When you buy your car insurance, your agent should offer you personal injury protection (PIP). The cost of acquiring PIP is relatively inexpensive, but in many cases the importance of PIP may not be well explained by the agent, so it is often declined.


Pip pays for your medical bills when you have been injured in an accident. Having your medical bills paid immediately by insurance benefits your case in a number of ways.


First, if standard health insurance is aware that the treatment is the result of a car accident, standard health insurance may decline to pay out for some or all of your necessary treatment. If there is no PIP or no other insurance that is applicable other than the at fault drivers’ insurance, you or your lawyer should resubmit to health insurance in an attempt to have the bills paid, but sometimes it just does not happen. If an insured client is carrying medical bills owed to a medical provider, perhaps some even turned over to collection during the pendency of their claim, the injured clients are typically much less inclined to get the additional treatment needed. This, of course, is problematic to the client from a heath and recovery perspective.


Second, not getting the needed treatment is also problematic from a claim valuation perspective. As addressed in previous blog posts, your claim for pain and suffering is in large part driven by the amount of your medical bills. If you don’t get the treatment you need, the overall value of your claim decreases.


Third, if you owe a car accident medical debt directly to a provider, you have to pay that debt in full to the provider. However, if PIP pays out on that debt, often times PIP’s reimbursement subrogation claim (request for reimbursement) is substantially less than the actual amount of the medical bills. This is due to the contracts for reimbursement between the insurance providers and health care practitioners.


Fourth, if you owe a bill directly to a medical provider, you lose your ability to claim the Mahler Reduction or assert the Made Whole Doctrine. The Mahler Reduction requires an insurance company to pay a portion of your attorney’s fees. In other words, if PIP pays out on your medical bills, you will have to pay PIP back less than what you would otherwise have to pay back to a medical provider directly.

The Made Whole Doctrine provides that if you are not made whole on your claim, then you do not have an obligation to pay back subrogation claims such as PIP. For example, if the at fault driver is carrying very low policy limits and your claim exceeds the policy limits, you do not have to pay back PIP. In those circumstances you don’t have to pay back any other insurance that pays out for medical treatment. On the other hand, if you owe the medical provider directly, you have to pay them back in full, even if you have received from the at fault insurer much less than what your claim is worth.


The bottom line is that PIP is well worth the cost. According to an article in Forbes, the average person is involved in a car accident roughly one (1) time every 18 years, which is about 3 – 4 accidents in your lifetime. Having PIP lessens the financial blow when you are in that accident.




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