What it is: Personal injury protection, known as PIP, pays for car-accident injuries regardless of who’s at fault.
What PIP pays for:
- Medical bills
- Lost wages
- Services you can no longer perform, such as house cleaning and child care
- Funeral costs
- A death benefit, in some states
Who is covered by PIP: PIP generally covers the policyholder and family members in the household, passengers in the vehicle, and others who are driving the car with permission. Your PIP can also cover you if you’re injured while riding in someone else’s car, or if you’re injured by a vehicle as a pedestrian or cyclist.
How PIP relates to no-fault insurance: PIP is required in 12 no-fault insurance states. In these states, you make a claim for accident injuries on your own PIP insurance unless the injuries are severe enough to meet a certain threshold, which is determined by each state. Once you meet the threshold you can sue someone for injuries, pain and suffering. But PIP is also available in some states that don’t use a no-fault insurance system.
|State laws related to PIP|
|Source: Insurance Information Institute|
|No-fault insurance states that require PIP||
|States that require PIP but don’t have a no-fault insurance system||
|Places where PIP is optional||
What’s a threshold? In no-fault insurance states, the threshold determines whether you’ll make a PIP claim or if you can sue. If someone can sue you, you have “tort liability.” Thresholds either describe the severity of the injury or are a dollar amount, depending on the state.
When you can sue in no-fault insurance states: Thresholds for tort liability
(a) Significant and permanent loss of an important bodily function
(b) Permanent injury within a reasonable degree of medical probability, other than scarring or disfigurement
(c) Significant and permanent scarring or disfigurement
(1) Death occurs to the person in such a motor vehicle accident
(2) Injury occurs to the person which consists, in whole or in part, in a significant permanent loss of use of a part or function of the body
(3) Injury occurs to the person which consists of a permanent and serious disfigurement which results in subjection of the injured person to mental or emotional suffering
(4) Injury occurs to the person in a motor vehicle accident and as a result of such injury that the personal injury protection benefits incurred by such person equal or exceed $5,000
(1) $20,000 for medical expense loss arising out of injury to any one person and
(2) a total of $20,000 for income loss, replacement services loss, funeral expense loss, survivor’s economic loss and survivor’s replacement services loss arising out of the injury to any one person.
“Serious injury”: a personal injury resulting in death, serious impairment of body function or permanent serious disfigurement.
Note: There are several exceptions to the Pennsylvania threshold that would allow someone to pursue a lawsuit even if they have a “limited tort” insurance policy. These include being injured as a pedestrian or cyclist, if the other driver is convicted of a DUI for the accident, or if the other driver is from out of state.
(a) A person who has or is required to have direct benefit coverage under a policy which includes personal injury protection may not maintain a cause of action for general damages arising out of personal injuries alleged to have been caused by an automobile accident, except where the person has sustained one or more of the following:
(iii) permanent disability or permanent impairment based upon objective findings
(iv) permanent disfigurement
(v) medical expenses to a person in excess of $3,000
What PIP doesn’t pay for: It doesn’t pay for car repairs, in most states with PIP. If you want insurance compensation for damage to your vehicle, you can make a claim against the at-fault driver’s auto insurance or on your own collision insurance, if you have it.
|Various PIP details|
|Kentucky, Pennsylvania and New Jersey||You can pay more for the unlimited right to sue over injuries.|
|Washington, D.C.||If you choose no-fault coverage and are involved in an accident, you have 60 days to decide whether to stick with no-fault insurance or make a claim against the other driver.|
|Michigan||Michigan’s no-fault insurance system is unusual in providing unlimited lifetime reimbursement for medical bills and rehabilitation. Michigan policies also provide reimbursement for lost wages for three years and “replacement services” like child care.
Michigan policies include property protection, which pays up to $1 million for damage your car does to others’ property in Michigan, such as fences and parked cars.
What’s the point? No-fault insurance was designed to reduce lawsuits by restricting people’s ability to sue over car-accident injuries. One advantage of this is that PIP claims are generally paid out promptly.
PIP costs: Depending on your state, the cost of buying optional PIP coverage might be relatively low. NerdWallet research shows that PIP added about $50 to the annual cost of car insurance in Maryland and about $150 in Texas.
Here are average annual rates for PIP, with and without the full right to sue:
|State||Limited right to sue||Unlimited right to sue||Annual difference in cost|
|Methodology: Average annual premiums are an average of car insurance quotes for single 30-year-old male and female drivers for six ZIP codes in each state. Rates include policy liability limits of $100,000 for injury for one person, $300,000 for all injuries and $50,000 for property damage in an accident, plus collision and comprehensive coverage. They also include $15,000 in PIP in New Jersey and Pennsylvania, and $10,000 in PIP in Kentucky.|
Is PIP the same as MedPay? No, although medical payments coverage is similar to PIP and is not available in all states. MedPay covers medical bills and funeral costs. In some states, like Massachusetts, you can buy both and use MedPay to cover your PIP deductible.
The health insurance route: You could forgo PIP where it’s optional and use your health insurance for car accident injuries. But if your health insurance has high deductibles and co-insurance, which is a percentage you pay for bills after the deductible, consider that PIP sometimes has a low deductible or no deductible. PIP may, however, have co-insurance, much like health insurance. PIP has other benefits, too, including coverage for any passengers in your car and replacement of lost wages, which health insurance doesn’t provide.
NerdWallet’s car insurance comparison tool can help you price out the options.