Personal injury protection (PIP) is a type of auto insurance that can help cover medical bills, rehabilitation costs, and lost wages for you and your family members or passengers after a car accident. PIP applies regardless of fault; it does not matter who caused the collision. Twelve states require drivers to purchase PIP, while others make PIP coverage available as an optional add-on.
How does personal injury protection (PIP) work?
Personal injury protection allows you to file a claim with your own auto insurance provider to help cover medical bills, rehabilitation, and other expenses after being injured in a motor vehicle crash — regardless of fault.
The no-fault system
The goal of no-fault insurance like PIP is to reduce litigation by making sure all injured parties have coverage for necessary medical care and other costs from their own insurer following a motor vehicle crash. Without no-fault medical coverage, drivers might have to wait for fault to be determined and for drawn-out liability claims to be processed before receiving reimbursement for the care they need.
Typically, states that require PIP also put limits on the right to sue after a car accident so that lawsuits are limited to cases of severe, life-changing injury.
Who is covered?
PIP coverage typically covers:
- The named insured policyholder (you)
- Family members who live in your household
- Your passengers who don’t have their own PIP insurance
- You or your family members if hit by a car as a pedestrian or cyclist
How PIP interacts with your health insurance
In no-fault states that require drivers to carry PIP, it typically serves as primary coverage in the case of motor vehicle injuries. That is, if you’re injured in a car accident, your auto insurance provider will pay out first up to your policy’s PIP limits. If you have additional coverage, such as health insurance, it will operate as secondary coverage to fill in gaps left by your primary coverage.
Check your policy details to understand which coverage — your auto insurance or your health insurance — is primary in the case of auto accidents. Regulations may vary by state, insurer, and policy.
What does PIP insurance cover?
PIP coverage can help to pay for a wide range of expenses if you or others insured by your policy are injured in a car accident, including:
- Medical expenses: Hospitalization, ambulance and EMT fees, X-rays or MRIs, surgeries, and ongoing therapy
- Rehabilitation costs: Physical therapy, prostheses, and crutches
- Lost wages: A portion of your lost income (typically 85%) if you’re unable to work due to accident-related injuries
- Essential services: Childcare, house cleaning, property maintenance, home care, and other things you can no longer do for yourself due to injuries
- Funeral expenses: Burial costs and other expenses associated with a fatal accident
- Survivor benefits: Financial support for dependents if a policyholder is killed by a motor vehicle crash
Note that this may not be an exhaustive list of the costs and services covered by PIP insurance. Check your policy details to understand the exact extent of your coverage, as well as your policy limits (meaning the payout caps).
What does PIP insurance not cover?
A key exclusion from PIP coverage is pain and suffering. Unlike personal injury lawsuits, PIP won’t pay for emotional pain and suffering resulting from a car accident. However, you may be able to use PIP coverage to pay for mental health care following a crash.
Other key exclusions include:
- Any form of property damage
- Injuries to other drivers
- Injuries sustained while driving illegally
Is PIP coverage required in my state?
Only 12 states require all drivers to purchase PIP coverage:
- Delaware
- Florida
- Hawaii
- Kansas
- Massachusetts
- Michigan
- Minnesota
- New Jersey
- New York
- North Dakota
- Oregon
- Utah
In addition to the 12 states listed above, there are two “choice no-fault” states that allow drivers to opt out of the no-fault system and decline PIP coverage: Kentucky and Pennsylvania.
Finally, several states simply make PIP coverage available as optional coverage:
- Arkansas
- Maryland
- South Dakota
- Texas
- Virginia
- Washington
Personal injury protection requirements vary widely by state, with different minimum coverage requirements, opt-out options, and overall fault systems. Check your local state laws to learn more about the requirements where you live.
How can I select the right amount of coverage?
In states that offer or require PIP, there’s typically a minimum amount included in your car insurance policy. However, it’s often a good idea to raise your PIP limits.
Consider the following factors when deciding how much PIP to carry beyond the legal minimum.
Evaluate your health insurance
PIP coverage works in tandem with your existing health insurance coverage to pay for your medical expenses after a car accident. In many cases, PIP is primary coverage, meaning that your auto insurer will cover your medical bills initially, up to your policy limits, while your health insurance fills in any gaps or remainders not covered by PIP.
If your health insurance plan has high out-of-pocket costs, you may want to maximize your PIP limits so that you’re less reliant on health insurance to fill the gaps. On the other hand, if you have extensive health insurance coverage, you might feel comfortable with a lower amount of PIP.
