We have discussed mandatory vehicle liability coverage, collision and comprehensive insurance, as well as uninsured and underinsured motorist policies. There are other Pennsylvania car insurance policy options that we should cover as well. One of these is Personal Injury Protection, otherwise known as PIP.
Personal Injury Protection and No-Fault Insurance
Personal Injury Protection (PIP) is mandatory in Pennsylvania. States, like PA, that require PIP insurance coverage, are called “no-fault” states. Also known as “First Party” coverage, PIP is a basic type of “no-fault” medical coverage. It pays your medical bills and those of your passengers, due to an accident. Personal Injury Protection can include:
- Treatment from hospitals, doctors, and other medical providers
- Lost earnings
- Funeral expenses
- Child care if parent is disabled due to an accident
Who is covered?
You (the policyholder)
Other authorized drivers in the household
Pedestrians injured in accident
Regardless of who caused the accident, this insurance will cover the costs of injuries due to a collision. The minimum coverage required by state law is $5,000. Since coverage is mandatory, using PIP will not increase your insurance premiums. This coverage is important for people who do not have adequate health care coverage to cover medical conditions that can result from a serious automobile accident. If you use your limit of PIP insurance, then your personal medical insurance will be responsible for the remaining medical bills. This insurance is especially important for drivers that often carry other passengers, or who carpool.
No-fault insurance was created in an attempt to decrease the number of lawsuits filed in order to prove who is “at fault” in an accident. Studies have determined that auto insurance is approximately $300 more per year because of this litigation. The belief is that litigation costs will decrease since no-fault insurance will cover medical bills regardless of who is at fault. In exchange for this coverage, you give up some of your options to sue the other driver in an accident. There are also limits for ‘pain and suffering’ and ‘loss.’
Under a ‘pure’ no-fault system, your insurance company would pay for all economic damages such as medical bills, loss of wages, rehabilitation, physical therapy, etc. You would be unable to sue for pain and suffering, loss of companionship, etc., in the event that you did not cause the accident. There are no states with a pure no-fault system. Instead, all 13 no-fault states have a modified no-fault system.
Pennsylvania car insurance is unique in the fact that it is a “choice no-fault” state. Policy holders can opt for pure no-fault coverage, or what is called a “tort” option. We will discuss the details of tort options in our next article.