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How does pip insurance work?

How Does PIP Insurance Work? Explained in Detail

Personal Injury Protection (PIP) insurance is a type of auto insurance coverage that provides medical and other financial benefits to policyholders and passengers injured in a car accident, regardless of fault. Here’s a comprehensive overview of how PIP insurance works:

1. No-Fault Coverage:

PIP insurance is often referred to as “no-fault” coverage because it pays out benefits regardless of who caused the accident. This means that you can file a PIP claim with your own insurance company, even if you were at fault for the accident.

2. Coverage Benefits:

PIP insurance typically covers various expenses related to injuries sustained in a car accident, including:

  • Medical expenses: Covers costs for hospitalization, surgery, rehabilitation, medication, and other necessary medical treatments.
  • Lost wages: Reimburses a portion of the policyholder’s lost income due to inability to work following the accident.
  • Funeral expenses: Provides coverage for funeral and burial expenses in the event of a fatality.
  • Substitute services: Covers expenses for hiring someone to perform household tasks or childcare duties that the injured person is unable to do.

3. Coverage Limits:

PIP insurance policies have predefined coverage limits, which determine the maximum amount the insurer will pay for each category of benefits. Policyholders can choose their coverage limits based on their individual needs and budget.

4. Mandatory vs. Optional Coverage:

PIP insurance is mandatory in some states, while it’s optional in others. States with no-fault insurance laws typically require drivers to carry PIP coverage as part of their auto insurance policy. In states where PIP is optional, drivers can choose whether to add it to their policy.

5. Coordination of Benefits:

In states where PIP coverage is mandatory, insurers may offer “stacking” options, allowing policyholders to combine PIP benefits with other insurance coverage, such as health insurance or disability insurance. This coordination of benefits helps cover additional expenses beyond the limits of PIP coverage alone.

6. Claims Process:

To file a PIP claim, the policyholder or injured party must notify their insurance company of the accident and provide documentation of medical expenses and other related costs. The insurer will then evaluate the claim and determine the appropriate benefits to be paid out.

7. Subrogation:

In some cases, if the policyholder receives compensation from a third party (such as through a lawsuit against the at-fault driver), the insurance company may seek reimbursement for the PIP benefits paid out. This process is known as subrogation.


PIP insurance is a valuable component of auto insurance coverage that provides financial protection for policyholders and passengers injured in car accidents. By understanding how PIP works and the benefits it offers, drivers can make informed decisions when selecting their insurance coverage to ensure adequate protection in the event of an accident.

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