Personal Injury Coverage is also referred to as PIP coverage or Minnesota No-Fault coverage. Minnesota Statute requires PIP coverage on every auto, personal or business, in Minnesota. Other states have different coverage requirements, such as medical payments, but Minnesota requires PIP. The purpose of PIP coverage is to reimburse the insured for certain economic losses resulting from automobile accidents.
PIP is made up of two different coverage buckets.
Bucket 1: Medical Expense Benefits
Reasonable expenses for necessary medical care, hospital room stays, continued treatment, rehabilitation and training.
Statutory Limit is $20,000.
Bucket 2: Non-Medical Benefits
Disability income loss due to the injury, replacement services for normal, non-income tasks around the house, funeral and burial expenses and survivors economic losses in the event of a death.
Statutory Limit is $20,000 with sub-limit maximums:
Disability income is limited to a maximum of $500 per week
Replacement services are limited to $200 per week
Death and survivors economic benefits are limited to $5,000 for funeral/burial services, $500 per week for survivors economic losses and $200 per week for survivors replacement services
Have you done the math? Income replacement of $500 a week is a maximum coverage limit of $26,000. However you total benefit has a cap of $20,000 so one you hit the maximum, you are out of coverage entirely. Can you meet your expenses on $500 a week if you are not working? Many people can’t. And if you receive any other non-medical benefits during the claim, those reduce that $20,000 maximum limit you purchased.
As noted above, your PIP coverage is set and limited by statute. The medical bucket limit of $20,000 has been in place since the statute was enacted January 1st, 1975 and has never been increased. The non-medical limit was $10,000 in 1975, was increased to $20,000 in 1985 and has stayed at that same limit for more than 30 years. These limits are extremely insufficient to accomplish today what the statute intended more than 40 years ago.
There are two ways you can improve your coverage considering the low statutory limits given.
If you own two or more vehicles, you can “stack” your PIP coverage. This simply means you are adding together your buckets by the number of vehicles you have insured with PIP coverage. For example, if you own three insured vehicles, and stack your PIP, you would have $60,000 in your medical expense bucket and $60,000 in your non-medical expense bucket. If you own four cars but one is parked with comprehensive only on it, you do not have $80,000 because one car does not have PIP on it at that time.
If you own only 1 car, you can still secure extra protection. You can increase just one or both of the coverage buckets listed earlier. You can increase your medical expense bucket above $20,000, usually in increments of $10,000. You can also increase your non-medical expense bucket above $20,000.
Remember that stacking your PIP also stacks (increases) those sub-limits as well. The disability income is now $500 times the number of insured vehicles. This could be $1,000, $1,500 or more per week as your maximum benefit. When you stack your PIP coverage, you stack the weekly benefits as well.
Remember that PIP pays first in an auto accident, regardless of who is at fault. If you rear-end me, and you are hurt, you turn it into your own auto insurance and get the PIP limits you bought. If you read-end me and I am hurt, I go to my own insurance first for the PIP limits I bought. If you drive off the road and hit a tree, and you are injured, you turn it into your own auto insurance and get the PIP limits you bought. If you are hit while you are walking as a pedestrian, the claim is first turned into your own policy for the limits you purchased. If you are a passenger in someone else’s car and they are involved in an accident, you would first submit this to your auto insurance for the limits you purchased.
This is the basis of “no-fault” coverage. As long as the injury was caused on, in, or by an auto, it does not matter who is at fault. The injured party will almost always submit the claim to their own auto insurance policy where they are an insured.
Stacking PIP, or increasing PIP limits, will add some premium to your policy, but you might be surprised at how little the premium increase is when compared to the benefits you get. You can’t ever rely on someone else to have the amount of coverage you or a loved one will need if there are injuries from a car accident. And if the accident was your own fault, then there is no one else to go to for additional coverage. The PIP limit you buy is the maximum available for recovery.
Contact us today to discuss ways to cost effectively improve the coverage you choose for your personal or business auto insurance needs.
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