PIP or No – Fault Car Insurance

Car insurance can be confusing, especially if you are moving to a different state. Each state has their own laws not only governing the amount of coverage you need to maintain for your auto insurance, but your state may operate differently from your previous state regarding their status as a no-fault state. In a no-fault state, regarding auto insurance, the driver’s insurance provider is required to pay the claim of the injured plus their passengers, regardless of who caused the accident.

No Fault States

In no-fault states, personal injury protection or PIP, is required as part of your auto insurance policy. PIP will cover the funeral expenses, medical expenses or lost wages for the driver and their passengers in smaller valued accidents (typically up to $10,000 worth of expenses).Because of the laws of the state being no-fault coverage, sometimes personal injury protection is also called no-fault insurance coverage.There are currently 16 states that have no-fault laws requiring PIP insurance as part of the states legally mandated minimum insurance coverage. However many states are trying to phase out this type of insurance and adopt atort-based (liability-based) set of laws.

Personal Injury Protection History

PIP or no fault insurance originated in 1930 as a way to reduce the sluggish and costly process of traditionallitigation claims. The theory was that by reducing the time-frame of the process and shifting the dispute reconciliation process from the court system to the insurance company, the premium rates would drop. Initially they did but over time, the rates crept up over those of the tort-based system.

Although most states have tort-based insurance coverage and procedures, PIP is still available as an additional feature of some auto insurance policies. If you are considering additional personal injury protection, investigate your existing health insurance as many times the coverage provided from these two policies overlap.

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