You may have hard of PIP. It stands for “personal injury protection,” commonly referred to as “no-fault” insurance . Some states require drivers to carry PIP, which covers the driver and his or her passengers in an accident, no matter who is at fault. This coverage does not extend to the drivers and passengers of other vehicles involved. PIP pays for medical bills and lost wages quickly, with no lengthy court battle trying to prove who caused the accident. However, most pip laws limit the types of damages for which you can sue, and can mean that you do cannot pursue the compensation you need.

Advantages

In a simple accident with minor injuries PIP can be a great thing. Sometimes, it can be helpful in more serious accidents.

• Fast payment - no waiting to determine who caused the accident, no matter who was at fault the bills get paid. Proving fault can be the most difficult and lengthy part of insurance claims and lawsuits.
• Further damages may be available – if your accident involved severe injuries, you may be able to pursue compensation from the driver who was at fault.

Disadvantages

PIP laws can be very limiting. As with most laws which sound good on the surface, PIP is a double-edged sword. While they can sound like they protect the consumer in the event of an accident, PIP laws are designed to reduce the amount of lawsuits brought against liable drivers and their insurance companies . Therefore, they are usually accompanied by limitations on when and why you can seek compensation.

• No pain and suffering or other non-monetary damages. Most PIP laws do not allow you to pursue compensation beyond monetary damages, except in extreme circumstances. This varies from state to state.
• The PIP protection may not cover all of the medical bills and lost wages. PIP protection is normally for a set dollar amount, which you can find in your policy. If your, and/or your passenger’s, medical bills and lost wages exceed this amount, you will still need to pursue compensation from the driver at fault.
• You may not be able to pursue compensation for your losses above what your insurance will pay. In some states, if your PIP does not cover all of the medical bills, you will have to pay for them yourself. You are not allowed to pursue a claim against the driver at fault unless your unpaid bills reach a certain dollar amount, called a threshold.

The cost of PIP

There is much disagreement and debate over whether or not PIP laws actually trickle down to a savings on insurance premiums for consumers. Some say that they save the insurance companies money by avoiding lawsuits. Some insurance companies say they cost money in easy, fraudulent claims. Hospitals love PIP laws, because they get paid much faster when they do not have to wait for fault to be established.