In most car accidents, the passengers involved typically walk away a little banged up and shaken. But occasionally, a car accident can leave you suffering more serious injuries. With some of these injuries, like stiffness and bruising, you can often still perform your job. Other types of injuries, like broken bones or a concussion, mean you can’t work until you’ve healed.
If you’ve been unable to work at some point in your life, you understand how quickly money can get tight. And in an accident, that could very well be through no fault of your own. In that situation, you’d expect that car insurance would replace any lost income you’ve experienced - but will that actually happen?
Lost income replacement is rare
For most Americans, lost income replacement from injuries sustained in a car accident is simply not going to happen, whether or not the accident was your fault. If the other party was responsible for the collision, their insurance likely covers the cost of your medical bills to the maximum in their bodily injury liability portion of their car insurance. The sad fact is that their liability insurance doesn’t cover your lost wages.
You can try to recoup your lost earnings by suing the responsible party, but there’s no guarantee you’ll win. There’s also no promise they’ll be able to pay, even if you do win your case. The time and aggravation to sue someone may be more costly than your lost wages anyway.
Your own car insurance may also cover you for medical costs. Through comprehensive insurance and optional medical payment coverage, you’ll be taken care of by health care professionals. But your medical costs do not extend to your lost income at all.
Personal injury protection coverage pays lost income
In order to receive compensation for lost wages, your car insurance policy must contain an optional coverage called PIP insurance, or personal injury protection insurance. These policies are mandatory in one form or another in 13 states, while the others don’t require PIP coverage at all.
PIP coverage applies to anyone in the insured vehicle who can’t return to work immediately following an accident. There are limitations on the coverage that dictate the maximum payable amount per month as well as annually. The amount of PIP coverage purchased is selectable by the insured party to customize their insurance policy.
Who needs personal injury protection insurance?
PIP insurance is mandatory in the following 13 states:
- New Jersey
- New York
- North Dakota
Personal injury protection insurance is a great idea for any car insurance policyholder. It’s most important for those with no other source of income including entrepreneurs and contractors, and for those who can’t afford to be without an income for more than a few days.