November 23, 2010

Why Some Drivers Do Not Need Personal Injury Protection Coverage

Personal injury protection is one of the most important and commonly purchased types of auto insurance coverage, and it's a legal necessity in some states. The purpose of personal injury protection (often abbreviated as simply PIP) is to pay for medical costs of the policy holder and his passengers during an at-fault accident. However, while personal injury protection can be one of the most helpful car insurance types available, it's not necessary for certain drivers. There are situations in which paying for PIP coverage is a waste of money, and if you're not sure whether to purchase personal injury protection or not, there are a few things to keep in mind.

First of all, if you have a fairly good medical insurance policy you may not need personal injury protection, because your medical insurance will be sufficient in an accident. There's no real benefit to being doubly covered by both PIP and health insurance, because if you are involved in an accident with both of these coverages only one will pay out at a time and the co-pays or deductible of each policy will still apply. In other words, say that you're involved in an at-fault accident in which you have $10,000 worth of medical bills. Unless your medical insurance coverage provides for less than $10,000, your personal injury protection won't be used- and if it is, you'll have to pay for its deductible, so it may be a better idea to simply extend your medical coverage limits.

There is an exception, however. As personal injury protection also protects the passengers in your vehicle, you should keep it intact if you regularly carry passengers in your car. Otherwise, you may rack up enormous liabilities in an accident. If you carpool or if you carry people in your car that aren't covered by your medical insurance (such as family members), personal injury protection is still a worthwhile purchase. You may also be required by law to hold PIP coverage if you live in a no-fault car insurance state like New York, New Jersey or Florida. Check with your insurance company or your state DMV to see if this is the case.

It's always important to know which coverages you're paying for and how they're protecting you while you're on the road. Look over your policy for car insurance types that you've been purchasing and make sure you understand how they work. If you're paying for coverage that you don't need, you're wasting money, so evaluate the terms and limits of things like PIP to find out whether they're appropriate for you.