Drop PIP coverage on Auto Insurance?

[icyappraiser]

So my state is now allowing the option to drop PIP coverage as long as you have Qualified Healthcare Coverage (QHC) that will pay primary in the event of an accident and has no limits on auto accidents. I confirmed that my health insurances meet this standard and I have no issue paying the deductible on my health insurance in case of an accident. I read it also pays for lost wages, but I also have a LT disability policy through my employer.

There is a lot of info out there about this change, but too much of it seems to be written by insurance agents trying to sell me something.

So....is there any reason I should not drop PIP coverage? Am I missing something?

[Duke03]

I wouldn't drop it!  PIP will allow you to actually double dip on a pay out if you are ever in an accident.  So if someone hits you and they have insurance they will pay you and then you can make a claim on your own personal PIP policy and get paid twice.  PIP is so cheap that it only takes one claim to pay for a life time of PIP coverage.  The last time I made a claim on my PIP I got paid 10k.

[diggingout]

I actually work at a legal branch for an auto insurance company in a state that’s allowing us to drop PIP coverage. I asked my attorneys immediately and they suggested NOT to drop it as we want as much coverage as possible in the event of an accident. I can try to get more info, but I trust their recommendations.

[Nick_Miller]

personal injury attorney here.

I can't really imagine dropping PIP coverage (it's technically allowed to be dropped in our state but NO ONE drops it)

Medical providers prefer PIP, because it generally pays better than health insurance, so the first benefit you have with PIP is that virtually anyone, from chiropractor to neurologist, will see you. Hell, I'm even convinced that some specialists move you up in the queue when you pay with PIP (just a theory, not confirmed).

Second, as has been mentioned, it acts as a first layer for medical bills. Your health insurance is fine as a second layer, but if you keep PIP, you can avoid the deductible as long as your total meds are until the PIP limit. This assumes you don't select a PIP deductible). Trust me, if you get hurt in an accident, it's reassuring to know there is extra protection.

Third, it also covers people riding in your vehicle. So that means your kiddos, spouse, even friends or extended family. So think of it as additional protection for people who might not have health insurance, or their own auto insurance.

Just some thoughts. I know it always comes down to money and assumption of risk.

[icyappraiser]

Thanks for the thoughts all! Didn't consider all this. So my understanding is that the PIP I currently have is set up to pay secondary to my medical already, so that negates some of the benefits you mentioned about it being primary / preferred by providers. I believe I did it this way in the past because it lowered the cost of PIP. It is listed as follows in my current coverage:

PIP: Medical Excess $300 Deductible (Cost: $219/yr)
PIP Full Coverage Work Loss: Income Benefits/Replacement Services (Cost: $68/yr)

@Nick_Miller Would you suggest changing this to make PIP primary (which would make the cost go up)?

The cost of PIP doesn't seem insignificant (where I live auto insurance is among the highest in the country and this change is supposed to help lower the cost) compared to my health insurance and LT disability. I have great work benefits and only pay $180/yr for Health Insurance ($1.5k deductible) and $40/yr for LT Disability (65% income replacement to age 65) through work.

The point on coverage for others in vehicle is well taken, though. Thanks!

[jafr1284]

My insurance does not offer PIP, it says "medical payment insurance." Maybe its the same thing. It seems pretty redundant to me to be double paying for my own health insurance. Who cares if I can double dip or not pay the deductible, in the long run I will likely pay more into it then I get out of it. I think only buying catastrophic liability insurance is worth it in case you damage someone else's car or hit a pedestrian or get sued after an accident.

[Nick_Miller]

@icyappraiser, Hmmm I haven't seen PIP set up as secondary before, but crap there are 50 states and lots of wrinkles among them, so I guess not surprising.

So I guess I would rearrange my list of benefits PIP gives you in your case...

1) Lost wages for MVA-related injuries resulting in missed work (usually capped at $400 or such a week). This can be paid sometimes more quickly than ST disability pays.

2) Again, you have the most flexibility for choosing providers; you're not limited to your health insurer's network.

3) You are protecting people who ride in your car in the event you (or another driver) negligently operates a vehicle causing them injuries. I would feel pretty shitty driving a car and giving my friend a ride, and then causing an accident and leaving them with medical bills (of course they would probably pursue a third-party claim against you too in that case).

So again, some people will read this and say, "Eh, not worth a few hundred dollars a year," and that's fine, like I said we all have our own risk tolerances. 

The way I look at it, if I'm going to be seriously injured, it's probably going to be in a car accident.

[seattlecyclone]

I'm not a fan of this insurance. It seems too specialized and duplicative of other more general-purpose insurance that you should have anyway.

This insurance, like all insurance, is priced to make a profit for the insurer. Insurance makes a lot of sense to protect against events that would cause major financial difficulties, but not as much for things that you can afford to pay out of pocket.

Would it be nice to have your medical deductible covered in case of a car crash? Sure! Would you experience a major financial hardship if it wasn't? If so, you should take a look at picking a medical plan with a lower deductible. If paying the deductible in a car crash would be a big problem for you, so too would paying the deductible if you get cancer or a heart attack or hurt yourself skiing, none of which are covered by your auto PIP coverage.

Would it be nice to have your lost wages paid in case of a car crash? Sure! Would you experience a major financial hardship if they weren't? If so, you need to look into short-term disability insurance that will pay you in case of any sort of temporary issue that may or may not be related to a car crash.

Once you have the right level of general-purpose insurance to cover your medical expenses and salary regardless of circumstance, the PIP just seems superfluous to me.

