Medical Payments Coverage (Med Pay) and Personal Injury Protection Coverage (PIP) are first party coverages, applying to the insured, the insured passengers and sometimes others. Med Pay is found in states that do not have No Fault laws in effect and PIP is found in states that do have No Fault laws in effect.
Med Pay will generally pay for reasonable medical or funeral expenses as a result of bodily injury when caused by an accident and sustained by the insured vehicle occupant(s) – named insured or family member (per policy definitions), non-family person(s) while occupying the insured vehicle or a pedestrian when struck by the insured vehicle. There are a number of exclusions to this coverage so be sure to read them!
The limit of liability for Med Pay is as stated in the Declarations. If you have, for instance, $10,000 Med Pay, that is the limit per qualified injured party for the subject incident. Note there is no wage loss allocation in this coverage. Further, there is no “double dipping” permitted. Most companies will demand reimbursement from you (subrogation) for the Med Pay expended on your behalf if you get a settlement from the at fault party’s insurance company that includes your medical bills. Further, Med payments will be deducted if your Uninsured Motorist or Underinsured Motorist coverage comes into play. Med Pay is designed to allow you to seek treatment and have it paid for but not to give you a financial windfall.
PIP is a coverage found in No Fault Law states. Remember, “No Fault” does not mean it does not matter who was liable for the accident. Those rules still apply. But PIP provides coverage for medical bills, wage loss, substitute services and funeral expenses and its purpose is to provide financial remedies to people who are injured in an auto accident (at fault or not at fault) so as not to suffer financial hardship waiting to sue as their only remedy, should that be the case. PIP coverage varies from state to state. The coverage is designed to provide the necessary benefits to keep the injured party “whole” with the ultimate goal to limit litigation. Does it work? Not sure. The injured party can still present a Bodily Injury claim or sue the at fault driver but there are various thresholds to be met and only parts of the claim can be subject to the claim/suit. Reimbursement of med bills are paid directly by the settling company to the injured party’s company by law. I believe this reimbursement is made whether there is a bodily injury claim presented or not.
Substitute Services provides payment for things the injured party cannot do while injured – like mow the lawn. PIP will typically also reimburse mileage to and from the doctor. Wage loss is per a chart and won’t be 100% unless, perhaps, the person’s salary is below the designated allowance.
Like Med Pay, the insured can buy greater PIP limits but usually the higher limits will only apply to those qualifying as named insured and family (per definitions). Others in the insured vehicle will get only the minimum limits per the state requirements.
With both Med Pay and PIP, pedestrians struck by the insured vehicle may be entitled to the benefits under these coverages.
Be mindful that whether Med Pay or PIP, these coverages are subject to all the definitions, terms, conditions and exclusions of the subject policy and, as the insured, it is your duty to read your policy and be familiar with all of it. If you are not clear, ask your agent or call your company representative. Assume nothing.