Should I take a PIP Deductible on my Massachusetts Auto Insurance Policy?

In our opinion, No. As everyone knows, in Massachusetts in order to register and drive your car, you are required to at least purchase certain auto insurance coverages and limits. The Massachusetts (Personal) Automobile Insurance Policy provides coverage for accidents and losses which result from the ownership, maintenance or use of motor vehicles. One part of compulsory (or mandatory) coverage is Personal Injury Protection Benefits (PIP for short).

What is PIP?

PIP benefits are no-fault auto insurance benefits that provide coverage for:

  • reasonable and necessary medical and funeral expenses incurred within two years of the accident;
  • lost wages of up to 75 percent of the injured person's average weekly gross wage; and
  • replacement services paid to someone outside of the injured person's household to perform necessary services that the injured party would have otherwise performed if not for his or her disability resulting from the accident.

No-fault means that these insurance benefits are available regardless of who is deemed responsible for causing the accident.

PIP benefits will cover up to $8,000 of medical expenses (or $2,000 of medical expenses if you have health insurance). For additional information on the amount of PIP coverage for medical expenses please see: “What is PIP (Personal Injury Protection)?

Why is it Not a Good Idea to Take a PIP Deductible?

As stated above, PIP coverage is mandatory in Massachusetts. Although PIP coverage is compulsory, you are able take a deductible of up to $8,000. What does this do? It will reduce the amount of your annual premium on your auto insurance policy. Sure, this sounds good at first glance, but let’s look at it in a bit for detail.

Taking a PIP deductible will eliminate the PIP coverage for you in the event you are injured in a car crash. I’m sure some of you reading this are thinking: “So what? I have health insurance to cover my medical bills.” Taking a PIP deductible, however, creates significant disadvantages to you if you are hurt in a car accident.

When you are injured in a car crash caused by a negligent driver, you can pursue a claim for damages against the other driver’s auto insurance company. When you finish treatment you (or your personal injury attorney) will submit a demand for settlement.  The claims adjuster will review your medical record and bills to evaluate your damages in order to determine the value of your accident case.

After the claims adjuster has valued your case, he or she will take an offset in the amount of PIP benefits paid on your behalf. This is standard for all auto accident cases in Massachusetts. The problem with an accident case where the injured party has taken a PIP deductible is that other driver’s insurance adjuster is allowed to take a deduction for PIP even though you haven’t received any PIP benefits. 

In short, this means that you will never receive a settlement offer that represents the full value of your damages. Let’s look at an example:

On a bitter cold day in February, you are driving home to Framingham from Worcester. You take the Mass Pike. While driving on the Mass Pike another car is negligently speeding and spins out of control crashing into you causing you to strike the Jersey barrier. You suffer serious injuries in the accident that require medical treatment.

In this example, you have elected a PIP deductible. So, your auto insurance company doesn’t pay any PIP benefits for your medical expenses. But, you have health insurance that pays your bills. At the conclusion of your medical treatment your medical bills total $10,000. When you try to settle your case, the other driver’s insurance adjuster values your case at $15,000 ($10,000 for medical bills and $5,000 for pain and suffering). The problem is that the adjuster will take an offset by what PIP would have paid had you had PIP coverage. That means the adjuster will reduce the value of your case by $8,000. So, the value of your personal injury claim is now $7,000 ($15,000 - $8,000).

This means that you will not get the full compensation you should have received because after settling your case, there may not be enough money left to pay any outstanding medical bills. Additionally, in some situations you may have to reimburse your health insurance company or other medical lien holders for the medical bills they paid related to the accident. In that case, you will also likely not have enough to cover the reimbursement or lien.

So, although taking a PIP deductible sounds good at first, but it can have a serious negative effect on your personal injury claim if you are seriously hurt in a car accident.

Get More Information on Massachusetts Accident Cases

If you, or someone you know, has been injured in an accident in Massachusetts you should consult with an experienced personal injury lawyer. Feel free to call us at (508) 879-3500 or contact us online. Our legal team will answer your questions and evaluate your case for free. It might be the best decision you make.

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