What is PIP insurance?
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PIP stands for Personal Injury Protection, but most people just call it no-fault insurance. Because Utah is a no-fault insurance state, this kind of coverage is mandatory for all insurance policies.
This coverage is designed to pay for medical bills, lost wages, and lost household services in case of an automobile accident.
PIP or no-fault insurance is designed to cover your basic expenses in case of an accident regardless of who is at fault. So if the other driver is at fault, your insurance will still cover your expenses up to a certain limit before the other driver’s insurance is responsible. However, if they are at fault and you do get money from their insurance company, your insurance gets paid back up to the amount they paid toward your injuries and lost time off work.
A normal PIP policy in Utah only pays up to a $3,000 limit unless you have purchased additional coverage at the time you set up your policy. Sound confusing? Let’s use an example to explain it more simply.
Fred buys a policy from a national insurance company represented by a small reptile. His PIP limit is $3,000, the required amount.
Al also buys an insurance policy from a national company. He also has the required PIP coverage of $3,000 along with other legal requirements.
On a Friday, anxious to get home, Al runs a red light turning left and runs into Fred. Fred is diagnosed with whiplash and other minor injuries. Fred makes a claim first with his insurance company, who pays his expenses up to $3,000.
However, if Fred suffers other complications, has broken bones, or misses a large part of work, now Al’s insurance company becomes responsible. Not only does Al’s insurance now have to cover all of Fred’s bills, but they must pay back his insurance company for the $3,000 they already paid.
There are a total of 12 states where PIP coverage is mandatory, mainly because all of those states are no-fault states.
- New Jersey
- New York
- North Dakota
Each state has its own laws regarding minimum amounts of coverage and limits. Your insurance agent can best inform you on what you need, and what additional coverage you may want or need to purchase to make sure you are protected.
PIP coverage is optional in all other states, and if you have medical insurance, it might be an unnecessary purchase depending on your coverage.
Keep in mind also that insurance companies often have limits on how much coverage you can purchase. For instance, in Utah where it is required, $3,000 is the normal amount of coverage, and the maximum most companies will sell you is $25,000.
Remember when we talked above about medical insurance? PIP insurance can be a good option to cover the gap between car insurance and health insurance coverage. For instance, in Utah $3,000 is the minimum, but if your health insurance policy has a high deductible, say $5,000 you might want to match your PIP to that amount, and carry $5,000 in coverage to limit your out of pocket expenses.
The minimum amount of coverage does vary by state, and as mentioned above, there are often maximum limits that insurance companies will sell you. The best idea is to sit down with your insurance agent and determine what your needs are, and what coverages will best benefit you above the required minimums.
The reason no-fault claims are called that is because at least the initial procedure is the same regardless of who is at fault in the accident. Initially, the driver files a claim with their insurance agency, who pays bills and other expenses up to the $3,000 or purchased limit.
After that, like in the example we used above, the other driver’s insurance company must pay expenses, but those may be limited by the amount of fault each driver is responsible for. For example, if instead of Al being 100% at fault, let’s say that he was texting and driving at the time, so he is deemed to be 34% at fault. In that case, Fred’s insurance will only have to pay 66% of his expenses.
No fault claims and PIP insurance issues can all seem a bit complex. Sometimes you will need to take legal action in order to make sure you get all the compensation to which you are entitled. In these cases, reach out to a qualified accident or injury attorney, and make sure your legal rights are protected.