When you get involved in a car accident, you not only stand to lose your car but your health may be affected as well. PIP insurance can help you guard yourself against the losses incurred during automobile accidents. The following article seeks to give you a better understanding of PIP insurance:

What is PIP?

These initials represent personal insurance protection. This is a type of car insurance policy. PIP insurance is also known as “no fault” coverage due to the fact that it will compensate you regardless of whether you caused the accident or not.

What does PIP include?

PIP pays for 80% of your medical bills and any other costs that arise from the accident such as medical costs your passengers incurred due to the accident or medical costs you incurred if you sustained the injuries as a pedestrian or passenger. In some states, if you have health insurance, the PIP insurer only caters for a small cost of your medical bills, the health insurer is responsible for paying the rest. It is worth noting that if your medical costs are more than your state’s PIP limits, then you are required to cater for these costs personally. In case you are on health insurance or a state health insurance arrangement like Medicare or Medicaid, these entities will cater for your medical costs at this point. In many cases, you cannot claim damages against the driver who is at fault unless the medical bills you have incurred accumulate up to a certain amount or unless your injuries are considered as serious enough to warrant compensation from the driver who is at fault. PIP also covers funeral costs and rehabilitation costs.

How Does a Claim of PIP Work?

Let’s say you are involved in an automobile accident where you were not at fault and the following facts hold:
  • You have taken health insurance
  • The medical bills compensation limit in your state is $ 2,000 if you do not have health insurance and $ 8,000 if you have insurance
  • The laws of your state are such that you get compensated $ 1,000 for lost earnings and $ 4,000 for medical bills
  • The laws of your state are such that if you get involved in an automobile accident, you can only sue the driver who is at fault if you have medical bills amounting to $ 5,000.
In such a case, considering you have taken health insurance, you will pay an amount of $2,000 as medical bills to your PIP insurer and the rest to the health insurance organization that has covered you. Your PIP insurer will pay $ 1,000 as lost earnings. Since you have only paid $ 4,000 for medical bills, you have not met your states limit in order to sue the driver who was at fault. Therefore, you cannot make a claim for pain or suffering, you are only entitled to the payment of your medical costs and your lost earnings.