No-Fault Car Insurance: What is PIP Car Insurance and Do You Need It?

Personal Injury Protection (PIP) is a type of insurance coverage designed to pay your own medical bills and related expenses after you’re injured in a car accident — regardless of who caused it.

One of the scariest parts of getting into a car accident is the cost you pay afterward for yourself. You may be out of work while you recover, have to pay for help at home, and face high medical bills for you and your passengers. In 2020, for example, the average car crash victim had to pay $11,556 in medical expenses, and it can go much, much higher than that.

The good news is that if you have PIP coverage on your auto insurance policy, all of these expenses (and more) may be covered, no matter who caused the accident. In some states PIP coverage is mandatory, and in others it’s optional. We’ll help you figure out whether or not you need PIP.

What is PIP insurance?

PIP insurance is essentially medical insurance you get from your own car insurance provider. In most states, after an auto accident both drivers' insurance companies have to duke it out and figure out which driver is at fault and which company should pay what medical expenses. That’s often a long and costly process for everyone involved.

To streamline things, some states began to change the rules starting in the 1970s so that drivers could go directly to their own insurer for medical cost compensation without everyone having to wait for a final verdict on fault. Regardless of who caused the accident, insurance companies would pay for their own customer’s medical bills instead of waiting on the other driver’s insurance to cover these costs.

This is where the name “no-fault insurance” comes from, and the finer details for how it works vary by state. But for you, it’s important to know that “no-fault car insurance” and “personal injury protection,” or “PIP,” are generally the same thing.

Do you need PIP insurance?

If you live in certain states, PIP insurance is required (more on that below). If PIP isn’t required in your state, it’s usually still an optional add-on.

If you don’t have health insurance, we highly recommend that you purchase PIP coverage. If you get into an accident, you might not have any other way to pay your medical bills and related expenses, which can be catastrophically high in the U.S.

That’s an especially important point to consider because many no-fault states place limits on whether or not you can sue the driver who caused the accident. If you can’t sue the other driver to cover your costs then you’ll be on the hook for your own medical bills, even if you didn’t cause the car accident.

How does PIP insurance work?

If you’re involved in an accident that requires you to go to the hospital, regardless of who caused it, PIP insurance will cover you, any passengers in your car, and even pedestrians you hit, up to the limits of the coverage amount you buy.

If you’re riding in someone else’s car when you get hit, you personally will still be covered unless the person driving has PIP coverage too, in which case you’ll be covered under their policy first. Importantly, PIP does not cover anyone in the other car.

No-fault PIP coverage will pay for a few different expenses: medical bills, lost wages, and, in a worst-case scenario, funeral expenses. It’ll even cover the cost of hiring someone to help perform tasks you’re temporarily not able to do, such as provide childcare, cook dinner, or clean your house.

You can’t get PIP coverage in all states, but other states might have something similar: medical payment coverage (a.k.a. Med Pay), which only covers medical expenses. It won’t pay for funeral costs, lost wages, or hired help.

In some states, both PIP and Medical payment coverage are available, in which case PIP is the superior choice because it offers more benefits than just medical costs.

What states require PIP insurance?

If you live in one of these states or territories, you’re required to purchase PIP insurance:

• Florida
• Hawaii
• Kansas
• Kentucky
• Massachusetts
• Michigan
• Minnesota
• New Jersey
• New York
• North Dakota
• Pennsylvania
• Puerto Rico
• Utah

Michigan recently passed a law that allows you to opt out of purchasing PIP coverage; however, that option is only available for people who’ve purchased certain types of Medicare and meet other requirements.

If you live in one of these 11 other states or districts, you’ll have the option of purchasing PIP coverage, but it’s not a requirement:

• Arkansas
• Delaware
• Washington, D.C.
• Maryland
• New Hampshire
• Oregon
• South Dakota
• Texas
• Virginia
• Washington
• Wisconsin

Finally, if you live in one of the states that doesn’t require or even offer PIP, you’ll have the option to purchase a different type of add-on insurance called medical payment coverage, which only covers accident-related medical bills. In some states, such as Maine, medical payment coverage is also required.

Do you need PIP insurance if you have health insurance?

If you live in a state where PIP insurance is required, then yes — unless you can meet the requirements for a waiver, you’ll generally need to purchase PIP coverage, even if you already have health insurance.

If PIP is optional in your state and you already have health insurance, it might still make sense to purchase it if any of the following situations apply to you:

• You can’t afford your healthcare plan’s deductible: You can use PIP coverage to pay your regular healthcare plan’s deductible, and even for coinsurance payments. That’s helpful if you have a high-deductible healthcare plan and wouldn’t easily be able to pay the cost.
• You drive other people around a lot: PIP also covers your passengers, unlike your own health insurance. If your passengers themselves don’t have good health insurance (or any health insurance), that’s yet another reason to purchase PIP coverage.
• Your health insurance excludes medical accidents: Check with your health insurance plan because some of them may have certain exclusions, which can include automobile accidents.
• You want the additional protection that PIP offers: Finally, a biggie: Your health insurance may cover medical bills, but it won’t pay for lost income, funeral costs, or the cost of hired help while you recover. On the other hand, PIP will pay for those things.

FAQ about PIP insurance

Bottom line

The rules around PIP coverage vary a lot depending on your own personal situation. First, look at whether PIP is required in your state. If not, consider if it’s worth purchasing.

Ask your insurer how it interacts with any other type of insurance you might have, like health insurance, and how you’d go about filing a claim. The best car insurance companies are able to answer these questions quickly for you and in plain English, so you can make the best call and get on with your day.