“Personal Injury Protection” (also known as “PIP”) is coverage purchased through your automobile insurance. PIP covers medical expenses and 80% of lost wages as a result of injuries sustained in a car accident. Texas law provides that PIP must be made available in the minimum amount of $2,500 per person, but you can purchase more coverage if you wish. PIP will cover you as well as any passengers in your vehicle.
In Texas, PIP is automatically included in any personal automobile insurance policy unless the coverage is expressly rejected in writing. Likewise, even if PIP does not appear on your policy, you will have the minimum coverage ($2,500 per person) unless your insurance company can produce a signed written rejection of the PIP coverage.
However, do not mistake PIP for “Medical Payments” coverage (also known as “Med-Pay”). On the surface, Med-Pay and PIP look similar. But there is one major difference. With Med-Pay, your insurance company has a right of reimbursement if you receive a separate settlement. PIP has no such right of reimbursement. For example, let’s say you are injured in a car accident which is the other driver’s fault. If you have medical expenses of $2,000, your PIP coverage will reimburse you for those medical expenses. You can then submit those same medical expenses to the other driver’s insurance company. If the other insurance company agrees to pay you a settlement (for example, $4,000), then you would not have to reimburse the PIP benefits that you previously collected from your insurance company. However, if you had Med-Pay coverage instead of PIP, then you would have to reimburse your insurance company the $2,000 you previously collected in Med-Pay benefits. That is why many insurance companies and their agents tend to push Med-Pay coverage instead of PIP.