PIP Deductibles – don’t get caught in this trap!
The Commonwealth of Massachusetts requires that all auto insurance policies carry “no-fault” insurance known as Personal Injury Protection or PIP. PIP is the portion of your auto insurance that pays your medical bills if you are injured in an auto accident. It doesn’t matter who caused the accident, your own PIP coverage pays your bills for the ambulance, hospital and any other treatment you may need following an accident. For this reason, PIP isn’t cheap. In order to save you money, many insurance companies now try to convince you to accept a PIP deductible.
Opting for a PIP deductible can be a dangerous choice. Unfortunately, few policyholders understand the impact this switch could have on them if they get into a serious car accident and few insurance agents explain the dangers because they want to give you the lowest price.
A PIP Deductible = Self-Insurance:
PIP coverage is mandatory in Massachusetts and covers up to $8,000 of medical bills and lost wages. When you choose a PIP deductible, you basically agree to insure yourself for all or part of that $8,000. If you choose an $8,000 PIP deductible, for example, the first $8,000 of your medical bills and lost wages following a car accident are YOUR problem. Your insurance will not pay a penny of that amount. You will not have any coverage for your bills or your lost wages.
You may think that the insurance for the other vehicle will pay your medical expenses, but this is far from the truth. They will not consider your bills in their offer for settlement, because you chose the PIP deductible. If you have health insurance, then it will cover your medical bills. However, private health insurance gets to be reimbursed any money it pays if you receive compensation from the other party. This means that you may have to pay back your health insurance lien out of your pain and suffering award. You end up paying one way or the other.
Bottom Line: Don’t Fall Into the PIP Deductible Trap!
Many insurance providers neglect to fully explain the full picture of PIP insurance and a consumer’s right to elect against the PIP deductible. The PIP deductible is a large benefit to them. Whether or not to take the PIP deductible is your choice as the auto insurance consumer; it’s not the insurance company’s choice. And choosing a PIP deductible is never a good choice.