Personal Injury Protection (PIP)
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Insurance coverage for injuries sustained during a car accident are required in some form by all states. Personal injury protection, or PIP, is a specific form of this coverage that’s associated with no-fault insurance laws, which requires drivers to insure their own damages regardless of who caused an accident.
Features - Personal injury protection insurance is designed to cover the costs of emergency and continuing health care costs of a driver or their passengers in the event of an accident. Up to the maximum payout of the plan, PIP can also cover lost wages and pain and suffering damages. Those covered under PIP are the policyholder, his relatives in the same household, his passengers, other authorized drivers and, in some states, any insured party injured while riding in someone else’s car or as a pedestrian hit by a vehicle.
Size - The amount paid out under PIP is capped, though this level varies by state from as little as $1,500 to as much as $250,000. In some states, the maximum personal injury protection coverage is significantly lower than the medical and repair costs of most serious accidents, so motorists are encouraged to procure other forms of insurance, such as bodily injury and uninsured motorists, or potentially face large out-of-pocket expenses.
Function - Personal injury protection was designed to help insured drivers receive insurance settlements quickly. It’s also supposed to limit the costs of auto insurance in general by eliminating the need in most cases to file a lawsuit and determine fault in an accident. In fact, in states with no-fault insurance laws that require PIP, drivers have no right to pursue damages from another driver in court unless their injuries meet a qualitative threshold. If the accident results in death or serious disfigurement, injured parties are usually able to sue for personal injury awards in excess of the PIP payout cap.
Geography - In 2008, only 14 states made personal injury protection mandatory. These states are Delaware, Florida, Hawaii, Kansas, Kentucky, Massachusetts, Michigan, Minnesota, New Jersey, New York, North Dakota, Pennsylvania, Utah and Texas. Auto insurance in these states is provided on a no-fault basis, meaning that individuals obtain speedy payment from their own insurance companies for injuries and damages regardless of fault, and the insurance companies can pursue reimbursement from the responsible party’s insurance at their convenience through a process called subrogation.
Types - Some states offer various types of PIP coverage based on what other forms of insurance a driver may carry. In New Jersey, for example, drivers can elect to purchase Medical Only PIP, which, as the names implies, covers medical costs but not the lost wages or other damages available under Full PIP. Motorists can also purchase special PIP health plans that cover these additional damages if they have another health insurance provider as their primary insurer for medical costs associated with an accident.