What Is Personal Injury Protection (PIP)?

Personal Injury Protection (PIP) is a type of auto insurance that pays for your reasonable and necessary medical expenses, up to your chosen limit, if you are injured in an automobile accident. PIP coverage is also known as no-fault insurance, because it provides benefits without requiring policyholders to prove who was at fault in an accident and covers you, your family members, and uninsured passengers.

PIP provides first-party benefits, which means that it covers the named insured, resident family members, and uninsured passengers.

First Party Coverages

• Personal Injury Protection (PIP)
• Collision
• Other than Collision (Comprehensive)
• Uninsured/Underinsured Motorists Coverage

Third Party Coverages

• Liability

No-fault coverage

Unlike other auto insurance coverages, no-fault coverage, commonly called PIP, pays without regard to who caused the accident that resulted in injuries. This helps ensure that you receive prompt, medically necessary treatment before liability has been determined.

No-fault states usually require drivers to have a minimum level of PIP coverage. When choosing your coverage limit, consider the cost of healthcare in your state. Your health insurance policy may not provide coverage for injuries resulting from an auto accident.

PIP non-medical benefits

You may be able to add a standard Extra PIP Package to your auto insurance policy. If you are injured or killed in a car crash, this package can provide the following non-medical options:

• Income continuation: reimbursement of a portion of lost wages due to inability to work.
• Essential services: helps reimburse the extra cost if you need to hire someone to take care of your home or family after you are injured in a car accident.
• Death benefit: provides a payout to your family if you are killed in a car accident.
• Funeral expenses: contributes to the cost of a funeral if anyone covered by your policy is killed in a car accident.

You may also choose medical expenses-only PIP coverage for a lower premium, or you can purchase higher limits for an additional premium.

How does PIP work?

If you are injured in a car accident, you should report your claim as soon as you are able. You will be asked for your insurance policy number, details about the accident, and details about the injuries.

Your insurance company will assign a PIP claims representative and a Nurse Case Manager (if required) for the medical portion of your claim. These professionals have specialized knowledge of medical billing, payments, and treatments. Their task is to ensure you have access to qualified providers of medical care, and then to reimburse those providers for their services.

You, your medical providers, and your employer (if applicable) will need to submit information to your insurer verifying:

• Your personal information
• Details about the accident
• A description of your injury
• Information about your treating doctor or hospital
• Your health insurance policy, if applicable
• Your wages or salary
• Your time absent from work

Your doctor will need to provide information about your treatment at certain intervals as part of the state-mandated decision point review process. It is best to use a provider in your auto insurer’s Voluntary Network for any imaging testing services to avoid additional copayment charges.

Licensed medical care providers should communicate directly with your insurance company regarding your treatment. Your provider should submit any non-emergency tests and procedures for decision point review/precertification before they occur. Failure to submit certain diagnostic tests, treatments, or services for precertification may result in an additional copayment.

Does PIP have a deductible?

PIP has a deductible that you choose, a copayment, and coverage limits. In New Jersey, there is also a 20% co-payment for medical expenses between your deductible and $5,000; you pay 20% and your auto insurer pays 80%. Above $5,000, your insurer covers 100%.

Here’s how it works:

You are injured in a car accident, resulting in medical costs of $10,000.

Your Medical Bills	+$10,000
Your Deductible	-$2,500
Your Copayment 20% x ($5,000 – Your Deductible)	-$500
Your insurer will pay:	=$7,000
Your out-of-pocket cost	=$3,000

If you use an imaging provider outside your insurer’s Voluntary Network, or if you or your doctor fail to comply with decision point review/precertification, you may be charged an additional copayment for the charges.