PIP

What is personal injury protection (PIP)?

Personal injury protection, commonly known as PIP, is an extension of your auto insurance coverage. PIP covers such things as medical expenses incurred as the result of an auto accident. Most times, PIP coverage kicks in whether or not you were at fault in the accident.

Other expenses that PIP covers include anything associated with your injury, such as lost wages or having to hire someone to mow your lawn because the injuries suffered in the accident prevent you from doing so yourself.

Deeper definition

PIP kicks in after you have had an accident. Being “no fault” means that the insurance company often makes payments associated with PIP coverage quickly, since it does not need to go through an investigative process to determine who is to blame for the accident. PIP is similar to the medical payment coverage that many insurance policies offer, except that PIP covers more than just medical expenses.

PIP is mandatory coverage in some states. The District of Columbia, Florida, Hawaii, Kansas, Kentucky, Massachusetts, Michigan, Minnesota, New Jersey, New York, North Dakota, Pennsylvania and Utah require insurance companies to provide PIP coverage with auto insurance, as well as requiring individual drivers to buy a certain amount of this coverage as a part of their insurance policies.

Other states offer PIP coverage as an option on your insurance policy.

PIP example

In addition to qualifying medical expenses, PIP covers other costs associated with an accident, such as lost income, such as:

• Lost income: Sometimes you need to take time off work after an accident, whether for treatment or due to your inability to work. PIP coverage compensates you for the wages you lose due to these circumstances.
• Associated services: An auto accident can also keep you from performing the basic duties in your everyday life, including taking care of your lawn, taking the kids to school, or grocery shopping. PIP coverage can pay for the expense of having to hire someone to do these tasks for you.
• Funeral expenses: If you end up dying in an auto accident, PIP can help with funeral costs.

To determine how much PIP coverage you need, you first have to determine the amount you would need if a car accident kept you from working. You also need to factor in additional costs, such as child care or anything else you might have to pay someone to do for you. You should calculate a year’s worth of these expenses to get an idea of the amount of coverage you need.

With the average payment for a personal injury claim averaging $5,000 per month, paying a small amount for basic PIP coverage can make a big difference if you have an accident. Most PIP coverage costs around $50 for about $5,000 worth of coverage.

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