless of who the at-fault party is. After reading this definition, you’d probably start to wonder – what’s the difference between PIP and health insurance? They sound quite similar.
Well, you are right in a sense – personal injury protection and health insurance are very much alike. Do not confuse them for being the same exact thing, however. There are many differences between them that may not be obvious at first glance. Below, let’s take a look at the differences between them.
Health Insurance Is A Package, PIP Is Just One Coverage Type
Health insurance is a package plan that comprises of different coverage types which are selected by you when you purchase the policy. It can contain coverage for out-patient care, drug prescription benefits, specialist visits, and/or consultation fees. However, PIP is just a type of coverage in an auto insurance policy. Although it bears many similarities to health insurance, it only covers one aspect of an auto insurance policy.
Difference In Coverage
As mentioned above, PIP only covers medical expenses that can arise from auto accidents. In essence, this means that if you are the driver of the car involved in the auto accident, or the passenger of the cars involved, or even the passer-by (that was unlucky enough to be injured in the accident), you would be eligible to file a PIP claim.
However, health insurance has a much larger scope of coverage. Health insurance allows you to file claims for any type of medical-related fee allowed in your policy. For example, health insurance can provide coverage for immunizations, emergency room visits, blood tests, psychological care, preventative treatment, etc. PIP, as mentioned above, only deals with medical costs related to car accidents.
It is interesting to note that if your hospitalization was due to an auto accident; your PIP will kick in first, even though your health insurance policy and PIP would essentially cover the same thing. This means that your health insurance coverage would pay for any additional fees that your PIP doesn’t pay for.
PIP Is Required By Law
In some states, it is compulsory for all vehicle owners to be covered by PIP. This is part of the no-fault law that many states have adopted, which restricts the rights of parties involved in an auto accident to mount a lawsuit suing the other party. This move is to reduce the expenditures and costs arising from an auto accident, thus reducing the financial burden of the parties involved in the accident.
However, health insurance, although a necessity, is not compulsory. There are more than 50 million people to date in America that do not own a health insurance policy, and that number is set to grow. It is always recommended that you purchase a health insurance policy because it will prevent you from being suddenly hit with huge medical bills due to accidents and emergencies.
If you live in a state where personal injury protection is mandatory, you might be able to remove some of your healthcare coverage that overlaps with PIP to save on your monthly premiums. Please exercise extreme caution when doing this, however, because PIP will only cover you for car accident-related medical costs.
Health Insurance Usually Doesn’t Cover Loss Of Wages
Health insurance usually does not cover lost wages. This means that if you are unable to work and lose some of your income as a result of an accident, health insurance will not reimburse you for your loss of income.
However, PIP does cover lost wages. In an event of an auto accident, a person covered by PIP will receive reimbursements from the insurer for his or her loss of income due to the accident. In a sense, this makes PIP more attractive than health insurance, even though health insurance is many times more comprehensive than PIP; PIP only covers medical bills arising from auto accidents.
Personal Injury Protection Deductibles
As with any insurance policy, you are required to choose how high you want your deductibles to be on your health insurance policy. This means that if you receive medical treatment, you will pay up to this set amount (your deductible), while your insurer will pay the remaining balance.
PIP, however, does not always have a deductible (depending on your state and your insurance policy). As long as the medical expenses arising from the auto accident are reasonable and are within the range of coverage of PIP, the full amount of medical expenses will be covered by your policy.
Many people think that with a health insurance policy in place, you will not need personal injury protection. However, based on the points above, it still might be a good idea to get PIP. Auto accidents are prevalent, especially to those who spend a lot of time on the road. With better coverage for auto accidents, PIP remains an attractive option for frequent drivers. This doesn’t mean that PIP is a replacement for health insurance. To ensure you are covered for all medical situations you find yourself in, there is no greater protection than a comprehensive health insurance policy.