A former insurance producer, Laura understands that education is key when it comes to buying insurance. She has happily dedicated many hours to helping her clients understand how the insurance marketplace works so they can find the best car, home, and life insurance products for their needs.

Full Bio →

Written by

Leslie Kasperowicz holds a BA in Social Sciences from the University of Winnipeg. She spent several years as a Farmers Insurance CSR, gaining a solid understanding of insurance products, including home, life, auto, and commercial, and working directly with insurance customers to understand their needs. She has since used that knowledge in her more than ten years as a writer, mainly in the insuranc...

Full Bio →

Reviewed by Leslie Kasperowicz
Farmers Insurance CSR 4 Years

UPDATED: Oct 21, 2021

Advertiser Disclosure

It’s all about you. We want to help you make the right coverage choices.

Advertiser Disclosure: We strive to help you make confident car insurance decisions. Comparison shopping should be easy. We are not affiliated with any one car insurance provider and cannot guarantee quotes from any single provider. Our partnerships don’t influence our content. Our opinions are our own. To compare quotes from many different companies please enter your ZIP code on this page to use the free quote tool. The more quotes you compare, the more chances to save.

Editorial Guidelines: We are a free online resource for anyone interested in learning more about car insurance. Our goal is to be an objective, third-party resource for everything car insurance-related. We update our site regularly, and all content is reviewed by car insurance experts.

Whether you have to have PIP or personal injury protection, it all depends on which state you live in. Some states require it along with a certain level of liability insurance, while others don’t. States that have no-fault insurance rules usually require PIP.

Find out how much you can save on car insurance by typing your ZIP into the box for FREE!

If you aren’t sure about the insurance requirements in your state, go to the department of insurance website for your state. You should be able to find out all the information about your state there.

Parts of Auto Insurance

Think of auto insurance as a collection of insurance policies all rolled into one bill. No one part of the policy can do everything you need auto insurance to do. While some features are required by nearly every state, others are always optional. A few are needed in some states and optional in others.

That’s why it is crucial to understand the law in your state.

Liability can usually be divided into two parts, bodily injury liability, and property damage liability. This is the part that is required in every state. Liability insurance pays to have the other car repaired when you hit someone or replaced if it is totaled. The bodily injury portion pays for the medical expenses of the people in the other vehicle when you cause an accident.

However, this part of the policy does nothing for your car. That’s why you have comprehensive and collision coverage. These are actually two different parts of insurance as they cover two different things. However, they are usually sold together, and both usually have the same deductible.

Comp and collision are optional in every state. However, every car loan lender requires that the car owner carry comp and collision as long as they have the loan. If they find you don’t, they can repossess the vehicle.

Collision is the part that will pay for the repairs your car needs if you cause the accident, minus your deductible. Comprehensive pays for the damages to your vehicle if something occurs that is not related to a traffic accident. For example, it will replace your car if stolen or repair it if it sustains storm damage.

What if the other driver caused the wreck but didn’t have any insurance? Often people who have no liability insurance don’t have many assets that you could recover in a lawsuit. Thus, you’ll be stuck with car repair and possibly medical bills. Uninsured and underinsured motorist policies cover you in this scenario.

This policy will also pay the difference if the person who hits you has inadequate insurance. For example, if your state only requires $10,000 in property liability insurance, the person who hits you might only have that much. If your car costs $20,000 to replace, your uninsured/underinsured motorist policy will pay the $10,000 difference.

However, none of these pay for your medical needs or those of your passengers if you’re the at-fault party in a wreck. That’s why insurance companies offer either medical payments or PIP.

The Insurance Information Institute outlines the different parts of a policy here.

Enter your ZIP code below to compare car insurance company rates.

 Secured with SHA-256 Encryption

Personal Injury Protection

So what exactly is PIP? PIP is a part of a car insurance policy that will cover your medical expenses and your passengers. In most cases, if another driver causes a wreck, his liability insurance will cover these expenses. However, if you cause the wreck, it’s up to you or your policy to cover them.

PIP covers more than just medical expenses. Not only will PIP pay for your ER and doctor bills, prescriptions, and therapy sessions, but it also pays for things like lost wages due to the accident. It will also pay for house cleaning or yard services if you cannot take care of these tasks yourself due to injuries stemming from the accident. PIP will even cover funeral expenses if there is a fatality in your vehicle.