[SimpleCycle]

We don't carry PIP on our car insurance.  It only saves us $18/year, but I don't believe in insuring risks I can self-insure for.  Our health insurance deductibles are well within our ability to pay, and we don't need PIP to pay them in the event of an accident.  On the other hand, we carry heaps of liability coverage, because we can't self-insure for a million dollar injury caused by an at-fault accident.

[Nick_Miller]

We don't carry PIP on our car insurance.  It only saves us $18/year, but I don't believe in insuring risks I can self-insure for.  Our health insurance deductibles are well within our ability to pay, and we don't need PIP to pay them in the event of an accident.  On the other hand, we carry heaps of liability coverage, because we can't self-insure for a million dollar injury caused by an at-fault accident.

On a related note, I'd suggest reviewing your UM/UIM situation too. Your liability coverage obviously provides legal protection from claims, but if you're a responsible driver like me, your biggest worry on the road is probably, "What if some yahoo plows into me? And what if they aren't insured? (which probably means they have no $ either). My wife and I make sure that our UM/UIM limits are very high. It's relatively cheap coverage for what you get, especially considering the number of uninsured drivers out there, and it protects your body and your ability to earn money, our biggest assets.

[seattlecyclone]

We don't carry PIP on our car insurance.  It only saves us $18/year, but I don't believe in insuring risks I can self-insure for.  Our health insurance deductibles are well within our ability to pay, and we don't need PIP to pay them in the event of an accident.  On the other hand, we carry heaps of liability coverage, because we can't self-insure for a million dollar injury caused by an at-fault accident.

On a related note, I'd suggest reviewing your UM/UIM situation too. Your liability coverage obviously provides legal protection from claims, but if you're a responsible driver like me, your biggest worry on the road is probably, "What if some yahoo plows into me? And what if they aren't insured? (which probably means they have no $ either). My wife and I make sure that our UM/UIM limits are very high. It's relatively cheap coverage for what you get, especially considering the number of uninsured drivers out there, and it protects your body and your ability to earn money, our biggest assets.

I think my response above applies equally well here. Why would you need to be paid more in case an uninsured driver hits you than if you get in a car crash of your own making, or if you get a disabling injury completely unrelated to driving? When you elect uninsured motorist coverage, that's exactly what you're choosing.

[Nick_Miller]

We don't carry PIP on our car insurance.  It only saves us $18/year, but I don't believe in insuring risks I can self-insure for.  Our health insurance deductibles are well within our ability to pay, and we don't need PIP to pay them in the event of an accident.  On the other hand, we carry heaps of liability coverage, because we can't self-insure for a million dollar injury caused by an at-fault accident.

On a related note, I'd suggest reviewing your UM/UIM situation too. Your liability coverage obviously provides legal protection from claims, but if you're a responsible driver like me, your biggest worry on the road is probably, "What if some yahoo plows into me? And what if they aren't insured? (which probably means they have no $ either). My wife and I make sure that our UM/UIM limits are very high. It's relatively cheap coverage for what you get, especially considering the number of uninsured drivers out there, and it protects your body and your ability to earn money, our biggest assets.

I think my response above applies equally well here. Why would you need to be paid more in case an uninsured driver hits you than if you get in a car crash of your own making, or if you get a disabling injury completely unrelated to driving? When you elect uninsured motorist coverage, that's exactly what you're choosing.

You need to be paid for your loss. Simple as that. Most of us, the most dangerous thing we do every day is get in a car. As far as I'm concerned, insurance is very good for covering huge ass losses that would leave you f*cked otherwise. UIM/UIM covers pain and suffering, medical bills, lost wages, lost of power to labor and earn money, every element of loss. Health insurance only covers bills, and as we've discussed before, a lot of people have big ass deductibles and out-of-pocket maximums. Tons of people don't have short-term or long-term disability coverage. Again, everyone can do their own risk analysis for their own situation, but I think it's incredibly unwise to not have both. And I'm stopping here.

[seattlecyclone]

You need to be paid for your loss. Simple as that.

Sort of. If the loss is small (however you might define "small") you don't really need to be paid for it. If it's a big loss (however you might define "big") you should absolutely carry insurance.

Most of us, the most dangerous thing we do every day is get in a car.

Absolutely correct.

As far as I'm concerned, insurance is very good for covering huge ass losses that would leave you f*cked otherwise.

Agreed!

UIM/UIM covers pain and suffering, medical bills, lost wages, lost of power to labor and earn money, every element of loss.

Sure. What I'm saying is that if you actually need to be reimbursed for all these things to avoid a huge hit to your finances, you need to carry insurance that will pay pay out in all of the cases where you might run into these issues. Don't just pick coverage for the one or two scenarios that seem most likely to you. If they really are the most likely, it shouldn't cost much more to upgrade to insurance that covers all the less likely things as well. If it does cost a bunch more, perhaps your intuitive sense of how likely you are to be hit by an uninsured motorist doesn't match up with the statistics that actuaries have collected and studied in great detail.

Health insurance only covers bills, and as we've discussed before, a lot of people have big ass deductibles and out-of-pocket maximums. Tons of people don't have short-term or long-term disability coverage.

Yes, many people make this mistake. Underinsured motorist coverage, at best, acts as a band-aid for this mistake in just one of many possible loss scenarios. PIP coverage acts as a band-aid for another possible loss scenario. Neither one fixes the underlying mistake. Stop buying band-aids and attack the real problem head on.

[Paul der Krake]

What about the scenario of a friend or even a stranger as a passenger? Let's say a crash occurs and they need hospitalization.

Our friends tend to be on the responsible side of things and I'm 99% sure they have health insurance, but it's not like I'm going to ask them about their deductibles and views on suing before letting them in my car.