Law Offices of Fogam & Associates, LLC

The Basics Of Personal Injury Protection (PIP) Coverage In Maryland And Why You Should Never Waive It

The goal of this Special Report is to provide you with a basic overview of Personal Injury Protection (PIP) coverage in Maryland, and explain why it is not advisable to waive this coverage as part of your automobile insurance coverage. Therefore, after reading this report, you should know what PIP is, who and what is covered by PIP, how PIP can be waived(knowingly or unknowingly), and why it is not advisable to waive this part of your automobile insurance policy.

PIP Coverage

PIP is a part of most automobile insurance policies in Maryland. Under Maryland law, PIP is required unless expressly waived by the insured. PIP is considered a “no fault” insurance coverage. This is because the insured who opts for PIP coverage, would be covered after an accident whether they were at fault or not. Because it is paid by the insured’s own insurance company, it is also referred to as a first party insurance coverage. Although PIP is not mandatory in Maryland, the law does require insurance companies to offer it to the insured who may accept or waive it. The minimum PIP coverage is $2,500. Of course, a policy holder may decide to purchase more than this minimum PIP coverage.

Persons Covered By PIP

PIP covers the insured as well as any passengers (guests in the car). PIP also covers the insured’s family members living in the household, permissive users of the insured’s vehicle, and pedestrians who are involved in an accident with the insured’s vehicle when the insured was at fault. For example, X insures his vehicle and has PIP coverage of $2,500. X is involved in an accident while carrying Y and Z as passengers. X, Y and Z will each be entitled to $2,500. However, if Y or Z owns a vehicle that was insured in Maryland and PIP was waived in their insurance policy, they will not be entitled to PIP coverage after this accident. Also, as an example, if X’s car hits a pedestrian, the pedestrian may be covered by the PIP aspect of X’s vehicle (as well as the liability aspect of the policy). However, if the pedestrian owns a vehicle that is insured in Maryland and had waived the PIP part of his policy, he will not be covered by X’s PIP.

Under Maryland law, a PIP application must be filed within 1 year of the date of accident. Therefore, a claimant who does not bring her claim within this time period will not be eligible for PIP benefits thereafter.

What PIP Covers

PIP covers medical bills, and 85% of any loss income. This coverage is only within the policy limits. For example, an insured who was involved in an accident, has PIP coverage of $2,500. His medical bills are $3,000 and his lost income is $1,000. PIP will pay only $2,500. Therefore, $2,000 will not be covered by PIP. PIP also covers only income that was lost from an employment that existed at the time of the accident. PIP would not cover potential lost income.

An accident victim who is covered by PIP can actually end up being paid twice for the same medical bills or lost income. For example, if you have PIP coverage, and were involved in an accident that was not your fault, your PIP will pay your medical bills and lost income up to your policy limit. However, the insurance company of the liable party, will also pay both your medical bills and lost income.

Waiving PIP Coverage

As afore-stated, although insurance companies are required to offer PIP, the insured is not obliged to buy PIP. The insured may decide to waive the PIP aspect of their policy. Maryland law requires that this waiver be signed. This signature may be done electronically. PIP cannot be waived over the telephone. If your insurance company tells you that your PIP was waived, request proof that this waiver was signed by you. We have handled cases in which the insurance company claimed that PIP was waived, but could not prove that our client personally signed any waiver. In these cases, we threatened litigation and compelled the insurance companies to pay. Also know that the fact that you were not paying your premium in and of itself does not constitute a waiver.

Why You Should Never Waive PIP Coverage

  1. An obvious advantage of having PIP coverage as part of your automobile insurance policy is that, if you were involved in an accident that was your fault, and suffer injury, your PIP coverage will pay your medical bills and lost income up to the PIP limit.
  2. Your PIP can augment the compensation that you receive after an accident that was not your fault. For example, you have a PIP coverage of $2,500. You are involved in an accident that the other party is at fault. Your medical bills amount to $1,650 and your lost income is $1,000. Your PIP will pay you $2,500 which will cover your medical bills and 85% of your lost income ($850.00). However, you will still be able to claim all your medical bills and lost income from the insurance company of the party who was at fault. Furthermore, if your employer had used your “holiday pay” to pay you during the time you were out of work because of the accident, you will still recover the lost income and keep your holiday payment.
  3. PIP coverage can actually help you settle a case that otherwise would go to court because the compensation being offered is inadequate. As an illustration, imagine that you are involved in an accident that is not your fault. Your medical bills amount to $2,500. Your PIP would pay this amount. However, you will also demand compensation from the liable party. You demand for compensation from the party at fault’s insurance company will necessarily include not only the medical bills but also noneconomic loss (pain, suffering, inconvenience etc.). Let’s assume that the liable party offers $5000 to settle the case. The fact that your PIP has paid off the medical bills, can enable you to accept this offer to settle the case. However, if you did not have PIP, your medical bills of $2,500 would have to be paid from the offer of $5000 leaving you with only $2,500 as compensation for your non-economic damages. This may be inadequate and compel you to take the case to court for a more reasonable compensation. This can be costly and time consuming.

Our office has settled many cases instead of litigating them because the clients had PIP coverage. On the other hand, we have had to litigate certain minor impact automobile cases, because our clients’ policies did not carry PIP, and the offer that the liable parties’ insurance companies made to settle the cases, if accepted, would not have reasonably compensated our clients.

Therefore, it is important to understand the PIP coverage aspect of your policy, and advisable not to waive it.
This Special Report is intended to provide information about the topic. The information contained herein is provided solely for informational purposes and does not create a business or professional relationship with the Law Offices of Fogam & Associates, LLC or any of our individual attorneys, or affiliates. This should not be construed as legal advice. Each person’s legal needs are unique. Laws change frequently, and it is possible that some of the information in this report may no longer be true at the time of reading, or may not apply to someone in your jurisdiction. You should consult with an attorney familiar with the law in your jurisdiction and your particular situation before making specific legal decisions.

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