PIP Coverage - Some Things to Know
New Jersey is one of many states that have a Personal Injury Protection (PIP) system in place as part of your automobile insurance coverage. The purpose of PIP as part of comprehensive reform was to lower auto insurance premiums, although it has not necessarily worked out that way.
When you purchase a policy of auto insurance, you must choose whether your health insurance carrier (assuming that you have one) or your automobile carrier will be primarily responsible for your medical coverage if you are injured in a car accident.
Do not make this decision lightly. There are pros and cons to both selections. If you choose your car carrier, you will be offered several levels of coverage from $15,000 per person per accident to $250,000. This coverage comes with a deductible of $250 and a co-pay of 20% on the first $5,000 of bills. This may be better or worse than your health insurance coverage.
While choosing your health insurance carrier as primary will reduce your PIP premium, the trade off is that your health insurance carrier may have a lien on any subsequent lawsuit that you bring against a third party for the injuries that you sustained if your health plan is a self-funded ERISA plan. That means that you would have to pay back your health insurance plan out of any settlement that you might receive. Generally, there is no re-payment obligation to your auto carrier.
Therefore, as the knight said to Indiana Jones in the last of the trilogy when Indiana had to choose the goblet - Choose Wisely!!
