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How Does PIP Insurance Work? 5 Common Questions

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By Jenny Tsay, Esq. on December 18, 2013 2:39 PM

Choosing the right car insurance policy can be tricky, and may leave people wondering: How does personal injury protection (PIP) work?

In general, PIP insurance covers expensive medical expenses after an accident. PIP can be beneficial because it reimburses drivers for their injuries, if those injuries aren't covered by medical insurance.

Each state has different PIP requirements and availability, so learning more about PIP insurance can help you choose the right policy. Here are some common questions and answers about how PIP coverage works:

1. What Is PIP Insurance?

PIP works by only covering medical expenses, rather than property damage, after an accident. PIP insurance is often considered a no-fault policy because it covers the injured person regardless of who is at fault in the accident.

2. What's Included in PIP Coverage?

Although the exact amount of coverage you'll receive depends on the insurance policy you've selected, Esurance explains that PIP insurance usually covers medical expenses and in some cases, lost wages and funeral expenses. So-called "substitute services" may be covered too, if accident-related injuries prevent the person from performing household duties. For example, PIP may help pay for daycare if the injured person is the primary caregiver and becomes unable to fulfill that role after the accident.

3. Is PIP Insurance Required?

Depending on the state you live in, you may be required to purchase PIP or have the option of purchasing it. According to Nationwide, 12 jurisdictions make PIP insurance mandatory, including Florida, New York, and the District of Columbia. Approximately 30 other states give drivers the option of purchasing it.

4. How Is It Different From Bodily Injury Liability?

The main difference between PIP and bodily injury liability is that bodily injury liability makes payments to the people you're legally liable for hurting while PIP only covers your own medical expenses. Bodily injury liability also covers your legal defense costs.

5. How Much PIP Coverage Do You Need?

When choosing your PIP coverage limits, take a look at your health insurance plan first. If your health insurance policy comes with a good amount of post-accident benefits, then it may make sense to purchase the lowest legally required PIP coverage limit and increase the amount later if needed. Alternatively, if your health insurance doesn't cover car accident injuries, you may want to start with a higher PIP coverage limit to make sure you're fully protected.

If you're in a car accident and have questions about how PIP insurance works, you may want to consult an experienced car accident lawyer near you.

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