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What is PIP Insurance (Personal Injury Protection Insurance)?

June 20, 2019 by Steven M. Gursten

What Is PIP Insurance (Personal Injury Protection)? | Michigan Auto Law

Drivers need to know about PIP insurance for their cars. Not only is it legally required in many states, but personal injury protection insurance provides important insurance benefits when drivers are injured in a car accident – even if they are the ones who caused the crash.

Michigan’s new No-Fault law has drastically changed how PIP insurance works for drivers and car crash victims.

What Is PIP Insurance?

PIP insurance, which is part of a person’s auto insurance coverage, pays for a person’s auto accident-related medical expenses and lost wages after he or she has been injured in a car accident.

What Does PIP Mean?

“PIP” is an acronym for what people commonly refer to as personal injury protection. However, in some states, such as Michigan, PIP is inexplicably shorthand for personal protection insurance – which obviously does not square with the “PIP” acronym. (MCL 500.3101(1))

Is Personal Injury Protection Insurance Another Way Of Saying No-Fault Auto Insurance?

For the most part, yes. PIP insurance is generally required only in states that have No-Fault auto insurance systems. There are 12 No-Fault insurance states.  

How Does PIP Insurance Work?

Personal injury protection (PIP) insurance is intended to give car accident victims the medical care and wage loss benefits they will need after being involved in a car accident.

PIP benefits are paid by a person’s own auto insurance company.

Personal injury protection benefits are paid regardless of whether a person was at-fault in causing a car accident. This allows people to obtain medical care and treatment and begin collecting the wages they’ve lost because injuries from a car accident are preventing them from returning to work. Without personal injury protection benefits, injured accident victims would otherwise be forced to delay or go without medical care until they could prove someone else was to blame and successfully sue.

What Does PIP Insurance Cover?

PIP insurance typically covers medical expenses, attendant care, medical mileage, lost wages and replacement services.

MEDICAL EXPENSES – Personal injury protection insurance can cover auto accident-related medical care and treatment.  This will vary somewhat by state, but will normally include the following:

  • Doctor visits, hospitalizations, surgeries, procedures, X-rays, MRIs, CT-scans, physical therapy, psychotherapy, cognitive therapy, rehabilitation and prescription medications.
  • Medical, physical and vocational rehabilitation services.
  • Home modifications, such as ramps, wider doors, or elevators, to enable an accident victim to return home despite his or her accident-related injuries or limitations.
  • Vehicle modifications, such as making the vehicle wheelchair accessible, to enable an accident victim to drive him- or herself around, despite his or her accident-related injuries or limitations.
  • Medical equipment such as wheelchairs, IVs, walkers, canes, crutches, prosthetics, artificial limbs, medical devices and other aids.

ATTENDANT CARE – Personal injury protection insurance pays for the attendant care that is provided to car accident victims. Sometimes referred to as “nursing services,” attendant care helps victims with “activities of daily living” that they are no longer independently capable of accomplishing on their own due to their accident-related injuries. Attendant care services that are typically covered by personal injury protection insurance include: monitoring and supervision of victims for safety reasons; administering medication; bathing; dressing; helping victims with ambulation; styling and combing of hair; grooming; toileting; carrying and lifting things for the patient; and wound care. Attendant care can be performed in a victim’s home or in a facility and by professional caregivers or members of the victim’s family or household.

MEDICAL MILEAGE – Personal injury protection insurance reimburses car accident victims for what is commonly referred to as “medical mileage” costs. This means that victims will be reimbursed for the transportation costs they incur in seeking medical treatment and care. This includes, but is not necessarily limited to, expenses for mileage to and from doctors’ offices, hospitals and rehabilitation clinics – or bus and taxi fare in the event the victims do not drive.

LOST WAGES – Personal injury protection insurance reimburses car accident victims for the income they lose because their accident-related injuries have disabled them from working. Wage loss benefits are paid on a monthly basis, but are usually subject to statutory maximums both as to dollar amounts and duration.

REPLACEMENT SERVICES – Personal injury protection insurance pays for replacement services benefits which covers the daily cost of getting someone else to do the everyday, household tasks that car accident victims did for themselves before being injured, such as housework, vacuuming, dusting, cooking, dish washing, making beds, ironing, doing laundry, changing linens, snow shoveling, grass cutting, leaf raking, grocery shopping, taking out the garbage, driving, running errands, child care, home repairs, car repairs, window washing and baby-sitting/child care and driving family members to school and appointments.

Is There A Limit On Coverage of Medical Expenses?

All states with PIP insurance now impose limits on how much of a car accident victim’s medical expenses will be paid by PIP.  These limits will vary by state.

Under Michigan’s auto No-Fault law, a person may select to opt out of personal injury protection entirely if they meet certain requirements, or they can choose different levels of PIP coverage.  As of June 11, 2019, these different levels of coverage include $50,000, $250,000, $500,000, and an unlimited option.

This means that under Michigan’s auto No-Fault law, personal injury protection insurance will provide medical coverage to an injured car accident victim to the extent that any “products, services and accommodations” for which coverage is sought are “reasonably necessary . . . for an injured person’s care, recovery, or rehabilitation.” 500.3107(1)(a))

How Does The New Michigan No-Fault Law Affect PIP Insurance

From 1973 to 2019, Michigan drivers had unlimited PIP insurance for all necessary medical care and treatment from a motor vehicle accident.

Starting after July 1, 2020, Michigan drivers can now select “caps” on the amount of the No-Fault PIP insurance coverage for car accident-related medical expenses should they ever be injured in a crash.  An unlimited medical coverage option will still be available. In addition, the new levels of PIP cap options caps for medical coverage under the new No-Fault law that was enacted on June 11, 2019 are:

  • $50,000 cap on medical expenses for drivers who are on Medicaid;
  • $250,000 cap on medical expenses;
  • $500,000 cap on medical expenses.

These caps on medical coverage under the new No-Fault law’s changes to PIP insurance reflect the maximum amounts that auto insurance companies will have to pay for an accident victim’s crash-related medical care, treatment, and expenses.

Once that cap amount is reached, then the burden of paying for medical expenses is shifted to the person who caused the car accident.  If the driver who caused the car accident does not have adequate levels of liability insurance to pay for the excess medical care and treatment, an accident victim may be forced to turn to his or her own personal assets, Medicaid, and perhaps even declaring personal bankruptcy because of medical debt.

Drivers who are already on Medicare can opt out altogether of PIP medical coverage under the new auto No-Fault law.

How Does The New No-Fault Law Affect Attendant Care PIP Insurance Benefits?

The new No-Fault law provides that, after July 1, 2021, auto insurers are not required to pay for more than 56 hours per week of No-Fault in-home, family-provided attendant care.

Does the New Michigan No-Fault Law affect Wage Loss and Replacement Services PIP Insurance Benefits?

The new law makes no changes to wage loss and/or replacement services benefits.

Difference between PIP Insurance and Bodily Injury Liability

PIP insurance in most No-Fault states pays for a car accident victim’s medical expenses, attendant care, medical mileages, lost wages and replacement services. These benefits are paid by the car accident victim’s own auto insurance and they are paid without regard to fault (who caused the underlying motor vehicle accident).

Bodily injury liability insurance is very different.  Bodily injury liability insurance pays for harms and losses caused by a negligent, at-fault driver.  This will often include pain and suffering damages, but it can also include excess economic loss and excess medical expenses and bills that are incurred over the PIP cap amounts that an accident victim has selected.  It can also include the costs of future medical care and treatment caused by a crash. Bodily injury liability insurance is paid by the auto insurer for the at-fault driver who causes a car accident.

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