First-Party Coverage

• There are three parties to a claim situation. The person who owns the insurance policy is the first party, the insurance company is the second party and someone outside the insurance relationship, often an injured person or his insurer, is the third party. Any claim that you make against your own insurance company is considered a first-party claim. Auto insurance commonly contains several kinds of first-party coverage, such as comprehensive and collision coverage for your vehicle. Any coverage that provides money for your injuries is also a first-party benefit.
  
  

Personal Injury Protection

• Personal injury protection (PIP) is considered a first-party, no-fault medical coverage that provides medical, lost wage and death benefits to you, your passengers, authorized drivers and people injured by your car. Some states are "no-fault" states, meaning the laws there restrict or prevent drivers from filing lawsuits against each other for accident-related injuries in exchange for immediate, no-fault PIP coverage. PIP is mandatory in no-fault states. Other states offer PIP to drivers but do not require it. Your ability to file an injury lawsuit in those states is largely dictated by whether you buy PIP.
  
  

Medical Payments

• PIP often comes with restrictions. Some states limit the amount of PIP your insurer must provide. Others restrict PIP benefits to a certain percentage of the total injury amount. In cases where you feel your PIP benefit may not be adequate, consider buying medical payments, or MedPay, coverage. This is an optional no-fault benefit that supplements PIP payments. If your state only provides PIP benefits for 80 percent of the total injuries, for example, MedPay benefits would cover the remaining 20 percent.
  
  

PIP and Health Insurance

• If you have health insurance, you may wonder why you need PIP. Both would pay for your injuries after an accident, so PIP may seem like a waste of money. However, your health insurance will not provide any benefit for lost wages if your injuries prevent you from working, or a death benefit in that circumstance. Additionally, your health policy will not provide for your passengers or people you hit with your car. If you have both health insurance and PIP, your PIP will be primary and you will not collect double benefits.