My clients often tell me that they “don’t want to make any claims on their own insurance policy” because they “will increase their rates.” Like many things, this is an insurance tactic designed to scare people out of claiming what is rightfully yours. Let me develop more.
Under Texas law, everyone in the state must have Personal Injury Protection (“PIP”) coverage on their auto insurance policy, unless you expressly sign a denial or “opt-out” of this coverage. The state minimum requirement is $ 2,500, although many people have coverage of $ 5,000 or $ 10,000 (or sometimes even more, depending on what your auto insurance company offers). Importantly, under the Texas Insurance Code, it is illegal for your insurance company to increase your insurance rates, cancel your coverage, affect your credit, etc. for making these claims. Therefore, if you have this coverage, you will always want to use it.
PIP coverage is intended to reimburse you for two things: (1) medical bills you have already incurred or (2) lost wages (although it will only cover 80% of your lost wages). Additionally, Texas allows you to “stack” insurance benefits. For example, let’s say you have an accident and are taken to the emergency room where they incur a bill of $ 10,000.00. Let’s also say you have the standard $ 2,500 PIP policy through your insurance company. After treatment is finished, we send the same bill for $ 10,000 to both the defendant’s insurance company and yours. We get you paid $ 10,000 from this insurance company plus $ 2,500 from your own PIP coverage for a total reimbursement of $ 12,500. That’s right, they pay you $ 12,500 for a bill that was originally $ 10,000.
I always tell my clients the same thing: if you pay for this coverage every month on your premium, and if your insurance company can’t raise your rates for using it, why wouldn’t you use it? It’s free money falling from the sky. However, because it is free money falling from the sky, many insurance companies (and their agents) will deliberately try to convince you that you don’t need it because it “costs more.” Again, this couldn’t be further from the truth. The cost of this coverage is literally pennies on the dollar for what you get in return should you need to use it. Also, the best part is that this coverage is not at fault, which means that you are entitled to these benefits, whether you caused the accident or someone else hit you.
For these reasons, it’s a no-brainer to not only have this coverage, but to use it once you need it.
