How it works
The NAIC describes PIP as coverage available in states with no-fault or other auto reparation laws, paying for injuries to the insured and the insured's passengers. You claim from your own insurer instead of waiting for a fault decision.
What PIP pays depends heavily on the state. In states with the broadest benefits, the Insurance Information Institute says it can include:
- medical and hospital bills,
- lost wages,
- the cost of hiring someone to do essential tasks an injured person cannot do,
- funeral costs.
States set different dollar limits for each type of benefit. In true no-fault states PIP is mandatory. In add-on states, first-party benefits like PIP may be optional and can be lower.
PIP vs MedPay
Medical payments coverage (MedPay) pays medical bills only. PIP is broader because it can also replace lost income and pay for services. In no-fault states, PIP is also tied to limits on lawsuits: you can sue the at-fault driver for pain and suffering only if your injury passes the state's tort threshold.
Related terms
Sources
- NAIC, Glossary of insurance terms definition of personal injury protection
- Insurance Information Institute, Background on: No-fault auto insurance PIP benefits, mandatory and add-on states, tort thresholds
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