What is PIP or no-fault insurance?
Personal injury protection can help pay for certain medical, hospital, and funeral expenses, and/or lost wages incurred by you, residents of your household, passengers in your insured vehicle, and pedestrians when injured in an auto accident—regardless of who is at fault. The coverage only applies to bodily injuries and does not cover damage to your car or other property. If you do not have health insurance, this type of coverage can prove to be especially important since you could end up with a lengthy medical bill after a major accident. Personal injury protection may be able to offset these costs.
This coverage can also referred to as no-fault insurance or abbreviated as "PIP." PIP coverage is not available in all states. Where available, it may be subject to state specified limits. In some states, personal injury protection is required in addition to your other auto insurance coverage, while other states offer it as optional insurance.
Along with the District of Columbia and Puerto Rico, there are 15 states that require drivers to carry PIP coverage: Delaware, Florida, Hawaii, Kansas, Kentucky, Massachusetts, Michigan, Minnesota, New Jersey, New York, North Dakota, Oregon, Pennsylvania, Texas, and Utah.
In states where PIP coverage is optional, insurance companies are still required to offer it. However, drivers can reject the coverage if they choose to. The cost of this coverage can increase if the insurance company requires you to cover all vehicles on your insurance policy, not only ones specifically identified.
Real Life Scenario: You're injured in a car accident and have to spend three days in the hospital. As a result of being in the hospital, you miss work and your kids have to stay overnight with their babysitter. Depending on your PIP limits and deductible, your PIP insurance would help cover the cost of your hospital stay and related medical expenses, and the expenses you incurred for childcare, as well as your lost wages. However, any costs associated with the vehicle involved would not be covered by your PIP coverage.