When to file under PIP vs liability in no-fault states: cost, coverage and medical expense comparisons

Understanding whether to file a claim under your Personal Injury Protection (PIP) policy or pursue a traditional liability claim against the at‑fault driver is one of the most consequential decisions after a crash in the U.S. — especially in states that use a no‑fault system. This ultimate guide walks through the legal triggers, cost tradeoffs, medical‑expense mechanics, statutory thresholds, examples, and practical strategies for claimants and advisers. If you live in or were injured in a no‑fault state, read this before you sign releases, accept fast offers, or assume PIP will cover everything.

Table of contents

Quick primer: PIP vs liability — the core difference
Which states use no‑fault / require PIP (and variations)
When you must file under PIP (first‑party, fast access)
When you can (or should) step outside no‑fault and sue (liability)
Money: cost comparisons — premiums, out‑of‑pocket, and expected payouts
Medical expense mechanics: what PIP pays vs liability settlements/judgments
Practical examples (low, medium, catastrophic injury scenarios)
Interaction with comparative negligence, subrogation, and medical liens
Claim strategy checklist: documentation, deadlines, and when to hire counsel
State strategy notes and links for deeper reading
Quick FAQs and final checklist

Table of Contents

Quick primer: PIP vs liability — the core difference

Personal Injury Protection (PIP) is a first‑party benefit that pays certain medical and economic losses to you and your passengers regardless of who caused the crash. It’s designed to deliver quick payment for care and lost income without waiting for fault to be decided. (investopedia.com)
Liability (bodily injury) claims are third‑party claims you bring against the at‑fault driver (and their insurer). A successful liability claim can compensate you for medical expenses, lost wages, pain & suffering and other damages — often above what PIP will cover — but it requires either negotiation or a lawsuit proving the other party’s fault. (iii.org)

Bottom line: PIP is fast and limited; liability can be broader but requires fault and — often — meeting state thresholds before you can step outside the no‑fault system.

Which states use no‑fault / require PIP (and how they differ)

Not all PIP rules are the same. There are three broad approaches:

Pure/mandatory no‑fault: PIP is primary and the right to sue is restricted to serious injuries. States include Florida, New York, Michigan (reformed), Minnesota, Hawaii, and others. (investopedia.com)
Choice no‑fault: Motorists may choose either no‑fault (PIP) or traditional liability coverage; Kentucky, New Jersey, and Pennsylvania have forms of choice or partial choice. (iii.org)
At‑fault states with PIP requirements: Some states require PIP/MedPay for limited purposes but retain broader tort rights (variations exist).

Key state examples (minimum PIP / basic structure):

State (example)	PIP minimum / common rule	No‑fault type / notable rule
Florida	$10,000; 80% medical / 60% lost wages; 14‑day treatment rule	Pure no‑fault; strict threshold to sue. (coveragecriteria.com)
Michigan	Drivers choose PIP level (unlimited, $500k, $250k, $50k options after reforms)	Mandatory no‑fault with post‑2020 choice options and premium rollbacks. (michigan.gov)
New York	Basic no‑fault (often $50,000 of PIP / basic economic loss), optional APIP/OBEL	No‑fault with right to sue for excess damages under thresholds. (nylawnet.com)
Full list overview	See state comparisons (III / industry resources)	State minima and formats vary widely; consult state regulator. (iii.org)

(These examples illustrate structural variety — always check your state’s statute or regulator page for exact numeric limits.)

Main takeaway: PIP coverage levels, opt‑out rules, and thresholds for lawsuits differ materially by state — which changes whether PIP is sufficient and what legal steps are available. (iii.org)

When you must file under PIP (the “file with your own insurer” rule)

You should file a PIP claim when:

You’re in a no‑fault state that requires PIP and the accident falls into the PIP trigger (typically: you or your passenger sustained an injury in a covered motor vehicle accident). PIP is usually your first route for medical bills and certain lost income. (investopedia.com)
The injury is minor to moderate and projected costs are within PIP limits (e.g., immediate ER visit, short rehabilitation, relatively limited lost wages).
You need cashflow quickly for medical care or rehabilitation and cannot wait for liability negotiations.

Why PIP first?

Speed: PIP pays directly to you or the provider without establishing fault.
No litigation gatekeeping (except some states require early provider proof like “emergency medical condition”).
It preserves your ability to later pursue a liability claim if and when you meet statutory thresholds — but you must follow filing rules precisely.

Important procedural rules to obey (examples):

Florida: initial treatment within 14 days to qualify for full PIP; otherwise benefits can drop to a low statutory figure. Missing early treatment deadlines can be fatal to PIP reimbursement. (coveragecriteria.com)
Michigan: post‑reform, carriers must offer PIP options and provide disclosure forms — if you don’t affirmatively pick, default may be different; premium effects vary by choice. (michigan.gov)

Always: file PIP quickly, document care with contemporaneous provider notes, bills and treatment timelines.

