Personal insurance protection (PIP) is one part of a complex package of insurance coverages which people call “car insurance.”
Each part of “Car Insurance” covers a different part of what gets damaged in an MVA. The PIP portion is a benefit that covers the medical expenses and can also cover some portion of a person’s lost wages after an automobile accident. Many times, this coverage is called “no-fault” coverage. This is NOT because it prohibits a lawsuit between the people in the accident. It’s called No Fault because it pays the medical claims regardless of who is at fault in the accident.
Many people do not like the fact that their own insurance covers their medical bills when “the other guy”, who was 100% at fault, does not cover them up front.
If you are in an automobile accident you MUST use your PIP insurance. Other things that PIP can cover are transportation expenses to medical appointments and home maintenance issues like lawn care. While these things are technically available for payment, 99% of all PIP payments go to medical providers.
Knowing how to bill PIP is very difficult. The payment schemes are all over the board. The PIP carriers intentionally under-pay because they know medical providers do not know how to demand a proper PIP reimbursement rate. Further, many patients are reluctant to use their own PIP insurance. Therefore, a significant investment in time and energy in investigating the claim must be made on the front end of the PIP billing system. Finally, after the claim is paid the billing company must be familiar which each state’s administrative or legal appeals system to maximize the receivable.
There are 12 States plus DC where PIP is MANDATORY: The District of Columbia, Florida, Hawaii, Kansas, Kentucky, Massachusetts, Michigan, Minnesota, New Jersey, New York, North Dakota, Pennsylvania and Utah.
Many other states allow for optional PIP. but it is optional: Alaska, Alabama, Arkansas, Arizona, California, Colorado, Connecticut, Georgia, Idaho, Illinois, Indiana, Iowa, Louisiana, Maine, Mississippi, Missouri, Montana, Nebraska, New Hampshire, New Mexico, Nevada, North Carolina, Ohio, Oklahoma, Rhode Island, South Carolina, Tennessee, Texas, Virginia, Vermont, Washington, Wisconsin, West Virginia and Wyoming.
Each state individually sets up what PIP actually covers. To bill and collect PIP claims across the nation one must be up to date on every state’s PIP schedules and payment methodologies. For example: PIP covers acupuncture when you are insured in Utah, but acupuncture is not covered in Florida or California. In Massachusetts PIP is primary for up to $2000, unless you don’t have available health insurance, or only have government health insurance, in which case it is primary up to $8000.
There is another automobile insurance called Medical Payments, or Med Pay. This is another part of the car insurance package that will cover injuries related medical costs. The big difference is that Med Pay is limited to medical bills, but PIP is more comprehensive and can cover lost wages. PIP is also more expensive than Med Pay.
Why is PIP necessary? PIP was created to stop small lawsuits. The idea was that if every driver covered themselves for a small amount of medical bills and lost wages it would knock out most of the small lawsuits for automobile claims from the court system. Therefore, if you have PIP and you hurt another person in an accident, then the PIP “threshold” must be met before that person can sure you. Each state sets a different “threshold.” In some states the threshold is a doctor’s finding that the injury is permanent within a reasonable degree of medical probability. In other states the “threshold” is simply a certain amount of money; for example: A person must accumulate at least $5000 in medical bills before they can sue another person who had PIP insurance.
PIP takes the question of “blame” away from the car insurance equation for the initial payment of a person’s medical bills and maybe lost wages. Each driver uses their own policy to pay for any damages they suffer.