If you don’t live in a no-fault state, you may never have heard of personal injury protection, or PIP, insurance. It’s a component of an automobile insurance plan and is sometimes called “no-fault insurance.” It helps cover certain expenses after a car accident, no matter who is at fault (hence the “no-fault”). Requirements for this coverage vary by state.
PIP is not a substitute for liability car insurance, which pays for damage and injuries caused to another person, like a pedestrian or the driver or passengers of another vehicle. The insurance company of the driver responsible for the accident pays these costs (up to a policy’s limits). PIP, as no-fault insurance, means it doesn’t matter who is found to be at fault for the accident—some of the expenses for the policyholder and their passengers will be covered by their own insurance company.
PIP minimum coverage requirements are set by the state and can vary. Insurance companies set coverage maximums.
What’s covered
PIP insurance can help cover a wide variety of expenses after an accident, including:
- Medical expenses for you (and this applies even if you’re not the driver!)*
- *If the cost of necessary medical care exceeds the auto insurance policy’s PIP limits, health insurance sometimes covers additional expenses.
- Medical expenses for injured passengers in your vehicle (even if they don’t have health insurance)
- Your health insurance deductible
- Lost wages if you miss work (including if you’re self-employed and need to hire temporary workers)
- Funeral and burial or cremation expenses
- Lost income for surviving dependents
- Services you’d normally perform for your family if you weren’t injured, like childcare and house cleaning
What’s not covered
What’s not covered by PIP:
- Property damage
- The other drivers’ injuries
- Any injuries from an accident while you were committing a crime
What else to consider
Figure out what the minimum legal requirement is in your state for drivers’ insurance. This may include PIP, especially if you live in a no-fault state. Beyond this you may also want the coverage offered by bodily injury liability insurance and property damage liability insurance.
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