WHAT IS PIP COVERAGE?
PIP is short for personal injury protection coverage. The Utah legislature passed a bill that requires all automobile insurance in the State of Utah to include insurance coverage for what the legislature called personal injury protection coverage. Sometimes lay people also call it “no fault” coverage.
PIP coverage is insurance that pays medical bills, lost income, lost household services and nothing else. The nickname “no fault” comes from the fact that the insurance covers an auto accident regardless of who is at fault.
Here is a hypothetical to illustrate how it works.
John owns a car and purchases State Farm Insurance. By law, State Farm includes PIP benefits in the insurance policy. Mary owns a car insured by Allstate. While driving, Mary adjusts her radio and accident rear ends John. Mary is at fault for the accident. In other words she was negligent. John is injured and goes to the doctor. The doctor diagnoses a whiplash and treats John with physical therapy.
John’s own insurance company will pay his medical bills. Let me reiterate that. State Farm pays the medical bills. Most people think Mary’s insurance, Allstate, would pay. Traditionally that was true. Under the PIP law, however, State Farm pays.
If John recovers quickly, the case is over. Mary and Allstate will never pay a dime. That is why it is called no fault.
If John doesn’t recover quickly, Allstate might have to pay. If John meets threshold, Allstate will have to pay. Most people in Utah meet threshold by having more than $3,000 in medical bills. There are other ways to meet threshold, such as dying, having a permanent disfiguring injury, and a few others. To keep it simple, we’ll just focus on the dollar amount of medical bills.
So if John has more than $3,000 in total medical bills, John can now make a claim against Allstate for (1) medical bills, (2) lost income, and (3) pain and suffering. When John wins, Allstate will not only have to pay John but Allstate will also have to reimburse State Farm for the medical bills that State Farm paid up front.