When you can (or should) step outside no‑fault and sue (liability)

Filing a liability claim (against the at‑fault driver) becomes appropriate when one or more of the following apply:

Your injuries meet your state’s legal “threshold” to sue for non‑PIP damages (common thresholds: permanent/serious injury, significant scarring, substantial disfigurement, death, or medical costs above a threshold). Thresholds are statutory and vary by state. (iii.org)
Your medical expenses, lost earnings, and non‑economic damages (pain & suffering) likely exceed the PIP limits and any additional available first‑party coverage (APIP/MedPay), and you can reasonably prove another driver’s fault.
The at‑fault party’s liability limits (or their policy’s umbrella coverage) are substantial enough to make litigation worthwhile.
You have strong evidence of the other driver’s negligence and either your insurer or the at‑fault insurer fails to make a reasonable settlement.

Examples of legal thresholds:

Florida: you generally cannot sue for pain & suffering unless you meet the “serious injury” threshold (permanent injury, significant scarring, loss of bodily function, etc.). This restricts routine soft‑tissue claims but permits suits for severe injuries. (coveragecriteria.com)
New York: no‑fault gives basic economic loss protection (often $50k PIP); tort recovery is permitted for economic losses above statutory minima or for non‑economic damages when thresholds are met. (nylawnet.com)

Practical considerations before suing:

Cost vs benefit: litigation is expensive and time consuming; the expected net recovery (after attorney fees and expenses) must justify the choice.
Statutes of limitations and filing timelines: missing these deadlines can preclude suits (see your state’s limitation rules). For state‑specific timelines see Insurance claim statute of limitations by state: avoid missed deadlines that could cost you thousands.
Settlement leverage: having incurred substantial out‑of‑pocket medical costs and clear causation strengthens negotiating position with the at‑fault insurer.

Cost comparisons — premiums, out‑of‑pocket, expected payouts

Costs to consider when choosing between relying on PIP vs pursuing liability:

Premiums: No‑fault states often include PIP in base premiums. Choosing higher PIP (or unlimited PIP in Michigan pre‑2020 changes) increases premiums; opting to reduce PIP (where allowed) may lower premiums but increases exposure. Michigan’s 2020 reform explicitly allows choice among multiple PIP medical limits with mandated premium reductions for lower limits. (michigan.gov)
Out‑of‑pocket: If PIP limits are too low, you’ll pay out‑of‑pocket for care until a liability settlement or judgment pays the balance (if successful).
Time: PIP tends to produce faster reimbursements; liability settlements often take months or years.
Recovery potential: Liability suits can include pain & suffering, future lost income, and full medical expenses above PIP limits — potentially far larger than PIP payouts, but contingent on success and the defendant’s insurance limits.

Hypothetical cost scenarios (illustrative):

Scenario	Injury & expected cost	PIP outcome	Liability outcome (if successful)
Minor soft‑tissue	$3,500 medical, 2 weeks lost wages	PIP covers most; fast	Not worthwhile to sue
Moderate fracture	$40,000 medical, 6 months lost wages	May exceed PIP; PIP handles immediate bills, out‑of‑pocket until excess paid	Liability could recover full $40k + pain & suffering; judge/jury risk
Catastrophic (spine/brain)	$500k+ medical, long‑term care	PIP may pay part (depending on state/limits); huge gaps remain	Liability necessary for long‑term care claims; sue for full damages and future costs

Note: the liability recovery depends on the at‑fault driver’s liability limits and available assets (uninsured/underinsured motorist coverage may be crucial).

Medical expense mechanics: what PIP pays vs liability settlements/judgments

PIP covers a set list of benefits (states differ), commonly:

Reasonable and necessary medical expenses related to the crash (percentage caps may apply; e.g., Florida 80% up to the limit). (coveragecriteria.com)
A portion of lost wages (often capped).
Replacement services (household help) and limited death benefits.

PIP limitations and quirks:

Early treatment rules (e.g., 14‑day rule in Florida) can reduce or deny PIP if not followed. (coveragecriteria.com)
“Emergency medical condition” definitions in some states (Florida) are used to determine whether the full PIP limit or a statutory reduced figure applies. (coveragecriteria.com)
PIP may be coordinated with health insurance or Medicare; subrogation rights and lien issues can arise.

Liability recoveries can include:

All reasonable past and future medical expenses caused by the crash.
Past and future lost earnings and loss of earning capacity.
Pain & suffering, emotional distress, and loss of enjoyment of life (non‑economic damages).
Punitive damages (rare and state‑specific).

Because liability includes future damages and non‑economic losses, it’s often the only route to fully compensate for catastrophic injuries.

For more detail on how state law affects this calculus see: How state law affects your car insurance claim: no-fault vs fault regimes and the cost implications in every US state.

