PIP insurance – What is it and how does it work?

Posted on February 17, 2023

Personal injury protection insurance (PIP) is a type of car insurance. It covers your medical bills, lost wages, and funeral costs after a car accident, regardless of who was at fault. It also covers anyone else in your vehicle.

PIP does not provide liability coverage, or cover property damage. There are also exceptions for when it applies to a crash.

What is personal injury protection for?

PIP is for an auto accident. It provides no-fault insurance coverage for you and anyone in your vehicle.

Rather than figuring out who was at-fault for the crash and then demanding compensation from that driver’s insurer, if you have PIP coverage then you simply file a claim with your own insurer or insurance agent.

There is no need to determine

• negligence,
• responsibility, and
• liability for a policyholder to file a PIP claim.

PIP insurance coverage generally pays for:

• medical bills,
• lost wages, and
• funeral expenses or death benefits for your eligible family members, if the accident was fatal.

Because you can recover these forms of compensation without dealing with the other driver’s insurance company, PIP provides several benefits:

• it simplifies the process of getting compensation,
• it expedites the repayment process,
• you do not have to deal with a hostile insurance company that you do not pay premiums to, and
• you do not have to worry about the other driver being uninsured or underinsured.

PIP can also help cover any payment gap from your health insurance policy’s deductible. It can also pay out once other forms of insurance have met their policy limits.

PIP coverage is sometimes referred to as “no-fault insurance.”

Different states handle PIP insurance differently. The specific terms of your insurance policy can also affect the scope and extent of your coverage. For example, in Florida, PIP insurance only pays for 80 percent of your medical bills and 60 percent of your lost wages.¹ Reviewing your specific benefits and coverage is important.

Does PIP car insurance cover me if I am not in a vehicle?

Generally, it does. However, the specific terms of your PIP insurance policy will matter. Usually, though, PIP insurance works by covering all forms of car accidents, even if you were hit and hurt by a motor vehicle while you were:

• walking,
• running,
• biking, or
• crossing the street.

Does PIP insurance coverage provide compensation for all of my losses?

No, PIP insurance coverage is generally limited to your medical expenses and your lost wages. This means that it will not cover your:

• pain and suffering,
• loss of life’s enjoyments,
• loss of consortium, and
• property damage.

Any property damage from the accident would be covered by your collision coverage. These other forms of compensation are available in a personal injury case. However, PIP insurance coverage comes with limitations on your rights to sue the negligent party.

PIP insurance also is not liability insurance. It is not a property damage liability coverage that would pay for damage to other people’s property. It is also not bodily injury liability coverage that would pay for any injuries that you cause in an accident. It will not protect you from being held liable for these consequences.

Can I still file a personal injury lawsuit?

It depends on the state. In states that require PIP insurance coverage, the rights to file a personal injury lawsuit after a car accident are often limited.

For example, New York is a state that requires drivers to carry at least $50,000 in PIP coverage.² These drivers only have a personal injury cause of action if they suffer a “serious injury” in the crash.³ A “serious injury” is one that results in:

• death,
• dismemberment,
• significant disfigurement,
• fracture,
• loss of a fetus,
• permanent loss of use of a body organ, member, function, or system,
• permanent consequential limitation of the use of a body organ or member,
• significant limitation on the use of a body function or system, or
• a non-permanent injury that keeps you from performing substantially all of your customary daily activities for at least 90 of the 180 days after the accident.⁴

Other states may impose similar limitations on when personal injury claims can be filed.

When does this type of auto insurance not cover my vehicle?

PIP insurance coverage has exceptions. If one of these exceptions is in play, PIP will not cover your medical expenses, lost income, or funeral expenses. The specific exceptions will be outlined in your insurance policy. However, the most common exceptions are:

• you were being paid to drive at the time of the accident, like if you were driving for Uber or Lyft, or
• you were committing a crime at the time of the accident, like fleeing from the police.

Additionally, PIP only covers car accidents. If your car was broken into or stolen, your PIP coverage will not apply.

Is PIP coverage different from medical payments coverage?

PIP and medical payments coverage, also called “Med Pay,” are very similar. Both cover your medical expenses after a car accident. Both provide this coverage without accounting for who was at fault for the crash.

The main difference between the two is that PIP covers some of your non-medical losses, as well. Med Pay is strictly relegated to medical bills and, in some cases, death benefits. PIP offers coverage for lost wages, as well.

Do some states have no-fault insurance requirements?

Yes, some states require all drivers to have no-fault, or PIP, insurance coverage. However, the details between states vary widely.

The following are some of the states that require drivers to have no-fault coverage:

• Arkansas,
• Delaware,
• District of Columbia,
• Florida,
• Hawaii,
• Kansas,
• Kentucky,
• Maryland,
• Massachusetts,
• Minnesota,
• New Jersey,
• New York,
• North Dakota,
• Oregon,
• Pennsylvania, and
• Utah.

However, each of these states has its own rules for personal injury protection coverage. Some of them differ quite substantially.

For example, Michigan generally requires all drivers to have at least $250,000 in PIP coverage.⁵ There are exclusions from this requirement for motorists who have other health insurance that would cover their medical costs, or if the driver is on Medicare or Medicaid.

Meanwhile, in Kansas, the minimum PIP limit only has to be $9,000 for medical expenses.⁶ This wide variety in required coverage limits can make a big difference in the outcome.

Still other states, like Washington and Texas, may allow no-fault insurance as an optional auto insurance policy add-on.

Note that PIP insurance is not available in 29 states, including California.

What is the law in California?

You cannot purchase PIP insurance in California. Instead, California insurers offer a similar no-fault option called MedPay.

Like PIP insurance, MedPay covers accident-related medical bills and funeral costs. Unlike PIP insurance, MedPay does not cover lost wages.⁷

Note that California requires all drivers to carry liability insurance with the following coverage minimums:

• $15,000 for the injury/death of one person in one accident;
• $30,000 for the injury/death of more than one person in one accident; and
• $5,000 for another person’s property damage in one accident.⁸

Since California is an “at-fault” state, the insurer of the at-fault driver pays for the other driver’s medical bills following an accident. This is as opposed to no-fault states, where drivers rely on their PIP coverage to pay for their own medical bills after an accident.

California also follows the pure comparative negligence standard, which allows you to recover damages even if you were partly to blame for the accident. The court would just reduce your financial recovery in proportion to your degree of fault.⁹

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