What is Personal Injury Protection (PIP) and Do You Need It?

Personal injury protection (PIP) insurance covers your medical bills and lost wages when you or your passengers are injured in a car accident. PIP is optional in most states, but 16 states require a minimum amount. PIP insurance may overlap with your health or MedPay insurance, but there are times when multiple policies are a good idea.

What is personal injury protection?

Personal injury protection, also known as "no-fault insurance," pays the medical bills (including rehab) for you and any passengers injured in a car accident. PIP also applies if you're a passenger in someone else's car or hit by a car while walking or biking.

PIP insurance is different from bodily injury liability insurance. PIP pays for your own expenses, while liability insurance covers the medical expenses of drivers and passengers in other cars when you are at fault for an accident.

PIP insurance may include some of the same coverages as your health insurance or medical payments (MedPay) policy. However, PIP is specifically written for car-related injuries, which are sometimes excluded from health insurance policies. PIP also covers additional expenses not covered by MedPay insurance.

What does personal injury protection cover

PIP insurance covers necessary medical procedures and reasonable expenses related to rehabilitation as you recover from an accident. The types of covered expenses vary by state and may include:

Do you need PIP if you have health insurance

If you live in one of the 16 states where PIP coverage is required, you must file a claim under that policy before you turn to your health insurance. But even if it isn't required in your state, you may want to consider PIP. It can offer several benefits you won't get from a health insurance policy, such as coverage for lost wages and funeral costs.

A few states, such as New Jersey and Michigan, have provisions that allow your PIP coverage to work in conjunction with your health insurance. For example, if you're injured in a car accident in Michigan, your health insurance policy may cover your physical injuries, and your PIP would cover additional economic losses, such as wages you lost while in the hospital.

How do you file a PIP claim?

You submit a claim, like with any insurance, either online or over the phone. PIP will help pay for necessary medical expenses immediately after the accident. But for ongoing, nonurgent claims, you'll be required to review or preapprove your treatment plan with either a medical expert your insurance company chooses or an outsourced medical claims processor.

The amount your policy covers may depend on your plan and your state. For example, in Florida, PIP will only pay for 80% of your medical costs.

It's critical to follow your auto insurance company's process and timeline. In New Jersey, for example, any medical care or treatment within the first 10 days of the accident must be approved and certified by your insurance company. Failure to provide the required "Attending Provider Treatment Plan" and documentation can result in a co-pay penalty of as much as 50%, even if the procedure or test was medically necessary or reasonably required.

In New York, all medical bills should be submitted within 45 days of treatment to be considered for payment; otherwise, written explanations must be provided. Ask your insurance agent for their PIP claim process requirements, and keep a copy on hand in case you're injured.

How Does PIP Work with Other Types of Car Insurance?

If you're injured by another driver and have PIP, you would typically exhaust your PIP coverage before turning to other options. If your medical costs exceed your policy's limits, you can then file a claim under the other driver's liability insurance policy. However, if you're significantly and permanently injured or your medical bills exceed your state's tort threshold, you may bypass PIP and file a lawsuit against the other driver.

Minimum PIP requirements by state

PIP coverage is sometimes called "no-fault insurance," since a minimum amount is required if you live in a no-fault state. In these states, your own insurance policy would cover your expenses, even if another driver caused the accident.

However, for injuries that meet a "tort threshold," defined by your state, you — or the other driver — will be able to sue the driver at fault. These thresholds typically fall into one of two categories, monetary or verbal, depending on your state.

Monetary thresholds require that medical expenses exceed a state-designated amount before you can sue another driver. Verbal thresholds specify the kind of injury that allows for a lawsuit. Although the language varies by state, verbal thresholds usually include injuries that have caused significant and permanent loss of a bodily function, disfigurement or death. Other variables, such as if a driver was under the influence of drugs or alcohol, can also change how tort thresholds are applied.

In addition to the 12 no-fault states, four fault-based states require PIP. Some other states allow you to buy it as optional coverage. Here are the PIP insurance requirements for the states that allow you to purchase it:

*Kentucky, New Jersey and the District of Columbia are optional no-fault states. Policyholders may elect to operate under either the no-fault system or a tort liability system that allows a lawsuit to be filed immediately.

How much does no-fault insurance cost

The total cost of PIP insurance will depend on coverage limit,deductible and state.

Should I get medical payments insurance on top of PIP?

Both PIP and MedPay are meant to cover medical bills after an auto accident. However, MedPay doesn't cover many of the additional expenses that PIP does, including lost wages, rehabilitation services and child care.

Because of this, if you live in a state that offers PIP, MedPay may be unnecessary. For example, Michigan requires insurance companies to offer unlimited PIP coverage, in which case additional MedPay coverage would be redundant.

However, if your state has a low required PIP limit, a MedPay policy may provide supplemental coverage. Florida, Kansas, and Massachusetts are three such states. If you're a resident of one of these states, consider adding MedPay insurance to your policy.

Annual cost of MedPay insurance coverage, by state

Methodology

To find the typical price of personal injury protection, statewide average rates were collected from three top companies — Allstate, Geico and Progressive — in Florida, where PIP is required by law. Rates were also collected for medical payments coverage in Florida, Kansas and Massachusetts.

ValuePenguin's analysis used insurance rate data from Quadrant Information Services. These rates were publicly sourced from insurance company filings and should be used for comparative purposes only. Your own quotes may be different.

Coverages:

All personal injury protection requirements were retrieved from individual states' departments of insurance.