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eLearning Series:
Your Most Popular Insurance Questions
Answers For Health and Home
Insurance
( 50 articles
in this series )
Personal Injury
Protection (PIP)
On Your Auto Insurance
A good automobile insurance policy includes
several elements: personal property liability, uninsured motorist
coverage, collision coverage, bodily injury liability, comprehensive
coverage and personal injury protection (PIP). Some of these
elements are mandated by the state and others are optional.
Collision coverage pays for damages to a vehicle when it collides
with another vehicle or object, even if the policyholder is
at fault. Comprehensive coverage protects the policyholder
in the event that his or her vehicle is stolen, vandalized,
harmed by an act of nature or otherwise damaged. Both of these
plans are always optional and very expensive.
The bodily
injury and personal property liabilities are required
by all U.S. states in one form or another; where the states
differ greatly is in the minimum guaranteed payout that is
set for each. For example, in Alaska, a driver is required
to carry coverage that has a guaranteed minimum bodily injury
payout of $100,000. In Florida, a driver is only required to
carry coverage worth $10,000.
Elements of an auto insurance policy that may or may not be
optional are: uninsured motorist coverage and PIP. Uninsured
motorist coverage protects the policyholder in case he or she
is involved in an accident with someone who is uninsured –
it provides the coverage that would have been supplied by the
other driver. PIP, in the event of an accident, pays
for the medical expenses and other miscellaneous damages incurred
by
the policyholder and his or her passengers (or if the policyholder
is an injured pedestrian). Carrying PIP is mandatory in: Colorado,
Delaware, Florida, Hawaii, Kansas, Kentucky, Maryland, Massachusetts,
Michigan, Minnesota, New Jersey, New York, North Dakota, Oregon
and Utah.
Who Needs PIP?
Even if PIP is optional in your state, you may still want
to consider purchasing the coverage. In the event of an accident,
PIP will pay approximately 80% (depending on coverage limits)
of the costs of the policyholder and passengers. These costs
include medical bills, lost wages and other miscellaneous expenses.
PIP is a no-fault policy, so it will cover you and your passengers,
even if the accident was your fault.
PIP,
sometimes referred to as Medical Payment Insurance or Medpay,
is a no-fault coverage for two reasons. First, the
fact that fault does not have to be ascertained saves time
and therefore allows medical payments to reach the injured
parties as quickly as possible. Second, it saves everyone from
the cost of lawsuits being filed in order to prove who is responsible
for an accident and therefore responsible for the bills. The
only time a PIP policy might allow for a lawsuit is in case
of very serious injury or death.
Before you purchase PIP, go through your current policies
and determine whether or not the coverage offered by PIP is
duplicated anywhere else. For example, the cost of medical
bills and lost wages may be recovered through an existing health
insurance policy. If this is the case, then you may need minimal
PIP or none at all. Your driving behavior will also help determine
whether or not you need PIP. Do you carry passengers on a regular
basis? While your health insurance might cover your own medical
expenses, it won’t cover those of your passengers (unless they
are family members who are on your health plan). Ask your regular
passengers about their own health coverage and its limitations.
If they are uninsured or underinsured, you need PIP in order
to cover them. That may not seem like such a fair deal (especially
if you’re the one driving an office car pool), but the safety
of any passenger riding in your car is ultimately your responsibility.
How Much PIP Coverage Do You Need?
If you live in a state that requires PIP, then the minimum
amount you must carry has already been decided for you. If
you live in a state where PIP is not required, however, you
might decide that you need the extra coverage anyway. How much
coverage do you need? Well, to a large extent, that depends
on where you are in life. If you are middle-aged or older,
have good health insurance and liability policies, and then
you will need minimal PIP coverage. If, on the other hand,
you are young, just starting out and still don’t have much
in the way of health and liability insurance, you will want
to protect yourself and your future by carrying as much insurance
as you can afford. This is especially true if you have young
children or if you consistently carry others in your vehicle.
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SolveYourProblem.com : 2005
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