In some states, PIP covers even more. For instance, it can cover your bills if you as a pedestrian are hit by a car or by a hit-and-run driver. Read your policy to be sure of what PIP covers in your state.

For more information about how car insurance works, read How Stuff Works’ article.

No-fault Insurance

Some states have a different structure set up for car insurance in their states. These states have what is called no-fault insurance. However, this term can be very misleading because, in most states, there is still an at-fault driver who must pay for some of the damage.

There is a lot of confusion regarding no-fault insurance, partly because the laws vary from state to state. In nearly all the “no-fault” states, the party who caused the accident still pays for the damage to the other vehicle, usually through liability insurance. But again, this is different in some states.

However, the medical expenses are paid by each driver’s own personal injury protection policy. This is why PIP is required by most no-fault insurance states. So PIP pays for the medical bills, regardless of who is at fault, but the car repair is paid for by the at-fault driver. This is why in Florida, a no-fault state, PIP is sometimes called “Florida no-fault insurance.” If the medical expenses exceed the PIP policy or a certain amount set by that state, you can usually sue the at-fault driver’s insurance for the remaining amount.

In Pennsylvania and New Jersey, the no-fault insurance laws are even more complicated.

In those states, you can choose which type of no-fault insurance to have. For example, you can choose to have the no-fault PIP described above. Or there is true no-fault insurance in which you can’t sue the other driver for any excess expenses, but in turn, you cannot be sued either.

States that Require PIP

Not all states that require PIP are no-fault states. For example, some states have required PIP to help relieve the strain on the health care system or have a high incidence of uninsured drivers in their state.

The states that require PIP are Delaware, Florida, Hawaii, Kansas, Kentucky, Massachusetts, Michigan, Minnesota, New Jersey, New York, North Dakota, Oregon, Pennsylvania, and Utah. In Arkansas and Maryland, car owners must decline PIP in writing, or their insurance companies automatically give it.

Enter your ZIP code below to compare car insurance company rates.

 Secured with SHA-256 Encryption

Using PIP after a Wreck

If you’re in a serious car wreck, the medical bills can be staggering. If the other person is at fault in states without a no-fault law, then his liability insurance is supposed to pay for your emergency room, doctor, and prescription bills. However, sometimes the other driver’s insurance company won’t pay the bills until you are completely done with treatment and your doctors have ultimately released you.

Suppose you have serious injuries that require a lengthy healing time or need physical therapy. In that case, this process can take weeks or months. Even when the insurance company isn’t ready to issue checks, the doctors and hospitals still want to be paid. If you have PIP, it’s often easier to submit the bills to your own insurance to be paid from your personal injury protection policy. This helps get their billing offices off your back.

Then once you are done with treatment, your insurance company will submit the claim to the other driver’s insurance company to be reimbursed. In many ways, this makes the process easier for you. After all, your insurance company doesn’t want to be out that money, so they will be a strong advocate to get the claim taken care of, even if it means going to court.

Carrying PIP

In states that do not require car owners to have PIP, it is still an option they can buy if they want. However, experts are split on whether paying for PIP is a good idea if it is optional.

Some financial experts suggest not carrying med pay or PIP if you have good health insurance and a life insurance policy.

Chances are, you’re already paying premiums for these each month, and paying for PIP or med pay on top of this is just redundant insurance, they say.

However, if you do not have health insurance or have a high deductible, having this extra insurance can save you a lot of money in case of a severe accident. This is especially true for young adults, who are at the highest risk of being in a traffic accident.

On the other side, some financial advisors suggest paying for PIP even if you have good health insurance. This is because PIP pays for more than just the doctor bills. Since it covers lost wages, house help, and funeral expenses, these experts say the small premiums for PIP are worth the extra protection to your finances.

If you choose between med pay and PIP, almost all experts agree that PIP is the better policy to have. The premiums are usually very similar, but you get more value out of PIP. Read what this lawyer says about PIP and med pay.

Get fast, FREE quotes from several car insurance companies by entering your ZIP into the box found here!