How Do First Party Benefits (PIP) Work in Pennsylvania?

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Pennsylvania is one of the 12 no-fault states and one of 18 states where drivers can have personal injury protection (PIP), also known as no-fault insurance. If you are unfamiliar with the term "personal injury protection," it is likely because it is called "first party benefits" (FPB) when you apply for a quote in Pennsylvania. The two terms mean and cover the same thing. We take a look at the Pennsylvania's no-fault law and discuss how to file a claim, what you should expect and whether you should get the coverage.


Benefits of choosing FPB/PIP over traditional car insurance

Pennsylvania drivers can choose whether they want to have FPB/PIP on their policy. The difference is more than just a policy choice, however. The purpose of PIP is to avoid proving anyone is at fault for an accident. As a result, drivers can receive compensation swiftly and without arbitration, which is costly and time consuming.

When you opt for no-fault insurance, you are signing away your right to sue another driver for your injuries and emotional pain and suffering. There is no point in doing so if all of your expenses are hypothetically covered by your insurance. The only way a driver with FPB/PIP can sue another driver is if their injuries are severe in nature, such as disfigurement or a permanent disability. If you choose a traditional policy, one without FPB, you can sue other drivers for your damages, but you also leave yourself open to being sued.

The biggest benefit of a traditional car insurance policy (that is, without first party benefits) is the cost. FPB is likely to add at least $100 to your yearly premium. If you are accident free for five years, you could end up saving at least $500 by not opting for FPB.

Be aware, though, that if you are injured in an accident, the cost and hassle of suing another driver for compensation can be high. Pennsylvania is also a "modified pure comparative negligence" state, which means you are only entitled to compensation in proportion to your fault in the accident. So, if you were actually 75% responsible for the accident, you would only be entitled to 25% of the settlement.

When to choose health insurance instead of FPB

You should only consider skipping FPB coverage if your health insurance plan covers you completely in a car accident. In this case, your injuries can be taken care of regardless of who is at fault. You should call your health insurance provider if you're not sure if you are covered in a car accident.

Even if you do have health insurance, however, you should still consider adding a small amount of first party benefits, because, in Pennsylvania, FPB is deductible free. Most health plans, on the other hand, come with a deductible, which can be several hundred to several thousand dollars. If your injuries from the car accident aren't serious — perhaps just $2,000 worth of ambulance expenses and medical care — it would be cheaper to use your FPB, since you wouldn't have a deductible. Using your health policy may cost you a $500 deductible. So, while you may save $500 by not opting for FPB, you could end up spending that $500 on your health insurance deductible if you're in an accident.

What is covered by first party benefits in Pennsylvania?

What is covered by PIP/FPB? Pennsylvania FPB covers you for medical costs, lost wages, funeral costs and accidental death in the event of a car collision, regardless of who caused it. The coverage also extends to all members of your household and policy. Pennsylvania is different from other states, because you need to purchase the four parts of coverage separately.

Medical costs covered by FPB

Drivers who opt for no-fault coverage are required to carry at least $5,000 for the medical payments portion of FPB. You can buy coverage up to $100,000 and then buy even more coverage under "extraordinary medical benefits," up to $1,100,000. The following are all covered medical expenses:

  • Hospital services
  • Dental services
  • Surgical services
  • Psychiatric and physical rehabilitation costs
  • Diagnostic services such as X-rays
  • Ambulatory services

Economic costs covered by Pennsylvania FPB

"Work loss" is the part of PIP/FPB that will reimburse you for lost wages due to a disability stemming from your injuries in an accident. In Pennsylvania however, you need to purchase this coverage separately from the medical benefits part. If you choose to buy this coverage, you are covered up to the limits you purchase. You will be entitled to 80% of your weekly earnings, until you reach your policy limits. So, if you make $1,200 a week, your first party benefits would pay you $960. If you select $5,000 worth of coverage, you would be covered for about five weeks. This benefit also covers a "reasonable" amount — usually $12 to $30 per day — for household expenses, such as cleaning services and snow shoveling.

Funeral benefits of Pennsylvania PIP

The third part of FPB that you can purchase is burial benefits. If someone were to tragically die in an accident, this benefit would pay for the associated funeral costs. If you choose to purchase this coverage, you will be entitled to at least $2,500 and a maximum of $5,000. If you, the policyholder, is the person who is killed, then the people in your household or your next of kin would receive the benefits.

Death benefit

In Pennsylvania, you can also purchase an "accidental death" benefit. If someone insured under the policy dies from injuries caused by the car accident within 24 months of the accident, their next of kin or a representative would receive the full amount of the limits you purchased. Limits can be purchased at levels of $5,000, $15,000 or $25,000.

When and how to file a first party benefits claim in Pennsylvania

If you get into an accident while carrying PIP/FPB insurance, you do not have to wait to prove the other driver is at fault in order to receive benefits. You should file your PIP claim with your insurance company as soon as you are able to do so. Once you do, you will have to submit all of your medical bills, including a detailed list of the treatments you have received, directly to your insurance company. For lost earnings, you will likely need to submit a year's worth of your pay stubs to the insurance company. Your company may request that an independent doctor provide an evaluation to verify your injuries and treatment.

How much does it cost for first party benefits or personal injury protection in Pennsylvania?

Personal injury protection is rarely the cheapest part of your auto policy. By selecting different limits and coverages that best fit your needs, however, you should be able to keep your premium reasonable. The following table details how different first party benefit premiums look for a 30-year-old male driver.

Price of FPB/Price of policy
$5,000 medical/$0 work loss/$0 funeral$95/$1,1778
$5,000 medical/$5,000 work loss/$2,500 funeral$100/$1,783
$100,000 medical/$0 work loss/$0 funeral$240/$1,923
$100,000 medical/$50,000 work loss/$2,500 funeral/$25,000 accidental death$323/$2,006
Combined benefits ($277,500 aggregate)^$474/$2,158
^ Combined benefits is a lump sum of the four coverages.

Going with very high car insurance limits can make your premium considerably pricier. However, you likely won't need the high medical limits if you have health insurance that will cover your injuries in the event of an accident. FPB is a good supplement to your health insurance, but if your health policy will cover a car accident, you can save a good amount by not opting for the higher car coverage.

On the other hand, if your health insurance deductible is fairly high, opting for higher first party limits can be useful. Because your PIP benefits do not have a deductible, you can save on out-of-pocket costs you'd incur with health insurance. You will have to do some math to see if your yearly FPB payments will outweigh the potential of a costly health insurance deductible. Essentially, your five-year cost of FPB premiums should be smaller than the cost of your health deductible. For example, if your health insurance deductible is $750, your FPB premium shouldn't be higher than $150 per year.

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