Do you need PIP or MedPay coverage?

Personal insurance protection, commonly referred to as PIP, and Medical Payments coverage, or MedPay are the two main types of medical coverage you can purchase as part of your car insurance policy.  Whether you need PIP and/or MedPay depends on if your state requires you to carry the coverage and the type of health insurance coverage you have.

PIP and MedPay are not as commonly talked about as liability, collision or comprehensive, but medical coverage is an important part of a holistic auto insurance policy.

While similar in some ways PIP and MedPay are not identical.  PIP typically covers medical expenses, loss of essential services and loss of income. MedPay generally only covers reasonable medical expenses.  Both PIP and MedPay normally come with a funeral expenses benefit.

MedPay vs PIP Insurance

How does PIP work?

Personal injury protection (PIP) helps cover injuries sustained in an auto accident, regardless of fault. 

PIP benefits vary by specific state laws and policy terms, but in general, it will cover:

• Medical expenses: Charges for ambulance, hospital, surgical, nursing, dental, medical treatment and x-ray services are all usually covered.  Psychiatric, physical, occupational therapy and rehabilitation may also be covered.  Essential medical supplies, medications and even prosthetics are typically part of your PIP benefits. 
• Loss of income: Partial coverage of wages you were unable to work due to injuries from the auto accident that kept you from working.
• Loss of essential services: Also known as substitute, replacement or disability services, this benefit covers costs when accident-related injuries make it difficult to perform necessary household tasks, such as cleaning or childcare.
• Funeral expenses: If accident-related injuries result in death, PIP benefits may help cover funeral costs.
• Survivor’s loss: Some PIP policies compensate heirs if an individual died due to accident-related injuries.

Those covered by PIP insurance typically include:

• The policyholder
• Passengers
• Relatives in the policyholder’s household
• Authorized drivers of the insured vehicle

If anyone injured in an auto accident has their own PIP coverage, it is primary to the car owner’s PIP coverage. 

How does MedPay work?

MedPay is shorthand for Medical Payments coverage.  MedPay offers medical coverage for injuries sustained in an auto accident.  Typical MedPay benefits include:

• Medical expenses: Reasonable and necessary medical expenditures, including hospital or doctor bills for visits, surgery, nursing services, dental, X-rays and prosthetic devices.
• Funeral Expenses: If injuries related to an auto accident result in death, a funeral expense benefit is given.

Medical payment coverage generally covers the following people:

• The policyholder, whether driver or passenger in insured vehicle.
• The policyholder if injured when a passenger in someone else’s car.
• Passengers injured while riding in insured vehicle.
• Policyholder and covered family members if injured while walking as a pedestrian.
• Policyholder and covered family members if injured while riding a bicycle (in some states).

What is the difference between MedPay and PIP?  How do they differ from bodily injury?

While PIP and Medpay are both medical insurance coverages that will pay for reasonable medical expenses, up to your limit, they are not equal in terms of benefits.

PIP is more comprehensive coverage than MedPay.  MedPay strictly pays for medical expenses, while PIP includes benefits for lost wages and loss of services.  PIP is also required in many states and MedPay is only mandated to be added to your car insurance policy in a couple of states.  Though to try and stop fraud that occurs with PIP claims, some states have put strict deadlines in which one can receive treatment and place a PIP claim.

If you carry both PIP and MedPay, PIP is typically primary.  Personal injury protection comes with a deductible and/or copayment, and medical payments coverage come with neither. MedPay, however, may be able to be used to help pay copays and deductibles for PIP or other health coverage.

How do PIP and MedPay differ from bodily injury?

MedPay and PIP are coverage for you and your passengers, which makes them completely different than bodily injury liability insurance. Liability covers you if you’re at fault and injure someone outside of your vehicle. MedPay and PIP coverages only pay if you’re injured by an at-fault driver who is either uninsured or whose insurance is insufficient to cover your medical costs.  PIP and MedPay can be claimed against regardless of who was at fault.

