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No-Fault PIP Deductibles…Penny Wise/Pound Foolish

 

Auto_AccidentsIn our state (Massachusetts), Personal Injury Protection (PIP) is part of compulsory insurance, i.e. it’s mandatory. For any one Massachusetts car accident, this coverage pays up to a maximum of $8000 per person injured in the accident — no matter who is at fault — for medical expenses and lost wages.

 

What is a PIP deductible?

Even thought the coverage is mandatory, you can choose to exclude yourself, or yourself and household members, for some or all of the PIP coverage in order to decrease your insurance premium. The portion of each claim for which you agree not to be covered is called a “deductible.” But the important thing to remember here is that by choosing this deductible, you are agreeing to self-insure for that amount (i.e. pay out-of-pocket up to that amount) in the event of an accident.

 

What about Medical Payment coverage?

People who carry Medical Payment coverage might think choosing the PIP deductible makes sense for them…assuming that any claim normally covered by PIP would be covered by their Med Pay protection. But here’s the thing: Med Pay does not pay until after the PIP deductible is paid. So if you are in an accident in MA, you are responsible for your PIP deductible amount before any Med Pay funds are available.

 

What if the accident was the other driver’s fault?

Remember, PIP coverage is not contingent upon who is at fault in an accident. So if you choose the PIP deductible and are in an accident caused by another driver, you are still responsible for paying that deductible amount for medical expenses.

 

What’s the Bottom Line?

At the Cushman Insurance Group, we are committed to providing our clients with smart insurance coverage. That’s why we never recommend a PIP deductible. The nominal amount it saves in annual premium is never worth the thousands of dollars in exposure a client faces in the event of an accident.

 

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