What Is the Difference Between PIP and Liability Coverage?

Quick Answer

  • The key difference between PIP coverage and liability coverage is who the policy covers.
  • PIP applies to your medical expenses arising from a car accident, no matter who’s at fault.
  • Liability coverage covers someone else when you cause an accident that injures them or damages their property.
A woman wearing an orange sweater is holding her neck and using her phone with a car accident in the background.

Liability coverage and personal injury protection (PIP) coverage are two common types of auto insurance. While nearly every state requires liability insurance for all drivers, only a handful of states require PIP coverage. In other states, PIP can be added as extra coverage or simply isn't available.

The key difference between liability coverage and PIP coverage is who benefits from it. Liability coverage pays for expenses that result from property damage or injuries suffered by someone else in an accident that's your fault. PIP (also called no-fault insurance) covers your medical expenses no matter who's at fault in an accident. It also might cover lost wages if you're unable to work after a crash. PIP can supplement an injured person's health insurance.

Neither type of coverage is the same as comprehensive and collision coverage, which kicks in when your car has been damaged in an accident (collision) or when a non-collision mishap occurs, such as the theft of your vehicle or damage caused by hail.

What Is Liability Insurance?

Almost every state—and Washington, D.C.—requires all drivers to carry liability coverage. New Hampshire is the lone exception; it mandates that some, but not all, drivers carry liability insurance. Liability coverage pays for injuries to people (bodily injury liability) or damage to property (property damage liability) that you cause.

  • Bodily injury liability coverage applies to injuries that you (the policyholder) or anybody listed on your policy causes to someone else in a car accident. It may cover expenses such as hospital bills or lost wages for an injured person or legal bills if an injured person sues you.
  • Property damage liability coverage applies to damage the policyholder or another covered driver causes to property that belongs to someone else. For example, the property may be a car, utility pole, fence or building. The coverage might pay for someone else's car to be repaired or replaced, for instance, or for someone's damaged fence to be fixed.

States set their own minimum amounts of bodily injury liability and property damage liability coverage. Coverage amounts usually are shown as three numbers, such as 25/50/10. In this case, the numbers refer to a maximum of $25,000 in coverage per person for bodily injuries, $50,000 per accident for bodily injuries and $10,000 for property damage.

The typical requirement for minimum liability coverage is 25/50/10, but some industry experts recommend $100,000 in bodily injury coverage per person and $300,000 per accident for more protection.

In some cases, you may want to buy additional liability coverage that exceeds the minimum amounts to help prevent the seizure of assets, like your home, if you lose a lawsuit filed against you by someone after a crash you caused.

The cost of liability coverage varies depending on several things, such as how much coverage you buy, as well as factors like your driving record, age and gender.

What Is PIP Coverage?

PIP coverage helps pay for your medical expenses, lost wages or funeral expenses related to an auto accident, regardless of whose fault the accident is. PIP might cover you as well as passengers in your car, and it might even cover you if you're hit by a car while you're walking.

Depending on where you live, PIP coverage is either mandatory, optional or not available. According to the Insurance Information Institute, 12 states require PIP coverage: Delaware, Florida, Hawaii, Kansas, Massachusetts, Michigan, Minnesota, New Jersey, New York, North Dakota, Oregon and Utah.

The cost of a PIP policy may range from $50 to $200 a month. This depends on the amount of PIP coverage you purchase, as well as factors such as your age and the type of car you drive.

What's the Right Kind of Coverage for You?

Laws in 49 states and Washington, D.C., require motorists to carry liability coverage. If you're caught without proof of this coverage where it's required, you might face penalties like fines, suspension of your driver's license, loss of your vehicle registration or even jail time.

As for PIP, it may be required by law in your state, be optional or not be available at all.

If your car is leased or financed, the lender may require you to maintain comprehensive and collision coverage on top of any coverage mandated by your state. If you own your car outright, comprehensive and collision coverage is optional.

When weighing how much auto insurance to purchase, consider whether you could afford to pay out of pocket beyond your coverage limits to cover medical treatment or repair bills. Furthermore, liability coverage can help cover legal bills and court judgments. You likely want to protect your money and other assets if you're forced to pay legal costs and a court judgment against you.

How Can You Save Money on Auto Insurance?

No matter what type of coverage you decide on, experts recommend obtaining quotes from several auto insurance companies so you can compare price, coverage, discounts and other details. Be sure to check out the Experian insurance marketplace, which enables you to do comparison shopping for auto insurance.