Thursday, May 8, 2008

A thumbnail sketch of PIP

In theory, PIP, or Personal Injury Protection, is a simple concept. It is Massachusetts' version of no-fault automobile insurance. Every insured driver's own insurance company will cover up to $2,000 in medical bills for that driver if he or she is in an motor vehicle accident, regardless of whose fault the accident is. If the driver doesn't have medical insurance, PIP will cover up to $8,000 in medical expenses. PIP can also cover lost wages and other expenses.

The counterpart to PIP is the "tort threshold", under which someone who has been injured in an automobile accident cannot bring a lawsuit against the other driver unless the injured person's medical bills exceed $2,000. If the person goes to trial and wins, the verdict will be reduced by the amount that was paid in PIP. That 's called the "PIP setoff."

There is also a scheme by which insurance companies reimburse each other for PIP payments, so that the insurer of the negligent party ultimately ends up paying. If X and Y are both injured in an accident and their respective insurers pay each of their medical bills through PIP, the insurers will decide who is at fault. If the insurers can't agree on who is at fault they will arbitrate the issue. If they decide, on their own or through arbitration, that X is at fault, X's insurer will reimburse Y's insurer the amount that Y's insurer paid on Y's behalf in PIP.

That's PIP in nutshell. In a future post I'll discuss what lawyers call "the PIP morass" (the complicated issues in this seemingly simple statute) and the related issue of why many top-notch personal injury attorneys can't answer seemingly basic questions about PIP.

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