In no-fault states, you are required by law to purchase personal protection injury protection insurance (PIP) that will cover some or all of your damages if you’re in an accident, even if the other driver was at fault. The damages your settlement will cover include medical bills and lost wages. When your coverage isn’t enough, you’ll need to file a lawsuit.
Most no-fault states will have a minimum amount of damages you must reach before you are permitted to file a lawsuit. The states that require PIP coverage do so because they are trying to keep their court system from getting backlogged with lawsuits for minor injuries. When minor damages are covered, this makes cases that involve major injuries or deaths quicker and easier to process.
One of the biggest benefits of personal injury protection is that you will not have to wait for a settlement from the at-fault party’s insurer before you can begin seeking treatment. Your PIP coverage will provide you with a settlement must faster, and you can use these funds to cover your medical bills and the salary you missed while you were too injured to work.
Which States Require PIP Coverage?
If you live in one of these no-fault states, you will be required to have PIP coverage:
- District of Columbia
- Florida
- Hawaii
- Kansas
- Kentucky
- Massachusetts
- Michigan
- Minnesota
- New Jersey
- New York
- North Dakota
- Pennsylvania
- Utah
Some states will have maximum limits of how much PIP coverage you’ll need to have while others do not. It’s in your best interest to carry as much coverage as you can afford because it may allow you to skip the expenses involved in a lawsuit later.
In some states, you may have what is called a two part medical bill limit. This means if you have health insurance you will use that to pay your medical bills first with PIP covering the rest.
How Does a PIP Claim Work?
The following example is a general overview of how a PIP claim works. The laws and PIP limits in your state may differ from this example, but this will give you an idea of what to expect from the process.
In this hypothetical car accident, you were hit by another driver who was texting while driving. After a trip to the emergency room, you are left with a $10,000 bill, and you miss a week of work, losing $2,000 in salary in the process. You do not have health insurance, and your state’s PIP limit for those without health insurance is $3,000. Your state’s PIP limit for lost wages is $1,000.
In your state, you must have $5,000 in damages before you can file a lawsuit, so you meet the threshold. Your damages are $9,000 more than the PIP limit, so you decide to get a lawyer. The at-fault driver’s insurance settles with you for the full value of your $12,000 in damages. You reimburse your PIP carrier for the $4,000 they covered, pay your lawyer’s fees, and the rest is yours.
Do I Have to Pay PIP Back Out of My Settlement?
PIP reimbursement may be required. This isn’t always the case, but most of the time reimbursement will be required. In fact, a significant chunk of your settlement or award may go right back to your insurance company. You’ll want to check the details of your contract to see if your insurer is entitled to be reimbursed if the other party is at-fault in your case.
Some states have laws that require insurers to be reimbursed after a successful claim. This is to prevent people from being paid twice for the same damages. It helps protect insurance companies as well. Insurers make their profits by taking a chance and hoping an accident doesn’t happen. If you get paid twice and they don’t get paid at all, this gamble won’t pay off.
