Understanding PIP (Personal Injury Protection)

Many states require personal injury protection (PIP) coverage for their motorists, and Maryland is among them. Insurers must offer a minimum of $2,500 in PIP coverage to automobile policyholders. Here’s a brief explanation of PIP and why you should consider it as a part of your risk management strategy.

PIP insurance is a form of no-fault coverage designed to pay medical and disability expenses for you and your passengers. It’s intended to speed up payments and reduce the incidence of lawsuits for minor claims. “No fault” is a bit of a misnomer, as fault is still assessed in any automotive accident, but payments are made by the insured’s own insurance company without regard to responsibility for the accident.

PIP covers reasonable and necessary medical expenses for those named in the policy for injuries sustained from an automobile accident, income replacement (lost wages) and funeral expenses, but not pain and suffering. In Maryland, it covers passengers in the vehicle as well.

What’s not covered? Injuries as a result of an accident in a bus or taxi … both are excluded from PIP coverage. And PIP focuses exclusively on injuries and subsequent income loss. It offers no coverage for repairs to your vehicle or the property of others.

Do you need PIP if you already have health insurance? Well, if you reside in one of the 16 states that require it, the answer is an obvious yes. Even if you don’t, however, consider that PIP covers some things that health insurance is unlikely to cover, like income replacement and funeral expenses. And PIP can provide a layer of protection from the liability associated with injury to a passenger who is not covered by health insurance.

Don’t underestimate the value of PIP from the standpoint of speed. Because of its no-fault component, you’ll deal only with your own insurer and payment is typically much speedier. There can be a huge financial burden in waiting out the settlement of a third-party claim, especially if it goes to court. For this reason alone, PIP is well worth considering as a part of your risk management profile.

Questions about personal injury protection (PIP) coverage? Contact Consolidated Insurance.