What is Personal Injury Protection?

Every state in the U.S. has unique laws for handling car accidents. Most states follow fault-based systems that require drivers to determine fault for accidents and file claims for coverage against at-fault drivers’ auto insurance policies. However, several states use no-fault systems, and personal injury protection (PIP) insurance coverage is the standard for auto insurance coverage in these states.

In the 12 states requiring PIP coverage, state laws determine how and when drivers may pursue legal claims for auto accidents. For example, a no-fault state may require drivers to use their own PIP to cover damages after an accident. However, if an at-fault driver caused a catastrophic injury or the incident otherwise meets the criteria for legal action under state law, the injured driver may file a lawsuit against the at-fault driver. Ultimately, states that uphold no-fault standards for car accidents do so to curb the number of lawsuits filed against at-fault drivers.

How Does PIP Work?

PIP coverage is an extension of auto insurance that can cover medical expenses and lost wages for the policyholder after an accident, and this type of coverage applies regardless of how the accident happened or who was at fault. In no-fault states, drivers must purchase and maintain auto insurance policies that include the state’s minimum PIP coverage. For example, one state may require $20,000 in minimum coverage while another may require $25,000 or $30,000. In most fault-based states, PIP is an optional form of coverage that may augment an auto liability policy.

Fault-based states usually require drivers to purchase auto insurance that includes bodily injury and death liability coverage for a single person in an accident caused by the policyholder, total accident liability coverage for a single accident caused by the policyholder, and property damage coverage. While a driver may legally drive with just a minimum policy, the coverage included in minimum auto insurance policies only covers damages the policyholder causes. If the policyholder sustains injuries and other losses, he or she may need additional coverage to pay for those expenses.

Purchasing Auto Insurance

Drivers with minimum coverage policies should strongly consider purchasing additional insurance coverage that allows for a decent buffer in the event of an accident. In fault-based states, this may mean adding comprehensive coverage, collision coverage, underinsured driver coverage, and/or PIP to a minimum policy. In no-fault states, PIP is mandatory, and each state determines how much a driver must carry and what types of medical treatment qualify for PIP coverage.

Every driver should strive to secure an acceptable amount of coverage with a reasonable monthly premium. More extensive coverage will lead to higher premiums, but offer a better buffer for an injured driver in the event of an accident. For example, if a negligent driver without insurance causes an accident in a fault-based state, the injured driver would file a claim against the negligent driver’s auto insurance policy. Since the at-fault driver is uninsured, the injured driver would need to file a claim against his or her own policy but may only do so in most cases if the driver purchased underinsured/uninsured motorist coverage.

PIP may be optional in fault-based states, but every driver should consider the potential value of purchasing this type of coverage. PIP does not consider fault, so an injured driver can secure coverage for medical expenses and other losses after an accident no matter how the accident happened.

Additional coverage on an auto insurance policy can help a driver by providing peace of mind when an accident happens, but more expensive coverage will cost more in monthly premiums. Drivers should try to strike a healthy balance of coverage and affordability. While other drivers may face mounting economic pressure from an accident due to lack of coverage, a driver with PIP can use this coverage for immediate medical bills and other expenses while he or she determines his or her next steps.