What does personal injury protection coverage do?
Personal injury protection (PIP or MEDEX) pays a per-person benefit amount for injuries you (the insured), and others specified in your policy, sustain in an auto accident. Basic personal injury car insurance coverage is for the insured's own injuries on a first-party basis, without regard to fault.
Parties typically covered by PIP include:
- Policyholder’s relatives in the same household
- Passengers (if they don’t have their own PIP coverage to place claim under)
- Other authorized drivers of your insured vehicle
- Policyholder and family members if they are injured while riding in someone else’s car
- Policyholder and family members if struck by another vehicle when a pedestrian (in some states).
The exact benefits offered by PIP vary by state, and there may be a deductible due before the benefits kick in. Coverage varies widely among states, so the terms of your policy will note your specific benefits, but in general personal injury protection coverage includes:
- Medical expenses – May include reasonable charges for medical, hospital, surgical, nursing, dental, ambulance and x-ray services. Necessary medications, medical supplies and prosthetic devices may also be covered.
- Loss of essential services (also sometimes referred to as disability or replacement services) - Can receive benefits if you need help performing household or other tasks due to your injury.
- Loss of income
- Funeral expenses
- Survivor’s loss – some policies compensate an individual’s heir(s) if the person died from accident-related injuries.
Your PIP limits set the maximum amount that will be paid per person for any combination of covered expenses. PIP limits vary by state; some states allow you to choose your PIP limits and others set it to a certain amount like $10,000, unless you choose to buy additional PIP coverage.
Is personal injury protection coverage mandatory?
Yes, in no-fault states personal injury protection coverage is required (and is typically referred to as no-fault coverage). In other states, it’s optional, if available at all.
According to the Insurance Information Institute (III), currently 12 states and Puerto Rico have no-fault auto insurance laws in place. These states include: Florida, Hawaii, Kansas, Kentucky, Massachusetts, Michigan, Minnesota, New Jersey, New York, North Dakota, Pennsylvania and Utah.
Three of these states, New Jersey, Pennsylvania and Kentucky, have “choice” no-fault laws. In these states you can retain your right to sue for auto accident injuries if you reject the lawsuit threshold. For this privilege you will pay a higher premium.
What happens if I don’t have personal injury protection coverage?
If this no-fault coverage is optional in your state and you choose to go without, when you are at-fault in an accident or the at-fault party cannot cover your injuries, you will need to have coverage such as medical payments on your policy or you may end up paying out-of-pocket for your medical bills.
If you have adequate health insurance and your state doesn’t require this coverage, then personal injury protection coverage may be unnecessary.
Additional personal injury protection is available in some states (and by only some carriers) where PIP is available. Additional PIP acts as a supplement to the PIP coverage required by your state. It allows you to raise your PIP maximum limit amount.
Extended personal injury protection is available in Florida where personal injury protection coverage typically pays 80 percent of medical expenses and 60 percent of lost wages. Purchasing extended PIP allows you to amend your PIP so that 100 percent of medical expenses and 100 percent of lost wages will be paid (up to the maximum limits of your PIP coverage). The Florida Department of Financial Services Insurance Library gives more information on increased PIP benefits.
Guest personal injury protection is available in Kentucky and provides coverage to guest passengers in your vehicles. It is required when all drivers on your policy have rejected no-fault coverage. (Kentucky is a choice no-fault state).
In states such as New Jersey, you have to choose a Personal Injury Protection Plan. Here is a description of those choices:
Full PIP Primary acts as the primary coverage for injuries sustained by you or your passengers in an auto accident. This option also covers income continuation, funeral expenses, death benefits, and essential services expenses.
Full PIP Health Primary should be purchased if another health insurance provider acts as the primary coverage for injuries sustained by you or your passengers in an auto accident. This option also covers income continuation, funeral expenses, death benefits, and essential services expenses, as detailed below.
Full PIP health primary coverage is not available if you use Medicare or Medicaid as your primary health insurance or if you are an active member of the military. In addition, some health insurers do not cover injuries related to car accidents. If you are unsure of what your health insurance covers, you should select full PIP primary or medical only PIP primary.
Medical Only PIP Primary acts as the primary coverage for injuries sustained by you or your passengers in an auto accident.
Medical Only Health Primary should be purchased if another health insurance provider acts as the primary coverage for injuries sustained by you or your passengers in an auto accident.
Medical only health primary coverage is not available if you use Medicare or Medicaid as your primary health insurance or if you are an active member of the military. In addition, some health insurers do not cover injuries related to car accidents. If you are unsure of what your health insurance covers, you should select full PIP primary or medical only PIP primary.
