UNDERSTANDING YOUR MASSACHUSETTS AUTO POLICY: A REVIEW OF THE PERSONAL INJURY PROTECTION DEDUCTIBLE
PIP is a part of every Massachusetts automobile insurance policy and works to help injured passengers and drivers of the vehicle pay the first $8,000 of their medical bills and lost wages. This coverage is no-fault, which means that it applies even if you, or your driver, is at fault for the crash. For example, let’s say you were driving too fast, skid off the road, and hit a telephone pole. Would PIP cover your first $8,000 in medical bills and wages? Yes! You and your passengers would be able to apply for PIP benefits. Your passengers would also be able to pursue a claim against you for negligence. PIP is excellent insurance coverage that helps many people get medical attention without having to reach into their own pockets.
What could go wrong? Well, the Massachusetts legislature has altered the law regarding this mandatory PIP coverage to allow automobile insurance companies to offer a “deductible” up to the $8000 limit required by law. This has the unfortunate effect of completely nullifying PIP. In turn, this may allow insurance companies who are private, for-profit businesses to offer lower premiums as they will no longer need to pay any claim for PIP coverage under the policy. Both the insurance company and the insured save money. But not all savings are worth the eventual cost to you.
The PIP deductible applies just like health insurance company deductibles. What does this mean? Let’s look at an example. Ann, a resident of Foxboro, MA is driving home after having just finished her first week at her new job as a pharmacy technician. She is on her way to her parents’ home to have dinner and celebrate when she is struck from behind by another vehicle. After inspecting the damage and calling the police, Ann goes to the hospital, is discharged that night. The next day, Ann pays $120 out of her own pocket and sees her primary care doctor the next day who tells Ann she needs to stay out of work for the next 4-6 weeks and that she needs to see a physical therapist and may possibly need an MRI. Ann returns to her car and begins to sob as she asks herself “Oh my goodness. I don’t have health insurance, how am I going to pay for these medical bills? What about all of the time I am going to miss from work?” If Ann has a Massachusetts auto insurance policy, she is in luck, as her insurance company will pay for the first $8000 in her medical bills and lost wages through a special insurance coverage known as Personal Injury Protection or “PIP”, for short. With this protection, Ann will be able to continue to see her primary care physician, make an appointment with a physical therapist or orthopedic and obtain that expensive MRI test in addition to begin receiving payments for her lost wages.
However, If Ann had elected a deductible for her PIP coverage, this would mean that Ann’s automobile insurance company would not be required to pay any medical bills or lost wages until she meets her $8,000 deductible. Even if Ann were to reach into her own pocket and pay the first $8,000 of her medical bills and then look to her insurance company for any additional benefits, they would deny her claim. You see, Ann’s $8,000 deductible is the same as her PIP coverage limit. This results in Ann not being able to get any additional help from her insurance company. Ann’s insurance company has essentially neutralized this legally required insurance coverage.
In shopping for car insurance, Ann may have been attracted to purchase the cheapest option she could find, not knowing what she was giving up. The difference per month could have been minimal for someone such as Ann.
To make matters worse for Ann, the law in Massachusetts allows the at-fault driver at trial to ask a judge to reduce any verdict by the amount “paid” by Ann’s insurance company to Ann. This includes the medical bills and lost wages that were applied to Ann’s deductible.
For example, were Ann to sue the at-fault driver, “Tim”, and get a verdict from a jury of $5000 for medical bills, $3000 for lost wages, and $6,000 for pain and suffering, the judge, by law, would find that Ann’s car insurance company had already paid her medical bills and lost wages amounting to the $8,000 and adjust the verdict to make it so that Ann would only be able to recover the $6,000 for her pain and suffering. In the end, Ann would get her $6,000 check from the Defendant, but her $5,000 in medical bills remain her responsibility and she was never reimbursed for her lost wages. In the end, Ann is negative $2,000, even after having won at trial.
PIP helps many residents of Massachusetts get the medical care they need and helps pay lost wages to allow injured people to pay their bills. The PIP deductible circumvents this protection in exchange, oftentimes, for a marginally lower insurance premium. If you are shopping for an automobile insurance policy, don’t always go for the cheapest option as you may not fully understand what coverage you are really giving away.
For questions about your insurance policy or the PIP Deductible, please feel free to call any of Massachusetts licensed attorneys from Rob Levine & Associates.