What is Pip Insurance?

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Personal Injury Protection, also known in the trade as PIP, is a type of coverage that can be included on top of your Commercial Auto Policy. PIP Insurance helps pay medical bills, rehabilitation costs, and lost wages incurred after a car accident. PIP is sometimes referred to as “no-fault” coverage because regardless of who is at fault for the accident, parties can claim and receive fair compensation.

PIP Insurance started out as early as the 1970s to simplify the process of determining which driver is responsible for the accident. Do note that PIP differs from your Personal Liability Coverage. The latter works by protecting you from liabilities and expenses as a result of an auto accident involving your commercial vehicle, wherein you are liable for injuries to others or damage to the property of others. Whereas with PIP, regardless of who caused the accident, will provide protection for you and your passenger.

Think of Personal Injury Protection as your health insurance, only this time it works specifically during car-related injuries. Keep in mind that most health plans exclude damages from auto accidents, making PIP an important add-on to your commercial auto insurance policy.

Do I need PIP Insurance? Which state requires it?

Auto accidents can happen anywhere without warning, and the expenditures associated with an accident can put a huge toll on your business’s finances. Just imagine paying costly medical expenses and lost wages as a result of an auto accident. While it may seem that PIP coverage overlaps other policies, PIP, and existing medical coverage work well together, with existing coverage paying medical expenses after PIP coverage limits are reached.

PIP Insurance is mandatory in 16 states, all of which require you to carry a minimum amount of coverage. You need PIP if your business is located in:

  • Arkansas
  • Delaware
  • Florida
  • Hawaii
  • Kansas
  • Kentucky
  • Maryland
  • Massachusetts
  • Michigan
  • Minnesota
  • New Jersey
  • New York
  • North Dakota
  • Oregon
  • Pennsylvania
  • Utah

Other states don’t require PIP, but it may be offered as optional coverage for your auto insurance. In Texas and Washington, insurance companies are required to offer PIP as an added protection, but the policyholder can decline the coverage in writing. In these states, if you want to add PIP to your auto policy again, you’d have to contact the insurer or broker to add that coverage selection.

What does PIP Insurance cover?

PIP provides financial aid for all necessary medical treatments and economic expenses due to an auto-related injury. This policy helps pay for:

  • Medical operations
  • Hospitalization bills
  • Ongoing professional recovery care
  • Transportation to medical appointments
  • Overhead that exceeds health insurance limits
  • Lost wages, if unable to work
  • Funeral expenses
  • Accidental death benefits
  • Other home care expenses, if unable to fulfill duties

Depending on the state you live in, coverage limits may vary as to which medical expenses are considered necessary and acceptable. A great example would be in Utah, where acupuncture is a permissible medical treatment under PIP, whereas in California acupuncture is not an accepted medical expense under PIP. Texas, on the other hand, includes medical expenses, 80% of lost wages, and provides someone to look after the injured person as part of their PIP coverage.

With regard to PIP limits, the range will again depend on the type of injury and state. Personal Injury Protection limits, when required, typically begin at $15,000 and go up to $250,000. In general practice, small businesses should have at least a $50,000 limit dedicated for this insurance add-on.

PIP requirements and limits vary by state. To determine the specific requirements for PIP in your state and to understand how PIP interacts with other medical coverage, it is recommended to discuss your coverage with your agent or provider.

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What is the difference between PIP and Med Pay?

Medical Payments Coverage, also called Med Pay, is yet another car insurance policy extension that is often confused with PIP. Med Pay and PIP are similar to each other in the sense that Med Pay will provide coverage for injury costs as a result of an accident, regardless of who is at fault. The difference is that PIP offers more comprehensive protection than Med Pay – by covering lost wages and other rehabilitation expenses.

Med Pay lends assistance by paying medical expenses due to an auto accident, regardless of who caused the accident. Though, this policy will only cover injuries directly caused by the accident and limits are usually below the $25,000 mark.

Additionally, Med Pay is obtained on a “per vehicle” basis. So if your small business owns three cars and wishes to protect them all, you must purchase a separate Med Pay Policy for each vehicle.

Another important thing to note with Med Pay is that it is not a replacement for health insurance. Health insurance covers medical expenses due to a number of causes while Med Pay is strictly limited to injuries caused by auto accidents. Also, Med Pay covers every injured person in the car as opposed to the personal coverage given by health policies, which only covers the people named on the individual health insurance policy.

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Running a business is challenging enough without having to worry about lawsuits, employee injuries or property damage. Having the right insurance gives you the peace of mind to focus on what matters - running your business.

The coverage you need depends on the type of business you run. A restaurant owner needs to be covered against customers possibly getting food poisoning while an accountant needs to be covered against calculation errors. CoverWallet's intelligent assessment system will identify the insurance you need based on your specific business, get you a policy that fits your budget, and do it all in less time than you think.

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