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Do You Really Know Your Automobile Insurance Policy? – Personal Injury Protection (PIP)

The State of Maryland requires any person who is operates a vehicle upon the roadways of the State to be insured. There are many different types of insurance offered by many different companies licensed to sell insurance in the State. Knowing more about the types of coverage offered to you is something that should be considered before you are involved in any type of automobile accident.

One of the most common questions asked by an injured party after an automobile accident relates to how their medical bills and/or lost wages will be paid. One such source of payment is through Personal Injury Protection (often referred to as P.I.P). Maryland law states that Personal Injury Protection coverage is a mandatory offering by insurance companies when issuing policies in the State of Maryland. Personal Injury Protection coverage is a type of first party coverage, meaning that you purchase the coverage for your own benefit or for the benefit of the passengers in your vehicle. All vehicles are covered by Personal Injury Protection unless the owner has specifically signed a waiver of Personal Injury Protection when purchasing their policy. That waiver is not binding on the passengers in the vehicle, unless they either reside with a person who has waived Personal Injury Protection coverage or they elected, in their own separate automobile insurance policy, to waive Personal Injury Protection.

A person who is eligible for Personal Injury Protection benefits has a minimum of $2,500.00 in coverage to use as explained below. Some companies offer higher limits at an increased cost to the policy holder. It is not uncommon for insurance companies to offer $5,000.00 or $10,000.00 in coverage. It is important to note that just because a person has $2,500.00 in Personal Injury Protection coverage does not mean the insurance company will write the injured party a check for $2,500.00. The amount of coverage represents a MAXIMUM amount the insurance company will pay. Should you be entitled to a lesser amount, the insurance company may keep the unused portion of the policy.

Personal Injury Protection is used to pay for a person’s medical, hospital and lost wages. Maryland Code, Insurance §19-505(b)(2) sets forth what is covered under Personal Injury Protection policies:

“(i) payment of all reasonable and necessary expenses that arise from a motor vehicle accident and that are incurred within 3 years after the accident for necessary prosthetic devices and ambulance, dental, funeral, hospital, medical, professional nursing, surgical, and X-ray services;
(ii) payment of benefits for 85% of income lost:
1. within 3 years after, and resulting from, a motor vehicle accident;
2. by an injured individual who was earning or producing income when
the accident occurred; and
(iii) payments made in reimbursement of reasonable and necessary expenses incurred within 3 years after a motor vehicle accident for essential services ordinarily performed for the care and maintenance of the family or family household by an individual who was injured in the accident and not earning or producing income when the accident occurred.” Md. Code Ann., Ins. § 19-505 (West).

The purpose of the Personal Injury Protection statute and resulting coverage are to minimize the financial burdens placed upon a person injured in an automobile accident. Personal Injury Protection is a no-fault insurance, meaning that even if the accident was your fault, you can recover the benefits listed above (as long as you are not excluded by waiving coverage or for any of the exclusions listed in the statute). Most companies require you fill out an Application of Benefits in order to qualify for Personal Injury Protection. Completing the forms can be tricky and time-consuming. Also, the information included in the Application may be used against you in the future. That is why it is recommended that you seek the assistance of a competent attorney prior to completing the Application for Benefits.

The amount of Personal Injury Protection coverage available to you after an accident depends upon the amount of coverage that you chose at the time you obtained your insurance. While it may cost a few dollars more a month on your premium, having Personal Injury Protection available to you following an accident can not only save you money, it can save you the stress of having outstanding bills and creditors looming over you. That is why it is important to check with your insurance agent to ensure that you carry an adequate amount of Personal Injury Protection coverage before it is too late.


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