Personal Injury Protection (PIP): What It Is & How It Works | '25

PIP Insurance Meaning

So, what exactly is PIP insurance? PIP insurance is a type of car insurance that provides coverage after a car accident. It typically covers medical expenses and other related costs. Importantly, PIP insurance provides coverage regardless of who was at fault for the car accident.

Some states have adopted “no-fault” laws. These laws are intended to limit lawsuits for car crash injuries, resulting in the value of car accident settlements often being lower. These states require drivers to purchase PIP insurance coverage. In no-fault states, PIP insurance is sometimes referred to as no-fault insurance. No-fault insurance was one of the earliest and most successful attempts at tort reform. A few states have not adopted no-fault laws, but still require drivers to carry PIP insurance under other laws.

In 20 states, Puerto Rico and Washington D.C. PIP insurance is either required or optional. In other states, PIP insurance is not required or offered at all.

States and Territories Where PIP Insurance is Required or Optional

How Does PIP Insurance Work?

Knowing what does PIP insurance cover is key to ensuring you have the right policy for your state and needs. PIP insurance steps in to provide coverage after a car accident, regardless of who was at fault for the accident. How much PIP insurance coverage varies by state and by the individual policy, so it is important to read your coverage details carefully.

Common PIP Insurance Coverage

What does PIP insurance cover? Expenses typically include medical costs, lost wages, service assistance, and funeral costs. Expenses that are commonly covered by PIP insurance include:

• Medical costs. This often includes medical treatment, ambulance service, nursing care, prescriptions, and medical supplies.
• Lost wages. If you are unable to work after a car accident, PIP insurance may reimburse you for income you lost.
• Service assistance. Some PIP policies reimburse for household cleaning and other support services if you are unable to manage tasks yourself.
• Funeral costs. In the event a car accident resulted in death, some PIP policies cover funeral expenses.

Common Exclusions From PIP Coverage

PIP insurance is designed to reimburse for injuries caused by a car accident. As a result, property damage is usually not covered. The same is true of property theft, such as if your car is stolen.

It’s important to understand that PIP does not cover emotional distress or non-economic damages unless specific conditions are met, such as in states with exceptions for serious injuries. This limitation often leads drivers to supplement PIP with additional coverage or consider liability options for broader protection.

PIP coverage also is subject to coverage limits. If your expenses exceed what the policy covers, you won’t be fully reimbursed. Some states allow car accident victims to pursue personal injury lawsuits when your medical bills exceed your policy. A personal injury case seeks compensation for people who have been injured from the wrongdoing or negligence of someone else.

Who Needs PIP Insurance?

Deciding how much personal injury protection you need depends on state laws and your personal circumstances. If you reside in a no-fault state, then you will have no choice but to purchase PIP insurance in order to drive legally.

For those living in states where PIP insurance is optional, it can still be beneficial. It offers you immediate paid access to medical treatment without waiting for a decision on fault. It also may provide coverage for expenses related to your daily life, such as recovering lost wages or paying for a household cleaning service.

In optional states, some drivers choose not to purchase PIP insurance. These drivers often rely on a personal health insurance plan to cover their medical expenses if they are involved in a car accident.

For individuals with high-deductible health plans or limited income, PIP insurance can provide vital financial support. It ensures that accident victims can access care quickly without facing significant out-of-pocket costs. In states where it’s optional, consider whether the benefits of PIP outweigh its costs compared to relying solely on health insurance.

PIP Insurance vs. Liability Insurance

While liability insurance is mandatory, determining how much personal injury protection you need helps tailor comprehensive coverage. Even if you live in a no-fault state, PIP insurance alone may not be sufficient to protect you after a car accident. Almost all states also require you to carry bodily injury liability coverage. The difference between PIP insurance and liability insurance lies in whose costs it reimburses. PIP insurance covers injuries to you, while liability insurance covers injury to others when you cause an accident.