Neither PIP nor MedPay pay for non-economic losses, like pain and suffering.  And, an exclusion may allow your auto insurance company to deny medical claims if you contributed to your own injury by operating a vehicle while under the influence.  Alcohol exclusion laws are in 37 states currently, according to the Governors Highway Safety Association (GHSA).   

Keep in mind the limits you can purchase for PIP and MedPay vary by state.

Are PIP and MedPay required?

Nearly all states have certain state minimum requirements a car owner must have in place to operate their vehicle on public roadways. The exact requirements vary by state and, thus, personal injury protection is required in 15 states, is optional in another six plus the District of Columbia and is not available in the remaining 28 states.

Medical payments are required only in Maine and New Hampshire. New Hampshire is a special case in that the state doesn’t require drivers to purchase car insurance, but if you are in an accident you must provide proof of having the financial means to pay for the damages you caused to others.  The easiest way in which to have that proof is to purchase a car insurance policy.  When you do obtain an auto policy in New Hampshire, there are minimum requirements you must have, including MedPay.  In all other states, it is optional coverage.

All states are no-fault, except Delaware and Oregon.

Understanding PIP and MedPay limits

PIP and MedPay minimum limits vary by state, and then by insurance company offerings for the maximum amounts (unless state laws also mandate maximums that can be offered).  In general, limits for both types of coverages vary from $1,000 to $10,000, but in some states you can go as high as $100,000 for PIP. 

PIP limits are per person in some states and per accident in others and limits vary. Remember most PIP policies have medical, work loss, lost services and accidental death benefits. For instance, South Dakota has a maximum coverage amount for all benefits of $30,000 regardless of how many people are injured. In contrast, Washington State has varying limits that are per person:

• Medical: $10,000
• Loss of income: Pays 85% of lost income to a maximum period of 54 weeks from date of accident and with per week maximum of $200.  Total coverage maximum $10,000.
• Loss of services: Pays up to $40 per day with limit to $200 per week maximum.  Total coverage amount is $5,000.
• Death benefit/funeral expenses: $2,000

If you exceed your limits, then there are a few ways in which your remaining medical expenses could be paid. The options include:

• You personally pay out-of-pocket. 
• Place claim or lawsuit against at-fault party.
• Your health insurance picks up where PIP leaves off.

You can be on the hook for your remaining medical expenses after MedPay or PIP benefits end if the accident was your fault and you have no health insurance or your plan doesn’t cover injuries from an auto accident. In this situation, having both MedPay and PIP with limits of at least $5,000 is advantageous.

How do PIP and MedPay differ from health insurance coverage?

If you live in a state where PIP or MedPay is required, you have must add it to your car insurance policy.  The good news is, it isn’t useless, but can work with your health plan.

PIP and MedPay complement your existing health insurance coverage. Your car insurance medical coverage is primary to your health insurance plan and can pay deductibles or copays associated with your health plan.  Discuss with your health insurance provider how the two can work together.

A couple of no-fault states, New Jersey and Michigan, allow you to set up your PIP insurance so that it works in conjunction with your health policy.  If your health insurance takes on a greater role, your PIP coverage cost will be reduced.  For example, in Michigan, you can set it up so that your health plan pays the medical costs for your injuries and your PIP covers economic losses sustained due to your injury.

Even if you live in a state that doesn’t require PIP, you may still want to carry it.  First, if your health insurance plan doesn’t cover injuries sustained in an auto accident, you’ll need to carry PIP or MedPay to help pay for auto accident injuries.  Second, PIP comes with benefits that health insurance plans don’t, including paying for lost wages, loss of ability to perform household tasks and funeral benefits.

If you have a stellar health plan and your state doesn’t require MedPay or PIP, then you can skip if you want to save money on your car insurance policy.

How much does MedPay coverage cost?

Medical Payments coverage is cheap to include on your policy and costs around $20 a year on average, which is less than $2 a month.  This is because the limits for MedPay are low, ranging usually from $1,000 to $10,000 and only covers reasonable and necessary medical expenses.