Or: The 17-cent mistake that can cost you BIG TIME
OK, we’ve covered Uninsured Motorist coverage and Underinsured Motorist coverage – the “UM/UIM Coverage” in your policy. (If you have not read them, let me know and I’ll get those installments to you.)
Today let’s talk about PIP. It stands for Personal Injury Protection. Why do they call it that? To hide and confuse, that’s why (in my opinion). It’s really medical expense coverage — like your medical insurance (if you have it) or Medicare (if you’re eligible). The problem is, these days most of my clients don’t have medical (health) insurance and they are not eligible for Medicare. So if you’re in a car accident, many times “PIP” is the ONLY medical insurance that is available to pay your bills, which can get hefty – very fast. Are you concerned yet? Read on.
Here’s a little quiz for anyone reading this who has never been injured in a car accident: who pays your medical bills if you’re injured in a car accident? Based on most of the phone calls I get, the meetings I take with new prospective clients (free consultations) and conversations I have with non-attorneys – most people think it’s the other guy’s insurance carrier. Wrong.
Even if you’re rear-ended by someone’s car as you’re stopped innocently waiting for the red light to change to green? Under New Jersey law, your insurance policy pays your medical bills, and that coverage is called Personal Injury Protection – PIP. New Jersey is a “pure no-fault” state – meaning that it never matters whose fault the accident was – it’s always your insurance that pays your medical bills.
“PIP protects you and your family from crushing medical bills”
So tell me this: if this PIP insurance is to pay your medical bills – and everyone knows that medical care costs are going nowhere but up – why do so many people opt for the minimal coverage available ($15,000)? Let me illustrate how silly this decision is. This is a real case in my office. My client was in a terrible accident at high speed on a highway in New Jersey, totally not his fault. He needed shoulder surgery. He needed pain management (epidural injections into his neck to ease the inflammation and help stop the pain) and then he needed surgery on his neck to fuse two vertebrae. There was more treatment, but you get the point. Can you imagine what the bills are like? They are well into six figures. Can you guess how much medical coverage he had on his policy? $15,000. He had no idea what the coverage was (what does personal injury protection mean?) and the choice he and his wife were given on line was to take the $250,000 in PIP coverage or save 16 to 33% by choosing the $15,000 option. Who doesn’t want to save money? But here’s the eye-opener: the difference between the $250,000 in medical expense coverage (PIP) and $15,000 was all of $60. Think of it – he could have gotten another $235,000 in coverage to protect himself and his loved ones from crushing medical bills – for $60 – that’s less than 17 cents a day!
There are other coverages in the auto insurance policy whose meanings are obscured – in my opinion purposely – by the insurance companies – to lead you to believe that they are not important. Insurance companies lobbied for and got statutory immunity for themselves, agents and brokers for negligently (again, my opinion) failing to inform you properly about what coverages mean and the comparative costs of different levels of coverage. They are allowed to entice you to buy lower coverage by giving you a percentage range you’ll save – they don’t mention the dollar amounts. So you are on your own. Be an informed consumer of insurance coverage, including auto insurance coverage. If you don’t know what you’re buying, you are not doing yourself or your family any favors. I know some people have to save wherever they can. But at very least know what you are giving up if you don’t buy better coverage – and find out how much better coverage would cost. In the example above, would you pay $60 for another $235,000 in medical bill coverage? I think most people would.
If you need information about what a coverage is, or what kind of coverage you should have, or what your coverage means to you after an accident, you can contact me (888-233-1272, email@example.com) and I’ll help.
To check on prices you can contact my agent, Rich Reiner (973-376-6810,Rich@ReinerInsurance.com). Rich told me recently he got a lower price for a policy than offered by the Gecko on line (you know the company I mean.) Rich has been placing my coverage and advising me for over 20 years.
Copyright Francis M. Smith, Esq.
Personal Injury Law in New Jersey