Personal Injury Protection and Medical Payments Insurance by Earl K. Straight, ESQ
Personal Injury Protection (PIP) and Medical Payments (MedPay) insurance coverages are basically no fault insurance provisions within a standard automobile insurance policy. They are no fault because they cover everyone in the insured vehicle, regardless of who is at fault for the accident. With liability insurance, you can only claim against the driver who caused the accident, or who was at fault. If the at fault party had no insurance, inadequate insurance, or disputed liability, you may not be covered, even if you carry your own liability insurance. With these coverages, who was at fault is irrelevant. If you were in the vehicle at the time of the accident, you are covered. Period.
Both of these coverages pay for reasonable and necessary medical expenses incurred as the direct result of the accident, and PIP also covers 80% of lost wages which were incurred as the direct result of the accident. These coverages begin at $2500.00, but can be purchased in larger amounts. Therefore, if you have $2500.00 in PIP coverage, then your reasonable and necessary medical bills up to $2500.00 will be paid by this coverage. It doesn't matter if the other party was at fault and you are claiming damages against them. These coverages are still effective and can be claimed by everyone in the vehicle. The policy limit, $2500.00 or more, is for each person in the vehicle. It is not cumulative.
There is one huge difference in these coverages. Your insurance company has no right of subrogation in most cases with PIP insurance, but they do with MedPay insurance. That means that once you settle with the third party, you do not have to pay your own insurance company back the $2500.00 or whatever amount was paid to you under the PIP coverage. That basically amounts to an additional $2500.00 or more in recovery for your claim. You would have to pay back any amounts you received under MedPay coverage in most instances. I would thus always advise that you choose PIP over MedPay. The premium for these coverages is extremely reasonable, and PIP must be offered to you. If you do not want PIP coverage, you must reject it in writing. Insurance agents do not normally encourage PIP coverage because it is not favored by the insurance companies due to the no subrogation laws. Which is even more reason to purchase it. You can bet that if the insurance companies don't like it, it is well worth your investment.