Basic Reparations Benefits

What is 'Basic Reparations Benefits'

Automobile insurance coverage benefits that provide medical, economic, and other loss coverage up to a predetermined limit. Basic reparations benefits (BRB), personal injury protection (PIP), and no-fault insurance are often used interchangeably. This type of coverage applies to injuries sustained by the driver as well as passengers in the vehicle.

BREAKING DOWN 'Basic Reparations Benefits'

Basic reparations typically cover three types of costs: medical, income, and essential services.

  1. Medical Cost: Medical expenses include the cost of visiting a doctor or hospital, as well as the costs of obtaining rehabilitation assistance. These costs will be covered providing that they are considered necessary and reasonable.
  2. Income Cost: If a previously employed policyholder is unable to work because of injuries sustained during an automobile accident, the insurer will pay a portion of the insured’s income. The amount of payment is typically low.
  3. Essential Services Cost: The policy will also provide funds to help an injured individual who cannot perform household or other tasks because of injury.

Drivers are typically required to purchase basic reparations coverage in states that have no-fault insurance laws. The state sets a minimum amount of coverage that must be purchased – for example, $5,000 – and the insurer is required to pay the benefit regardless of who was at fault. Requiring the driver to purchase this type of coverage comes with a caveat: the driver may have his or her right to sue the other driver for damages.

In states that do not require drivers to purchase basis reparations coverage, injured drivers are able to seek compensation for injuries and damages from the negligent driver. For example, an injured driver may initiate a personal injury claim against the negligent driver. Because basic reparations coverage is considered optional, the injured party will have to successfully sue the negligent party in order to pay for medical expenses unless the driver has purchased BRB coverage.