When it comes to auto insurance, it can sometimes be confusing which kind of coverage to go with. When it comes down to it, there are two main types of coverage. Those are Personal Injury Protection or PIP, and Medical Payments (MedPay) that you can go with. Both have a range of pros and cons to share between them, and there is no one-size-fits-all option that will solve all of your problems.
In order to figure out what’s best for you, we’re going to take a look at both PIP and MedPay, see their similarities and differences, the way they work, and a breakdown of the costs for both PIP and MedPay. Let’s get started by figuring out how PIP and MedPay work.
How Does PIP and Med Pay Work?
Both PIP and MedPay benefits depend entirely on whether the driver lives in a no-fault state or the traditional tort liability state. Most states are in fact tort liability states and they require the driver who was at fault and their insurance to pay damages to the victim’s car as well as any hospital bills.
In no-fault states instead, the amount needed for personal injuries are covered by PIP policies. It’s important to note that PIP policies don’t pay damage to the cars involved or any other property. In no-fault states, at-fault drivers or their insurance providers are required to pay for these damages.
Believe it or not, people have to buy extra liability coverage as well as collision coverage if they want to make sure that damage to their car is covered.
Similarities and Differences
Both PIP and MedPay cover injuries done to their driver policyholders and any passengers in the event of an accident. In both, the fault does not matter. Both will be covered by their own insurer, and they’re paid by their own insurer. Those are similarities that go across the board. Now that we’ve looked at similarities, let’s take a loon at some of the differences.
PIP provides for just about every aspect of hospitalization and medical coverage that you can think of. Anything from medication to nursing care to surgery is covered under PIP. It’s important to note that 100 percent reimbursement isn’t required, but a co-pay might be.
PIP also covers for all funeral expenses, lost income, child care as well as household expenses, and survivors’ loss.
When you’re in an auto accident, you apply for PIP benefits with your own insurer, not the other driver’s insurer. It’s important to note that PIP does not compensate you for pain and suffering.
In no-fault states, you can, in fact, sue the other driver for pain and suffering and other losses. However, the injuries have to be severe and hit a certain medical expense threshold. You can’t just claim pain and suffering for minor injuries.
MedPay is similar to PIP in a lot of ways, but it’s not as comprehensive. It’s optional in all states but two, and it covers medical expenses for whoever’s insured as well as other drivers who are listed on the policy, members of the insured person’s household and any passengers that might be in the car.
Depending on state law where you live, your coverage, and your insurer, MedPay can actually supplement the coverage you have for health insurance or even function as primary medical insurance after your accident.
If it is considered to be supplemental, your health insurance will be used first in order to cover all of your injuries, and then MedPay will come in for deductibles and co-pays. If instead it’s primary, MedPay is used in order to cover the immediate medical costs. After that, your health coverage will cover the rest, including ongoing expenses.
MedPay was basically designed to further supplement any existing coverage that you might already have. Some people who have a PIP will go ahead and supplement with MedPay in order to make their account as strong as possible.
The coverage is limited but MedPay has a few Aces up its sleeve:
– It pays the medical costs quickly, no matter who’s at fault. In a tort state, you’ll be responsible for all of your medical costs if you were at fault. If the other driver’s at fault, you’ll have to fight to get your losses covered. This can take months in court or even years.
– MedPay has no deductible or co-pay while most health insurance policies do.
– You’re covered if you were a passenger, if you were taking public transit, or if you were injured by a vehicle while biking or walking.
Costs of PIP and MedPay
MedPay tends to be exceptionally cheap, usually only amounting to $5 extra per month because of how limited it is and how low its maximum payout is, usually totaling between $5,000 and $10,000.
The cost of your PIP coverage, on the other hand, is going to vary quite a bit depending on the state you live in. This really makes a lot of sense when you consider the entire range of mandatory coverage that you need to have.
Limits will range from a per accident amount of $2,500 to unlimited medical expenses as well as permanent injury benefits of $250,000.
Since PIP is only one part of the mandatory coverage over in no-fault states, its cost isn’t easy to figure out. It is possible, however, to compare the average cost in no-fault states as well as tort states.
There are 15 states that require PIP. These include Florida, Michigan, Delaware, Hawaii, Kansas, Kentucky, Massachusetts, Minnesota, New Jersey, New York, North Dakota, Oregon, Pensylvania, Texas, and Utah. Each state requires a different minimum for PIP coverage.
Are There Benefits to Doubling Up?
If you do live in a no-fault state, you’re already paying for PIP. Adding MedPay won’t make much sense in this case since it has a far shorter reach than PIP. However, MedPay is very cheap and has some benefits. One of these is the fact that MedPay doesn’t have a deductible. This can be especially handy if your PIP or health insurance coverage comes with a high deductible.
While this list isn’t exhaustive, it should give you a good look into what goes into PIP and MedPay coverage. This should help when it comes time to look for an insurance policy.