Should Personal Injury Protection Be Primary or Secondary for Medical Expenses?

It’s a question often asked of insurance professionals, particularly here in New Jersey. Should personal injury protection, more commonly known as PIP, be primary or secondary insurance? To begin with, it’s important to understand exactly what Personal Injury Protection is. PIP is a piece of your auto insurance policy that is in place to cover the medical expenses you may accrue after sustaining an injury in an automobile or associated accident. Depending on the type of coverage and policy you have, you may have the option to designate your personal health insurance provider as the primary source of payment for medical expenses stemming from an auto accident, making the PIP coverage associated with the auto insurance policy the secondary payer.

There are a variety of things to take into consideration when making this kind of designation. Firstly, there are statutory limits. In New Jersey the statutory limit for personal injury protection available through an automobile policy is $250,000. According to the Department of Banking and Insurance for the State of New Jersey, most drivers do purchase the complete $250,000 of PIP coverage, which is in fact higher than average when compared to other states. At LG Insurance, we recommend having the full amount available as a part of the automobile policy. Some insurance companies may suggest or include reduced PIP limits, lowering limits of liability, which then reduces the overall cost of the policy. While at first blush this may seem like a deal, we know that seeking cost reduction in premiums can lead to bigger, unfortunate expenses down the line.

In order for personal injury protection to be designated as a secondary form of coverage, you’ll need to have a qualifying medical insurance plan. If this is the case, and you are in an automobile accident, then your health insurance will act as your primary medical coverage for any associated costs, with your automobile insurance picking up any additional costs as your secondary insurance. While using your health insurance as your primary insurance with your automobile’s PIP protection as your secondary insurance is a way to reduce the overall costs associated with your auto policy, at LG we recommend that auto insurance be kept as primary, and that policyholders keep the $250,000 limit- especially in New Jersey.

Why do we recommend this? Simple. There are a variety of reasons, but the biggest one is this: the care that you can receive using the personal injury protection primary through the automobile insurance is better than that of your medical insurance. The reason we say that is based in large part on the limitations that many healthcare plans have regarding chiropractic and physical therapy, and in-network versus out-of-network practitioners. With your automobile PIP as your primary insurance, you have a broader range of medical solutions that will be covered by the insurance policy available to you.

For instance: many health insurance plans don’t have comprehensive benefits that cover visits to a chiropractor. If a patient wishes to receive chiropractic care, they often have to pay for it out of pocket. Automobile accidents frequently result in injuries that benefit from long term or ongoing chiropractic care- which PIP through automobile insurance will cover.

In addition to automobile coverage, let’s say you are a pedestrian or cyclist and you are hit by a car. Did you know that you can tap into your automobile policy’s coverage and utilize your PIP to help cover associated medical bills? We actually know about that from personal experience! After being hit by a car while riding a bike, and filing a claim with the auto insurance provider under the PIP policy, all medical bills were paid for at the time.

Another benefit to using the PIP under auto insurance as the primary insurance policy? Very high deductible health insurance. Rather than using the medical insurance, where a huge deductible must be met, using the auto insurance policy as primary means getting the coverage without shelling out thousands. It’s also important to consider that most people have their health insurance plans through their employers. With employment-based health insurance as your primary, there are additional risks. What if you are laid off? What if you change jobs? What if your company switches health insurance providers and the new plan doesn’t extend to automobile accidents? While there are also reasons to use the health insurance policy as a primary and allow the PIP to be secondary, at LG, as a business practice, we never reduce the $250,000 limit, and for good reason. We never want to be in a position where a client is facing the fallout from a horrific, traumatic accident, and we are explaining to them that they have limited benefits because they wanted to save 15% on their car insurance.

At the end of the day, it’s important that you make the selection that you believe will provide you with the best possible standard of care in the unfortunate circumstances of facing an injury after being in an auto accident. The highest standard of coverage is what you’ll want on your side to help you heal, and without having to negotiate whether your recommended care is covered. The simplest way to do that, we believe, is to make your PIP protection primary, and use your health insurance as your secondary provider.