Personal injury protection (PIP) covers the policyholder and their passengers regardless of who was responsible. Named drivers will also be covered under PIP if they are injured by a car as a passenger, pedestrian, or cyclist. PIP applies to things like medical expenses and lost wages for covered individuals.
Who PIP Insurance Covers
Any other named drivers
Passengers in the car if a named driver is at the wheel
Named drivers who are injured in a car accident, even if they weren’t driving
No-fault states generally require drivers to have PIP so that they can file minor medical claims with their own insurance company after an accident, even if they were not at fault. PIP is available in some at-fault states, as well, because it’s an inexpensive way to protect against medical bills down the road.
There are 12 no-fault states for car insurance: Florida, Hawaii, Kansas, Kentucky, Massachusetts, Michigan, Minnesota, New Jersey, New York, North Dakota, Pennsylvania, and Utah. In these no-fault states, each driver’s car insurance provider pays their own medical claims after an accident regardless of who was at fault.
A no-fault insurance system limits the ability of drivers and passengers to sue for additional compensation. Drivers in no-fault states can sue for injuries only if they are determined to be “severe” – the legal definition of which varies from state to state. No-fault rules only apply to injuries, however. Property damage claims in no-fault states are still paid by the at-fault driver’s liability insurance.
Special Types of No-Fault States
"Choice" No-Fault States
Of the 12 “pure” no-fault states, New Jersey, Pennsylvania and Kentucky are the only ones that give drivers an option to choose between buying a no-fault insurance policy and a traditional auto liability insurance policy.
"Add-on" No-Fault States
District of Columbia
Besides the 12 no-fault states, some “add-on” states have auto liability insurance laws that are a blend of the no-fault and at-fault insurance systems. These add-on states are not considered to be true no-fault states by the Insurance Information Institute because they do not restrict or place limits on a driver’s right to sue for additional compensation.
Finally, at-fault states follow a tort system, which assigns responsibility for an accident to a driver or drivers. At-fault states also allow injured parties to sue negligent drivers for injuries, as well as pain and suffering, without restrictions. Most U.S. states are at-fault states.
Insurance Rates in No-Fault States
Drivers who live in one of the 12 no-fault insurance states can expect to pay more for auto insurance than those in at-fault states. Insurance fraud is more common in no-fault states, given that claims are paid regardless of who was at fault, providing an incentive for some individuals to exaggerate the extent of their injuries. Those heightened rates of fraud, combined with mandatory PIP insurance, raise costs for auto insurers, which are passed on to consumers.
It should be no surprise that the three most expensive states in WalletHub’s Cheap Car Insurance Study – Michigan, New York, and New Jersey – are all no-fault states. So if you live in a no-fault state or will be moving to one, be sure to compare quotes so that you can get an auto insurance policy that fits your needs and your budget.
The biggest differences between personal injury protection (PIP) and health insurance are when they can be used and how much they cover. PIP can only be used in the event of a car accident but tends to cover a wider range of expenses than health insurance, like child care and lost wages. Health insurance can be used any time, including after an accident, but it usually only covers your direct medical costs. … read full answer
Mandatory in 5 states and the District of Columbia
What are the penalties for not having it?
Can result in fines, reinstatement fees, or license suspension
Can result in a fine on your state tax return
What does it cover?
Medical costs after an accident, including funeral, child-care, and household expenses
Medical costs at any time
Who does it cover?
Covers you and your passengers
Does not cover your passengers
Coverage varies by state and insurance company for both health insurance and PIP, so check with your insurance company to understand what your policy specifically covers. If you live in a place where PIP is available, it is a great investment to have it alongside your health insurance since PIP can be used to cover your health insurance deductibles and copays. Plus, PIP protects any non-family member passengers that your health care wouldn’t cover.
In some states, a similar system called MedPay is available that covers medical expenses after an accident without requiring any co-pays or deductibles. MedPay does have less coverage than PIP, though, as it doesn’t include peripheral costs like lost wages or child-care expenses. If you already have health insurance or PIP, MedPay can still be worth the investment since it can cover certain costs associated with both.
You should have $2,500 to $30,000 in PIP coverage per person in states that require personal injury protection (PIP), though exact requirements vary by state. Even if it’s not mandatory in your state, you should purchase as much PIP coverage as you can comfortably afford. For example, $10,000 in PIP coverage will ensure that you're covered for at least basic medical expenses and some lost wages.… read full answer
Personal injury protection pays for your medical expenses after an accident, regardless of who was at fault. As a result, purchasing higher limits can better protect you against hefty expenses that may result from injuries.
What to Consider Before Purchasing PIP Coverage
When deciding how much PIP to purchase, you should consider how much coverage you can afford as well as the coverage offered by any health insurance that you have. If you have a reliable health insurance policy, you may be able to purchase lower PIP limits, since the coverage overlaps in some areas.
However, you should keep in mind that PIP also covers certain long-term expenses that don’t typically fall under health insurance, like lost income and household services. Additionally, PIP can help cover the deductibles and copays that you’re typically required to pay with health insurance, so you’ll have fewer out-of-pocket costs.
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