Personal Injury Protection Coverage (PIP)
You may be wondering, "Why should I buy medical coverage for my car insurance company when I already have health insurance?" The answer is that there are important differences in what PIP and most health insurance covers.
One important benefit of PIP is that it will cover treatment for injuries you sustained in an auto accident, up to the limit of your coverage with minimal deductibles and co-pay. This coverage is available regardless of who is at fault in the accident.
Under New Jersey's Standard policy, your PIP coverage is $250,000, although you can (and never should) opt for lesser coverage for a reduction in premium. The savings are not substantial. Under the Basic Policy, PIP coverage is $15,000, but you can (and always should) opt for more coverage for an additional premium.
You elect $15,000 of PIP coverage. Your insurer is only obligated to pay medical bills up to $15,000 unless you suffered "certain injuries" which are discussed below. If you have ever been injured or hospitalized, you know that $15,000 is not sufficient to cover basic diagnostic tests and doctor fees, never mind the cost of a hospital stay. The good news is if you suffer "certain injuries," the law requires your insurer to cover you up to $250,000 even if you opted only for $15,000 of coverage. But, what are "certain injuries?" The law says that "certain injuries" are permanent or significant brain injury, spinal cord injury or disfigurement or for medically necessary treatment of other permanent or significant injuries rendered at a trauma center or acute care hospital immediately following an accident, until the patient is stable, no longer requiring critical care, and can be transferred to another facility in the judgment of the physician. That definition does not cover a herniated disc, a bulging disc, or other injuries that will cost more than $15,000 to treat, but are not considered permanent injuries. It is for this reason that I recommend you obtain.
One of the additional benefits of PIP is the minimal deductible and co-pays. For example, if you have a $250,000 PIP limit with a $250 deductible and a 20% co-pay of the first $5,000, the most you will be out of pocket is $1,250.00. Medical providers who accept to treat you under your PIP policy are bound to accept a certain fee for work performed as per a statewide PIP schedule. They cannot charge you for the difference between what PIP pays and what they would normally charge. The most out of pocket expense you would incur would be your deductible and co-pay, nothing else.
Another advantage of a PIP policy is that it comes with few provisions and exclusions compared to the pages and pages of fine print that usually comprise your average health insurance policy, meaning that PIP typically covers medical services that most health insurance policies do not-often including chiropractic care, dental care and others. What's more, you're not limited to a single provider. The reason why PIP is broader in terms of the care and providers it will cover is that the situation in which it becomes active is narrower. Your health insurance will cover any illness or injury, regardless of when or how it was caused. PIP insurance, on the other hand, will only pay for injuries sustained in a car accident.
To summarize, a driver should have liability insurance in proportion to his or her assets and adequate to cover the cost of a possible personal injury claim. Uninsured/Underinsured Motorist Coverage should be as high as reasonably possible for protection against the large number of uninsured or inadequately insured drivers on our highways. The good news is that many relatively high limit insurance policies are reasonably priced in relation to the valuable protection they offer. Let's look at each type of insurance.