What is a resident relative under personal injury protection coverage?
The definition of a resident relative can differ depending upon state laws as well as the language (terms) of an auto insurance policy.
A typically insurance policy defines a resident as someone who has physical presence in your household with the intention to continue living there. Unmarried dependent children, while temporarily away from home, to attend college for example, are normally still considered residents if they intend to continue to live in the parents' household during breaks from the school year.
A relative is someone related to you, so a relative resident would be someone related to you who lives in your home.
For instance, Colorado defines a resident relative as a person who at the time of an accident is related by blood, marriage or adoption to the named insured or resident spouse, and who resides in the named insured's house, even if temporarily living somewhere elsewhere. The state also adds that any ward or foster child, who usually resides within the named insured's home, can be considered a resident relative.
Another example is from Maryland. The Maryland Appeals court had to consider what constitutes a resident relative for the purposes of an uninsured motorist coverage claim. In this case the plaintiff had been living with his grandmother for almost a year. When the plaintiff was in an accident, he wanted to use his parents' Uninsured Motorist coverage, saying he was a resident relative. The court, however, found that he could not be a resident relative of his parents who lived in a different town from the grandmother.
The court noted he was not a full-time student, lived with his grandparents for the 11 months preceding the auto accident and during that time only visited his parents' home approximately four to six times. So the court of appeals found he was not a "resident" of his parent's home as defined by their insurance contract with their carrier.
The court reasoned that according to the policy language the plaintiff would be a resident only if he physically lived in his parents' house, was under the age of 24 and attended school full-time.
Who will be considered a resident relative in regards to your personal injury protection (PIP) coverage will depend upon the definition of a "resident relative" your state has in place as well as the language of your policy regarding this term and your PIP coverages and exclusions.
In general, if you have a child that lives with you, then he or she would normally be considered a resident relative and be covered by your PIP insurance. If you had a child that moved out and lived on his or her own, then this child would not usually be covered as a resident relative any longer under your PIP coverage.
Resident relatives and their own insurance versus your personal injury car insurance
If your resident relative has his own insurance policy, your PIP coverages may not extend to him, depending again on state laws and your policy's terms. For example, in 2007 New Jersey courts decided that a plaintiff in a court case could not recover PIP benefits from both her own auto insurance policy and her mother's policy.
In this New Jersey court case, the plaintiff was involved in a car accident in which she sustained extensive injuries. She was operating her privately owned vehicle at the time of the accident and was insured by her own insurance company for $75,000 worth of PIP benefits. Her medical bills exceeded this amount. At the time of the accident, the plaintiff lived with her mother, who was the named insured on an automobile policy issued by a different insurance carrier and had PIP benefits of up to $250,000. Since the mother's limits were higher, she tried to place a claim with her mother's PIP policy for the medical bills in excess of her $75,000 PIP coverages of her own policy.
The mother's auto insurance policy extended coverage and PIP benefits to resident relatives, although subject to exclusions. One such exclusion was the denial of liability coverage and PIP benefits to resident relatives for injuries sustained as a result of an accident involving a vehicle owned by a resident family member. So, according to the terms of the mother's policy, the daughter was excluded from making her PIP claim since the accident took place in her own vehicle which had its own coverag.
New Jersey law section 39:6A-4.2 authorizes PIP benefits not only to the named insured but also to resident family members of the insured's household, provided the resident family members are not named under their own policies. This section of the statute also says that no person can recover PIP benefits "under more than one insurance policy for injuries sustained in any one accident."
To find out about your state laws with regard to resident relatives, check with your state's insurance regulator. For information on the language of your policy and the exclusions it may have, read over the terms of your policy, specifically the PIP portion.
What states require personal injury car insurance?
There are 12 states that are considered no-fault and PIP coverage is required:
- New Jersey
- New York
- North Dakota
There are eight states that are not no-fault states but in which PIP can still be part of a policy, but These states are not no-fault states and either require PIP coverage, require it to be offered though drivers can decline or offer it as optional coverage:
What is PIP fraud or no-fault fraud?
PIP fraud is when a system is setup to illegally get payment for PIP claims from an insurance company on behalf of the policyholder.
One type of PIP fraud involves staging a fake car accident so that bogus injury claims are paid out through a person's PIP coverage. In this example, clinics are set up to sign off on the fake injuries, making it appear that the person was treated, so that both parties will receive money from the driver's PIP policy.