Car Insurance Personal Injury: Bodily Injury Insurance Coverage / How Does It Work

Car Insurance Personal Injury: Bodily Injury Insurance Coverage / How Does It Work

PIP stands for personal insurance protection (personal injury protection), and it is an extension of car insurance that covers medical expenses and, in many cases

, lost wages. It is often called “no-fault” coverage because its inherent comprehensiveness pays out claims agnostic of who is at fault in the accident.

If you have PIP insurance and are hurt in the accident, you can receive maximum benefits whether or not the accident was your fault. On top of medical bills and lost wages, PIP insurance can also cover expenses like transportation to medical appointments and lawn repair.

PIP insurance is mandatory in 13 states: The District of Columbia, Florida, Hawaii, Kansas, Kentucky, Massachusetts, Michigan, Minnesota, New Jersey, New York, North Dakota, Pennsylvania, and Utah

The states in which PIP coverage is available but optional are: Alaska, Alabama, Arkansas, Arizona, California, Colorado, Connecticut, Georgia, Idaho, Illinois, Indiana, Iowa, Louisiana, Maine, Mississippi, Missouri, Montana, Nebraska, New Hampshire, New Mexico, Nevada, North Carolina, Ohio, Oklahoma, Rhode Island, South Carolina, Tennessee, Texas, Virginia, Verman, Washington, Wisconsin, West Virginia and Wyoming.

What is covered by PIP varies for state-to-state, in terms of what each state believes is customary and reasonable? In Utah, for example, acupuncture is a permissible medical treatment under PIP, while in California it is not.

PIP is similar to Med Pay insurance in that it will cover injury costs stemming directly from the accident. The main difference is that PIP is actually more comprehensive and will even compensate you for lost wages. PIP insurance is, therefore, more expensive than Med Pay is.

These states chose to make PIP insurance compulsory in the hopes of limiting the number of lawsuits filed against at-fault drivers. While PIP has helped free up the courts to a certain degree, there has been a backlash of sorts from consumers who feel their right to file lawsuits were subverted by the laws. In response, each of the 12 states has subsequently written laws that allow drivers to bring lawsuits against other drivers in specific circumstances. PIP insurance is optional in the other 38 states.

In a nutshell, PIP insurance removes the question of blame from the car insurance equation. Each driver’s policy pays for damages to that driver based solely on his or her needs. Rate fluctuations are therefore based on the frequency and severity of your car damages, not whether you are — or are not — frequently at fault.

Bodily Injury Car Insurance Coverage: How Does It Work

Bodily Injury Liability (BI or BIL) insurance is one of the two forms of liability car insurance coverage that pays for any damages you caused other drivers. Most states require minimum limits of this coverage to demonstrate your financial responsibility on the road, but consumers can pay more and opt for greater coverage

How Much Bodily Injury Liability Coverage Should You Have?

You should get limits that match the number of assets you have, or the highest limits that you can afford. That’s because if your car insurance isn’t enough to pay for the damages you cause, the other driver may take you to court and sue for the remainder. If the judges rule in their favor, your assets will have to be liquidated to pay for the court damages. If you have limited assets – as in not a lot of money stored in bank accounts, retirement accounts or other funds – it’s likely that the other party will be willing to settle a claim for what the insurance company pays out. You don’t have much risk in a lawsuit when there are fewer assets to spare. On the other hand, if you are wealthy or have savings or investments, your financial risk, and exposure in an accident increase. If you pick low limits, more of your assets are exposed when an accident results in hundreds of thousands of damages. Because you’re exposed more, we recommend higher coverage limits – more of the claims brought against your bodily injury protection will be covered directly by your insurer. For more information on our liability limits, refer to our guide here. The next thing to consider is how affordable the car insurance policy will be.

How Much Does Bodily Injury Liability Car Insurance Cost?

Using quotes for a sample 34-year-old married man living in Indiana we can illustrate how price changes with different BI limits. Just remember, car insurance premiums are highly tailored to individual drivers’ profiles, so these numbers are only for reference. We’ll focus on how much it costs our driver to adjust from one limit to the next.

As the table below shows, our sample Indiana driver looking to increase his limits from 25/50 to 250/500 would pay $9 more a month, or $109 more altogether a year, for 10x the protection in Indiana. As drivers increase the amount of liability insurance protection, their premiums will increase at lower rates. For example, going from the state minimum of 25/50 to the next available limit results in a 34% increase in premiums for twice the protection. But once you have medium levels of bodily injury coverage, getting more protection will cost less – our driver would only have to pay 15% more moving from a 50/100 limit to a 100/300 limit. As we say above, opting for the highest limits may be a good idea if you have many assets to protect.

Bodily Injury Liability Limits (per person/per accident) Annual BIL Premium
25/50 $147
50/100 197
100/300 226
250/500 256

How to File a Bodily Injury Liability Claim

BI claims are considered “Third Party Claims”, which means you are filing a claim against the at-fault driver’s insurance company, or they’ll file against yours if you were at fault. In order to make sure a reasonable amount of your expenses are paid for, you will be required to document and keep record of the accident. Before making a claim, you should be prepared to provide:

  • Records of what happened
  • Photos of the scene and any injuries you sustain
  • Records of medical examinations and any bills from doctors and health care providers
  • Receipts of all related expenses
  • Proof of lost wages: If the injuries you sustain cause you to miss work and potential income, documentation of this from your employer is necessary

After making a claim:

  • You should hear back within a set time frame, as determined by your state and policy or get an explanation for any delay
  • Be prepared to discuss the incident. There may be conversations with a liability claim examiner or adjuster who may want clarification in order to assess the sustained injuries as well as the cost of the claim
  • Your right to collect compensation for your claim may have a time limit as well: you may be required to accept a settlement within the required timeframe as regulated by state law. You can either accept the offer or file a lawsuit if you do not agree with the settlement
  • Sign the release form only if you are ready: As part of the process, the insurance company will ask you to waive all future rights to pursue the person and company for further payments after settlement. You should take into account future medical bills and any expenses that might arise. Ask an attorney to review the settlement and release.

How Much is the Average Bodily Liability Claim Worth?

Unlike property damage liability claims, which average around $3,000 per incident, bodily injury claims tend to be significantly higher. In 2013, the average bodily injury claim was $15,443 as reported by ISO. Bodily injury claims tend to be relatively infrequent, however, with only 0.94% of policies experiencing a claim. Based on this data, most bodily injury claims fall within reach of the minimum coverage limits required by the states, with a few exceptions, such as Florida. This should not be used as the sole piece of information in determining your limit, however. There is a wide range of claim amounts that aren’t indicated by these numbers, ranging from the fortunate low ones to catastrophically high claims.

Year Average Bodily Injury Claim
2004 $11,640
2005 12,282
2006 12,907
2007 13,361
2008 14,067
2009 13,891
2010 14,406
2011 14,848
2012 14,690
2013 15,443
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