In order to hook you in as a prospective new client, auto insurers or agents in Massachusetts may try to quote you a rate for Massachusetts auto insurance with a PIP deductible claiming that they’re offering you a savings on your premium. Don’t do it!!

Insurers such as Progressive Insurance may have you fill out an insurance application online for Massachusetts auto insurance. There may be a question asking if you have health insurance. If you answer yes, the insurance application may even apply a PIP deductible by default.

What does that mean and why should you care?

In Massachusetts auto insurance, PIP (”Personal Injury Protection” Benefits) is the term used for No-Fault Benefits. These are insurance benefits that pay for accident related medical expenses and lost wages in the event you are injured in a car accident. PIP or No-Fault Benefits are paid by the insurance company for the car that you are driving or occupying at the time of a car accident even if you are the at fault driver. That’s why they’re called No-Fault Benefits.

In Massachusetts, PIP benefits are compulsory. The insurance company or PIP Carrier has to include them by law. However, you can claim a PIP deductible for yourself and your household members. Anybody else who is a passenger in your car or driving your car with your consent, will be covered by PIP in the event of a car accident resulting in injuries.

So what you ask? Here’s the so what. By claiming a PIP deductible you just let your auto insurer off the hook for up to $8,000.00 in the event that you are injured and disabled from work as a result of a car accident.

Who cares? You should. For a paltry savings of less than $50.00 (estimated cost), you waived your right to benefits that the insurance company has to sell you by law and which cover all non-household members who are injured in a car accident while occupying your car even if you claim a PIP deductible.

Taking a PIP deductible is a sucker’s move IMHO! Who really saves? Your insurance company — not you. For peanuts you’re giving your insurance company a gift to them that is potentially worth up to $8,000.

I seriously doubt that your insurance company or insurance agent explain the consequences of claiming a PIP deductible when you apply for insurance. Just like they don’t explain that you should have the maximum coverage if you own significant assets like a home. Just like they don’t explain that the optional coverage for BI, UM and UIM coverage should be the same amounts on your policy.

Complicated stuff? Consult a lawyer. Protect your legal rights.

Copyright © 2009 John J. Sheehan