Why does PIP have to be reimbursed?

Posted Friday, April 22, 2011 by Ed Harper

Personal Injury Protection is insurance coverage for your own medical treatment, wage loss, and loss of services. You pay a premium for this coverage. The insurance is primary for a motor vehicle collision for health care benefits. However, PIP benefits are to be reimbursed to your own insurance company if you recover a settlement/verdict against the at-fault company. The idea is based on an injured person should not receive double recovery – or receive compensation twice for the same damage.

Thus, if you recover from an at-fault insurer, after you have received PIP benefits, your insurance company will request reimbursement through subrogation – or the right to be reimbursed. Jurisdictions vary with how they handle subrogation. In many states, the subrogated carriers can go directly to the at-fault insurer and get their money and exclude the injured person. Other states allow the injured person to collect funds, creating a common fund, and then the subrogated carrier must share in the costs and attorney fees which allowed the reimbursement in the first place.

It is always a benefit to the injured person to have PIP insurance. However, the idea of subrogation is complicated and there are many potential potholes to be avoided. You should contact an experienced personal injury attorney to discuss these matters.

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