What Is Personal Injury Protection (PIP)?

Personal injury protection (PIP), also known as “no-fault insurance,” is a feature of automobile insurance that covers the healthcare expenses associated with treating injuries sustained in a car accident. PIP covers medical expenses for both injured policyholders and passengers, even if some don’t have health insurance.

If the cost of necessary medical care exceeds the auto insurance policy’s PIP limits, health insurance sometimes covers further expenses. Policies have a per-person maximum, meaning that coverage is limited to a certain amount per person if numerous people are injured in an accident.

Key Takeaways

  • Personal injury protection (PIP) covers the healthcare costs of injuries caused by an automobile accident.
  • PIP covers both the policyholders and their passengers, regardless of whether they have health insurance.
  • PIP policies have a minimum coverage amount and a per-person maximum coverage limit.

Understanding Personal Injury Protection (PIP)

Auto insurance requirements and features differ from state to state, and PIP coverage is available primarily in no-fault states, meaning that if the policyholder is injured in a car crash and the accident itself is covered by the policy, then that insurance policy pays for the holder’s medical care regardless of whether the policyholder caused the accident. Policyholders receive coverage even if the other driver doesn’t have insurance, as long as their respective policies include PIP.

PIP pays for medical expenses even if the policyholder causes the accident.

PIP coverage, in addition to making medical care affordable, often provides payments for lost income, child care, and funeral expenses related to the accident. Normally, an auto policy’s medical payments coverage does not pay for these types of costs. Some no-fault states offer medical payments coverage, but it typically has low limits. 

22

The number of states that either require PIP or offer it as an optional add-on to insurance.

PIP auto insurance is required in Florida, Hawaii, Kansas, Kentucky, Massachusetts, Michigan, Minnesota, New Jersey, New York, North Dakota, Pennsylvania, Utah, and Puerto Rico. It is a compulsory add-on to auto insurance in Arkansas, Delaware, Maryland, Oregon, and Texas and an optional add-on in New Hampshire, South Dakota, Virginia, Washington, Wisconsin, and Washington, D.C. That’s a grand total of 22 states, one territory, and one federal city.

Minimum coverage requirements are set by the above entities’ governments and can vary. Maximums are set by insurance companies and can also vary, but they are usually no more than $25,000. If a policyholder’s health insurance provides coverage for injuries and rehabilitation related to a car accident, the policyholder probably only needs to purchase the minimum amount of PIP required by his or her state.

Personal Injury Protection (PIP) vs. Liability Insurance

PIP is not a substitute for liability insurance, which is required by every state (plus Puerto Rico and Washington, D.C.), except for New Hampshire and Virginia. Liability insurance pays for injuries caused to another party, such as a pedestrian or the driver and occupants of another vehicle. There's also professional liability insurance; such policies are generally taken out by financial advisors, business owners, landlords, doctors, lawyers—anyone at risk of being sued for damages and/or injuries.