Consider your income and savings
How big is your financial safety net? Not only can PIP reduce your emergency out-of-pocket costs after a vehicle crash, but its income replacement function could be a crucial resource if you’re unable to work due to a car accident injury. Take savings accounts, rainy day funds, and workplace benefits like disability insurance into account when weighing PIP coverage.
Assess your frequent passengers
If you frequently drive with passengers who don’t have health insurance, you might benefit from having higher PIP limits on your auto policy. Think about family, friends, and carpool companions who ride in your car regularly.
Weigh your risk tolerance and budget
Consider how much financial risk you’re willing to take versus what you can afford to pay each month. Bear in mind that if you’re already paying for the minimum amount of PIP coverage, increasing your limits is typically inexpensive, especially when compared to the out-of-pocket costs associated with a major car accident injury.
PIP vs. medical payments (MedPay) coverage
The key difference between PIP and medical payments (or MedPay) coverage is that only PIP covers lost income and essential services after a car accident. While MedPay also acts as no-fault medical coverage, it typically comes with smaller limits and won’t pay for lost wages, childcare, housework, or other replacement services.
|
Expense category |
Personal injury protection (PIP) |
Medical payments (MedPay) |
|
Ambulance/EMT fees |
Yes |
Yes |
|
ER bills |
Yes |
Yes |
|
Diagnostics (e.g., X-ray, MRI) |
Yes |
Yes |
|
Surgery |
Yes |
Yes |
|
Rehabilitation/PT |
Yes |
Yes |
|
Funeral costs |
Yes |
Yes |
|
Lost income |
Yes |
No |
|
Household services (e.g., childcare, cleaning, yard work) |
Yes |
No |
The bottom line: PIP coverage is more robust and pays for a wider range of expenses after an accident, but it’s more expensive than MedPay as a result.
The availability of PIP and MedPay varies significantly from state to state. Some states only offer one or the other, while many give drivers a choice between these two types of coverage or even allow drivers to carry both. Check your state’s regulations and speak to a local agent to better understand your options and what’s appropriate for your situation.
The pros and cons of PIP insurance
PIP can be a great financial safety net for certain drivers, but it’s important to understand the perks and drawbacks.
Pros of PIP
- Immediate coverage for essential medical services
- Streamlines the claim process by allowing your own insurer to cover your costs
- Covers non-medical costs like lost wages
- Protects your passengers
- Applies to pedestrians and cyclists, not just motorists
Cons of PIP
- Increases car insurance premiums
- Can limit your right to sue at-fault drivers
Should I get personal injury protection coverage?
Most insurance professionals strongly recommend adding personal injury protection coverage to your auto insurance policy if it’s available and fits your budget. While it can add to your premiums, PIP is often relatively inexpensive and can provide crucial benefits in the event of a serious car accident.
The National Safety Council estimates that in 2023 over 6 million drivers were involved in motor vehicle crashes that required some form of medical care. The total cost of motor vehicle injuries — including medical bills, wage and productivity losses, administrative expenses, and more — exceeded $513 billion.
Personal injury protection can significantly reduce costs after an accident, streamlines the claims process, and ensures each driver has access to immediate coverage. If you’re concerned about the cost of PIP, you may want to speak with a licensed insurance agent who can help you compare your options and identify discounts to help fit your coverage to your budget.
Frequently asked questions
What is a tort threshold?
In states with PIP coverage, drivers often give up their right to sue after a car accident — up to a point. That point, known as the tort threshold, refers to the medical or monetary limit your injuries must exceed to file a personal injury lawsuit for pain and suffering.
Do I need PIP if I have good health insurance?
You might still need PIP coverage if you have good health insurance. In many states, PIP acts as primary coverage after a car accident, and it covers a significant number of costs that health insurance won’t, such as lost wages and replacement services like yard work and childcare. PIP may also come without a deductible or copay, which can simplify the process of getting care and reduce your out-of-pocket costs after a major crash.
Does PIP cover damage to my car?
No, PIP never covers property damage. PIP coverage only applies to medical expenses and related costs, such as lost income due to an injury. To cover damage to your own vehicle caused by a collision, you’ll need collision coverage.
Can I opt out of PIP?
PIP isn’t mandatory in every state, and some states that require PIP for most drivers, such as Kentucky and Michigan, do give some motorists the option to opt out of this coverage. However, other states, like New York, don’t allow drivers to waive PIP coverage under any circumstances. Check your state laws to understand whether or not you’re required to buy PIP coverage.
How much PIP coverage should I carry?
There’s no single formula for how much PIP coverage each driver needs. Take your income level, your financial safety net or rainy day fund, your current health insurance coverage, and your overall comfort with risk into account when choosing a PIP coverage limit.
