Personal Injury Protection (PIP) vs. Medical Payments (Med Pay): What’s the Difference?

When purchasing insurance, it is easy to become confused by the litany of different coverage options that are offered by the insurance company. This blog post will explain the difference between two important, but quite different, types of coverage: Personal Injury Protection (PIP) and Medical Payments Coverage (Med Pay). Both PIP and Med Pay provide coverage for medical expenses that arise from injuries sustained in a car accident. PIP coverage is generally more expensive but provides more benefits.  It is worth noting that insurance companies will not let consumers purchase both coverages: you must choose either PIP or Med Pay.

Med Pay Coverage

Med Pay covers the “reasonable and necessary” medical expenses an insured incurs after being involved in a car accident. Reasonable expenses could include those costs associated with doctor visits, ambulance transportation, chiropractic treatments, X-rays, hospitalization, and even funeral expenses. However, it is important to note that Med Pay cannot and does not act as a substitute for regular health insurance. Rather, Med Pay can only be used in a very specific situation: for those medical expenses that you, or your passengers, pay or incur as a result of the motor vehicle accident.

Med Pay provides “no-fault” coverage to those who carry it, which means that an insured is eligible to use this insurance regardless of whether he or she caused the accident. Importantly, however, the insurance company retains subrogation rights on payments made under your Med Pay coverage. This means that if an insured is not the at-fault driver, the insurance company is entitled to be paid back when the other driver’s insurance company accepts fault. This is one reason that Med Pay coverage is generally less expensive than PIP coverage.

PIP Coverage

Personal Injury Protection, or PIP, also provides coverage for medical expenses that are associated with a car accident. However, PIP insurance generally provides more coverage than one receives with Med Pay.

First, PIP often extends coverage to expenses associated with physical or occupation therapy, psychiatric treatment, and other rehabilitation costs. PIP also generally provides coverage for 80% of lost wages, a death benefit, and other non-medical expenses that are related to the car accident.

PIP may also provide “no-fault” coverage to those who carry it, which means that an insured is entitled to use this coverage even if at-fault for an accident. Unlike Med Pay, however, the insurance company does not retain subrogation rights. This means that if the other driver is found to be at-fault, the insurance company is not entitled to reimbursement for the medical expenses that were covered under the PIP policy. Therefore, although PIP is usually more expensive, it provides greater coverage and benefits than Med Pay offers.

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Dealing with the aftermath of a motor vehicle accident can be frustrating, time-consuming, and confusing. If you were hurt in a car accident and feel that your insurance company is not looking after your best interests, or that the at-fault insurance provider is refusing to pay you the compensation you are entitled to, contact the lawyers at Armstrong & Lee LLP for a consultation regarding your rights and available options.

Photograph credit: Getty/anyaberkut

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