Should I take a PIP Deductible?
In short – NO! PIP or personal injury protection benefits are part of the limited no-fault system for motor vehicle crashes in Massachusetts. If you are injured in a motor vehicle crash, unless you die, suffer a fracture, lose a body part or significant function, or a sustain disfigurement, you must incur $2,000 in medical bills in order to file a claim for pain and suffering against the negligent party. See https://malegislature.gov/Laws/GeneralLaws/PartIII/TitleII/Chapter231/Section6D
The idea behind the $2,000 tort threshold is to limit claims and lawsuits where there has only been a minor injury.
But to provide some means of recovery, whether the injury is minor or not, personal injury protection coverage on your own policy provides you and your passengers (as well as pedestrians and bicyclists that you hit) up to $8,000 to address lost wages and medical bills (and sometime substitute child-care) regardless of whether you or the other driver was at fault. https://malegislature.gov/Laws/GeneralLaws/PartI/TitleXIV/Chapter90/Section34M
If you have a public health plan or an ERISA plan, PIP will pay up to $8,000 of medical bills. If you have private health insurance, PIP will pay the first $2,000 of medical bills, but will then also cover the portions of your bill that your health insurance doesn’t pay, eg co-payments. Often, hospitals or doctors will try to submit their bills directly to the PIP insurer for payment. But you may need that PIP coverage to address your lost wages. PIP will pay up to 75% of your lost earning capacity if a doctor has substantiated your inability to work. If you are living paycheck to paycheck, PIP benefits may be the only life raft that keeps you afloat immediately following an injury. Remember there is only $8,000 total in PIP benefits to address both medical bills and lost wages, however. Therefore, if you have no sick time pay, vacation benefits, or disability insurance, it is crucial to submit your doctor’s disability notes and earnings records to the PIP insurer as quickly as possible so you can get as much of the $8,000 for lost wages as possible.
Although the coverage is listed in the compulsory portion of your policy, you can take a deductible of up to $8,000, which would save you some money on the premium, but would obviously eliminate the coverage for you. If you have health insurance and a lot of sick time available at work, you may think taking the deductible is a good move. But there are significant drawbacks to taking the deductible beyond missing out on the initial PIP benefits.
When you are injured by a negligent operator in a motor vehicle crash, the liability insurer’s claims adjuster will evaluate your damages by reviewing your medical records and bills, lost wages, etc. Once the adjuster assesses the value of your total damages, he or she will then deduct the amount that you received in PIP benefits to come up with the offer of settlement (which is invariably too low and will need to be negotiated by your attorney).
A problem arises, however, when you have taken a PIP deductible. The liability insurer is allowed to take a deduction for PIP even though you have received no PIP benefits. This means that even after negotiations, you will never receive an offer that represents the full value of your damages.
If the case does not settle but goes to trial, if the jury awards you damages, defense counsel will then file a motion with the court to reduce the verdict based on the PIP benefits paid or the deductible. So whether you settle or go to trial, if you have taken a deductible you will never be fully compensated for your damages.
Thus after suffering through the injuries caused by the crash, you then have to suffer the insult of getting paid up to $8,000 less than what your claim is really worth. You may then even have difficulty paying your medical providers.
Moral of the story: don’t take the deductible!