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Why stacking personal injury protection (PIP) insurance makes sense

On Behalf of | Mar 10, 2022 | Firm News |

Every Minnesota auto insurance policy includes mandatory Personal Injury Protection (also called “PIP” or “no-fault”) coverage. The basic maximum coverage is $20,000 for medical expenses and $20,000 for economic loss, including wage loss.

When the no-fault law was adopted in the 1970s, $20,000 of medical coverage was enough for nearly all injuries. Today, we sometimes see that amount completely exhausted before our client is even home from the emergency room.

If you own more than one vehicle, consider “stacking” PIP coverages. For a modest increase in your premium, you will be covered by $20,000 times the number of vehicles you insure. So, if you “stack” PIP coverage for three vehicles, anyone injured in one of those cars would qualify for up to $60,000 of medical and $60,000 economic loss benefits. That also means your weekly wage loss benefit would increase by $500 multiplied by the number of vehicles insured. For three vehicles with stacked coverage, that means up to $1,500 weekly.

Medical Bills

Stacking PIP coverage means more payments towards your medical bills by your insurance company and less money spent out of pocket towards medical insurance deductibles. Some medical insurance plans will not pay for some kinds of medical care. Your car insurance company will generally pay for whatever medical treatment you need.

Wage Loss

Stacking PIP coverage can be especially helpful if you are a higher income earner. A higher wage-loss benefit can help you maintain day-to-day finances as you recover from crash-related injuries. Your car insurance company is not required to pay you for your entire weekly gross wage loss, and remember that without stacked PIP coverage, each week’s wage-loss benefit is capped at $500. Minnesota law allows a reduction of 15% to your lost weekly gross income when calculating the wage-loss benefit you are entitled to. To figure out the maximum wage loss you can claim each week, you multiply your gross income by 85% (average weekly gross income x 0.85). Here are some examples of the benefits of stacking PIP coverage when it comes to lost wages:

  • Joe’s average weekly gross income is $900. He owns and insures two vehicles. He does not have stacked PIP coverage. He is in a car crash and suffers injuries that cause him not to be able to work at all for the foreseeable future. The maximum he can claim for each week of wage loss is reduced by 15%, leaving $765 ($900 x 85% = $765). Even though his claimed loss is $765, the maximum wage-loss benefit owed to him is $500. If he had stacked coverage with two vehicles, he would have been able to claim the entire $765 of weekly wage loss.
  • Mary’s average weekly gross income is $1,500. She and her husband each have a car, and they recently bought a car for their teenage daughter to drive, since she will soon obtain her driver’s license. Mary stacked PIP coverage for all three vehicles. Mary was in a high-speed crash, and she will not be able to work for weeks as she recovers. Her average weekly gross income is reduced by 15%, leaving $1,275 that she can claim. With stacked PIP coverage for three vehicles, her car insurance company will pay her the full $1,275 each week for wage loss. If she did not have stacked PIP coverage, her maximum weekly benefit would have been $500 per week.

    Understanding your rights after you are injured in a car crash can be challenging, and insurance coverage laws that affect those rights can get very complicated. We welcome calls to explain these insurance coverage issues. If you have been injured, we can help you map out a plan to maximize what you can recover from the various insurance coverages.