This coverage is very much like MP, only with a few key benefits not offered by that coverage. Personal Injury Protection, or “PIP”* as it is usually referred to, may be an optional coverage, or it may be mandatory (in so-called “no-fault” states). Either way it will protect you for the same things as MP, plus usually a benefit for lost income (wages) suffered as a result of your injuries. This crucial coverage will help bridge the gap you may have (the “waiting period”) between the time when you are first injured, and when your state or company short-term disability income replacement plan kicks in.
If you do not have income replacement now, you may wish to carry the highest (or a very high amount) of MP or PIP, or whatever your budget allows you to afford. If seriously injured, both your injuries and those of your passengers are paid for immediately through this coverage, up to the limit of the policy. If you have the lost wages included they will also be paid, up to the limit you select per day, week, or year.
Your premium will be lower if you decline this coverage, if it is “optional.” By default, your policy will typically include it. If you live in one of the several mandatory PIP states, you can also reduce your premium for this coverage by choosing a higher deductible, meaning you will pay more out of pocket if you do have an occurrence. So will your passengers, so be careful when you choose your deductible here.
Some states (Michigan and New Jersey, for example) allow you to select a less expensive “health insurance primary,” or “medical only” PIP option, but if you do so, make sure that your health insurance actually covers auto accident-related injuries (many do not, including most government-funded health plans like TRICARE, and Medicaid).
“Medical only” PIP means that you will only be compensated for your injuries and related expenses, but not for any lost wages. Of course, if you do not earn an income this may be a good option for you, but if you do, be careful in selecting this coverage just to save a few premium dollars. It may be something you (and your passengers) will regret.
Medical Payments and Personal Injury Protection
Medical Payments and Personal Injury Protection are usually not selectable together, as they largely duplicate each other. Therefore you should choose the one that best suits your particular situation. If you need work loss income replacement, PIP will be the way to go. If you have no health insurance, higher limits of either would certainly make sense.
In conjunction with PIP you may be offered an optional coverage called “Additional Personal Injury Protection,” or APIP.* This will offer more coverage for things like lost wages or “income replacement,” and it is usually offered in increments of so much per day, per week, with more coverage costing more premium. Even at maximum reimbursement, though, the premium for APIP is very low versus the potential return. Therefore if you are a high income earning individual, this may be especially attractive to you, so be sure to ask for more information about it, as agents will not usually offer or even mention it.
Guest Personal Injury will extend the level of your PIP to others who have lower limits of PIP from their home state, if any. Again, discuss this coverage with your agent if you feel you might benefit from it, as it is very inexpensive, but if you don’t need it, don’t spend premium dollar on it.