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What is personal injury protection (PIP) insurance?

Personal injury protection (PIP) insurance helps cover necessary expenses after a car accident. Also called "no fault" insurance, it is required in some states, and can help pay for medical bills, lost wages, and funeral costs.

How does PIP insurance work?

Personal injury protection coverage can be purchased as an add-on to your commercial auto insurance policy. It’s known as “no-fault insurance,” because it provides medical payments (MedPay) coverage after a car accident regardless of who was at fault.

It is also referred to as bodily injury liability insurance, and can be a very important addition to your car insurance coverage.

Many people buy this coverage because their personal health insurance coverage is unlikely to cover their medical costs after a motor vehicle accident.

If your auto insurance policy does cover your injuries, it might not include all medical treatments and will not cover you for lost income if you’re unable to work for a while. PIP coverage can help provide coverage for lost wages while recovering from an accident.

What does PIP auto insurance cover?

PIP covers the financial costs of recovering from an auto accident. This can include:

  • Hospitalization and other medical bills
  • Physical therapy
  • Lost wages, if you’re unable to work
  • Accidental death and funeral expenses
  • Transportation costs for medical appointments
  • Childcare, house cleaning, and other services that you typically perform but are unable to do so

Additional benefits may be available, depending on how your state defines an accepted medical expense.

Coverage may also include a death benefit to the survivors of those killed in a car accident. This amount would typically be whatever PIP limits remain unpaid on a policy, after the medical bills and other PIP claims are paid, up to your policy limits.

What is not covered by PIP car insurance?

PIP auto insurance covers expenses related to the physical injuries of yourself and any passengers while in a covered vehicle. It would also cover your injuries if you were hit by a vehicle while crossing the street.

It does not cover physical damage to any vehicles, damage to someone else’s property, or vehicle theft. It also excludes injuries to other vehicles or their passengers, work-related injuries, or accidents that happen during the commission of a crime.

Your PIP coverage also might not cover you if you are in an accident while driving someone else’s car.

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How much PIP coverage do I need?

The recommended coverage and the minimum limits for PIP insurance differ according to the insurance laws in each state. Typically, personal injury protection coverage requirements can range between $2,500 to $50,000.

Even when it is not required, small businesses would be wise to purchase PIP insurance coverage if they use vehicles for work purposes. Many industry experts recommend that business owners secure a minimum of $10,000 in coverage.

Where is no-fault insurance required?

State laws determine whether no fault insurance is required or not. Some states are "at fault states" while others are "no fault."

"At fault states"

Most states are “at fault states,” where the driver who was at fault for an accident is responsible for any damages, either through their insurance or out of their own pocket.

This includes medical expenses for the injured party, but it does not include personal injury protection for the driver who caused the accident or their passengers.

Three “at fault states” require some type of medical coverage for drivers. Delaware and Oregon require auto insurance to include PIP coverage, while Maine requires medical payments coverage.

"No fault states"

There are 12 “no-fault states,” where auto insurance companies will cover personal injuries, regardless of who was at fault, because personal injury protection is mandated as part of the state’s minimum vehicle insurance requirements.

These “no-fault states” are: Florida, Kansas, Hawaii, Massachusetts, Minnesota, Michigan, New Jersey, New York, North Dakota, Kentucky, Utah, and Pennsylvania.

While Pennsylvania qualifies as a “no-fault state,” it only requires medical payment coverage in a car insurance policy.

In some states, PIP coverage is optional but not required. These are: Arkansas, Maryland, South Dakota, Texas, Virginia, Washington, and Washington DC.

If you live in a state where PIP insurance is required, you may want to increase your coverage beyond the minimum requirements if you are in an accident with an uninsured motorist.

Even if that driver was at fault, you could find it difficult being fully compensated by them, and your own insurance might not be enough to cover your medical bills and other expenses.

What is the difference between personal injury protection insurance and collision coverage?

Comprehensive auto insurance and PIP insurance are both types of vehicle coverage, but they provide protection for very different things.

Personal injury protection covers your medical and related expenses from personal injuries after a car accident. However, it does not cover damage to other vehicles, property damage, or passengers and drivers in other vehicles.

Comprehensive auto insurance is an optional coverage for your commercial auto insurance. It provides protection for your vehicle itself in the event of theft, vandalism, weather events, falling tree limbs, and animal collisions.

Auto liability insurance differs from both of them and is required in most states.  Auto liability insurance covers damage to other vehicles and property if you’re at fault in an accident.

It also covers the medical expenses for injuries sustained by the other driver and their passengers, but it does not insure you for damage to your own vehicle, or the medical expenses for you or your passengers if you are at fault in an accident.

All of these policies are subject to a deductible, stipulated in your insurance policy. If your deductible is $500 you would pay the first $500 in expenses before the insurance company would cover the claim, up to your coverage limits.

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Complete Insureon’s easy online application today to compare car insurance quotes from top-rated U.S. carriers. You can also consult with an insurance agent on your business insurance requirements. Once you find the right types of coverage for your small business, you can begin coverage in less than 24 hours.

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Updated: February 21, 2024
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