If you’re involved in a car accident, personal injury protection (PIP) pays for the medical services and some other nonproperty damages you or your passengers may need afterward. PIP applies regardless of who’s at fault in an accident.
What does personal injury protection cover?
PIP is designed to protect you against the cost of more than just medical services. Coverage may include:
What doesn’t personal injury protection cover?
Any damage to personal property or injuries sustained by people in another vehicle aren’t protected under PIP. Comprehensive, collision and liability coverage are necessary to cover the cost of damages to your own property or another person’s property and medical expenses.
Coverage varies depending on your insurance company, but typically includes:
You when you’re driving your car
Your passengers when you’re driving your car
Anyone driving your car with permission
You when you’re riding in another car
You while you’re out walking or cycling
How much does personal injury protection cost?
You may be able to purchase personal injury protection for around $10 – $15 per month. However, like any other car insurance coverage, the cost of PIP will depend on your personal driving history, where you live, the car you drive and even your credit score among other factors.
Why should I buy personal injury protection?
You might need to buy PIP if you live in Quebec or Manitoba. But it could still be a good idea even if it’s not required.
If you’re involved in a car accident, your health insurance will cover you for most of your primary medical needs. But you may not be covered for other expenses that stem indirectly from the accident.
For example, health insurance doesn’t usually reimburse you for lost wages, while PIP does. PIP may also help cover your health insurance deductible. You might want PIP coverage especially if you frequently drive with passengers who could hold you responsible in the case of an accident.
How much will PIP pay?
The amounts and policy limit your PIP insurance will pay depends on where you live. For example, in Quebec, a standard PIP policy will cover up to $50,000 in personal injury and property damage claims outside of Quebec. In terms of income replacement component of PIP, Manitobans will have up to 90% of any lost income covered, up to a maximum annual income of $98,500.
Personal injury protection in action
You’re involved in a side-impact car collision, and your arm is now broken. You’re anxious because you’re the only one in the family who drives your kids to school. Fortunately, PIP could pay for the cost of hiring a nanny, who transports your kids to school while your arm heals.
What are the provincial and territorial minimums?
Every province and territory has different minimum car insurance requirements. Between coverage limits and types of insurance, be aware of the minimum requirements where you live before getting on the road. There are two general approaches the government takes towards claims coverage: No-fault and at-fault. Personal injury protection is either mandatory or recommended in no-fault provinces.
All provinces in Canada enforce some form of no-fault car insurance. When you have no-fault coverage, each person in an accident is covered by their own insurance company, regardless of who caused it and the insurance company investigates and decides who caused the accident. Many of these types of policies require personal injury protection. For example, both Quebec and Manitoba require PIP in their basic policies. Ontario, on the other hand, only recommends that you add PIP for additional coverage.
How is no-fault coverage different in each province?
The difference between how each province handles no-fault coverage really comes down to whether or not you can take someone to court. For example, Quebec has comprehensively adopted no-fault coverage, which means insurance companies cover all payouts related to their client, and you can’t legally sue someone for damages beyond what the insurance company has covered. Conversely, Alberta accident victims will still be covered by their insurance company up to a specified amount, but still have the right to sue the other driver for further compensation due to financial losses, pain or suffering.
In an at-fault system, each insurance company pays for damages according to the degree of fault of each party. If you are found to be completely at fault, you may not receive any payout from your insurer. This type of coverage is optional in Saskatchewan.
How do I buy personal injury protection?
If you’re in a province or territory that requires or recommends PIP, your current insurer will offer it. Contact the company and ask for more details. If you have the option to buy insurance from a private company, don’t be afraid to shop around for the best price. Each company has different underwriting methods, so your quotes can vary significantly from company to company.
Does PIP come with a deductible?
PIP comes with deductibles. The deductible is what you’ll pay before your insurance company will pay a claim. You’ll choose how high you want it to be when you’re buying insurance. To decide, check what your health insurance covers and consider how much you’d want to pay out of your own pocket. The higher you set your deductible, the lower your insurance premiums will be.
Personal injury protection can cover you for costs that your health insurance doesn’t pay for. It’s also required in more states than medical payments coverage is. Compare car insurance policies with PIP to find the best deal for you.
Frequently asked questions about PIP
Insurance companies want to make a profit. They want to make sure you’re paying them more than they’re potentially paying out on your behalf. To do that, they’ll assess how risky you are to insure.
Many factors go into determining your insurance premium. These include your age, your gender, your driving history, the car you drive and more. For example, teenagers tend to get into more accidents than drivers ages 25 or older, and some cars are safer to drive than others.
Chelsey Hurst is an associate editor at Finder. She loves empowering people to make better financial decisions, primarily in the life insurance and banking fields. Chelsey has received a Bachelor of Science in Biology and Chemistry, followed by a Master of Science in Chemistry, and has numerous awards for research communication. Chelsey enjoys tutoring, cooking and taking long walks in nature.
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