Practical examples (realistic, concrete)

Low‑cost soft tissue case — Florida

Facts: Fender bender, neck/shoulder strain; immediate ER visit ($1,200), two PT courses ($1,500), lost wages $1,000. Total $3,700.
Action: File PIP with your insurer — likely covers 80% of medical and 60% of lost wages up to $10,000. No reason to sue. Follow 14‑day treatment rule to avoid denial. (coveragecriteria.com)

Mid‑severity fracture — New York

Facts: Tibia fracture; $40,000 medical bills; 6 months lost income $30,000; limited PIP (NY basic often around $50,000).
Action: File PIP to pay immediate bills; evaluate whether to pursue excess liability for pain & suffering and full wage loss if damages exceed basic economic loss caps. Consult counsel if liability limits look adequate. (nylawnet.com)

Catastrophic brain injury — Michigan (post‑reform)

Facts: Severe TBI, lifetime medical & long‑term care estimated >$3M.
Action: Michigan PIP may be selected at unlimited or high limits by some policyholders; if your policy PIP is insufficient, liability suit against the at‑fault driver (plus possible UM/UIM claims) will be necessary. Michigan’s PIP choices and premium consequences should be considered proactively when purchasing coverage. (michigan.gov)

Comparative negligence, subrogation and medical liens — how they change outcomes

Comparative negligence reduces liability recoveries proportionally to your fault percentage. In modified comparative states (e.g., Florida’s 50% bar), being more than 50% at fault can prevent recovery entirely. Always document scenes and evidence to limit fault attribution. (louislawgroup.com)
Subrogation: If PIP or health insurers pay your bills, they often gain subrogation rights to recover payments from the at‑fault party’s insurer. This can complicate settlement negotiations — expect to allocate settlement proceeds between claimant and lienholders.
Medical liens: Providers or health plans may assert liens on any recovery. Effective negotiation with lienholders can preserve more of your settlement. See: State regulatory tips: how to use local consumer protection rules to contest a low car insurance payout for practical dispute strategies.

Claim strategy checklist — what to do immediately and within 30/90/365 days

Immediate (first 0–14 days)

Seek medical care and keep all provider notes, bills, and diagnostic tests. In many states, early care is a legal eligibility requirement for PIP. (coveragecriteria.com)
Report to your insurer: open a PIP claim and (if applicable) a property damage or liability report.
Photograph the scene, vehicle damage, injuries, and get witness contact info.

Short term (15–90 days)

Track all medical treatment and work absences; request itemized bills and treatment plans.
If your treatment costs are likely to exceed PIP, consult an attorney early to evaluate liability options and preserve evidence.
Investigate whether UM/UIM coverage is available via your policy.

Longer term (90–365+ days)

Reassess: Has your condition plateaued or become permanent? If so, thresholds for suing may be met (state‑dependent).
If you expect future care, get impairment/functional reports from specialists and life‑care planners for damages modeling.
Negotiate carefully; accept written settlement only after verifying medical liens and insurer releases.

If you want a state‑specific timeline and limit list, see: State-by-state guide to filing timelines, minimums and limits that change your claim cost and settlement options.

State strategy notes — tailoring your approach

Florida: Follow the 14‑day rule exactly; evaluate whether injuries meet the “serious injury” threshold to pursue liability and avoid accepting quick low offers. (See Florida statutes and guidance.) (coveragecriteria.com)
Michigan: Review your PIP election on policy purchase — that choice affects premium and coverage for catastrophic injuries. Use the PIP selection disclosure and compare costs. (michigan.gov)
New York: Understand Basic Economic Loss and optional add‑ons (APIP/OBEL). These can be layered to reduce gaps before pursuing a tort claim. (nylawnet.com)

For deeper state‑level tactics:

How state law affects your car insurance claim: no‑fault vs fault regimes and the cost implications in every US state — https://insurancecurator.com/how-state-law-affects-your-car-insurance-claim-no-fault-vs-fault-regimes-and-the-cost-implications-in-every-us-state/
PIP and no‑fault claims explained: what Florida, Michigan and New York drivers must know about coverage and costs — https://insurancecurator.com/pip-and-no-fault-claims-explained-what-florida-michigan-and-new-york-drivers-must-know-about-coverage-and-costs/
Comparative negligence and claims: how fault allocation changes payouts and premium impacts by state — https://insurancecurator.com/comparative-negligence-and-claims-how-fault-allocation-changes-payouts-and-premium-impacts-by-state/
How state-specific fault rules impact rental reimbursement and out-of-pocket repair costs after an accident — https://insurancecurator.com/how-state-specific-fault-rules-impact-rental-reimbursement-and-out-of-pocket-repair-costs-after-an-accident/

(Use the above for state‑specific research and to adapt local negotiation strategy.)

When to hire a lawyer — red flags and thresholds

Consider legal counsel if any of the following are true:

You face catastrophic injuries or projected lifetime care costs.
Liability is contested, or insurers deny or undervalue claims.
You risk permanent impairment, disability, or substantial loss of income.
You’re dealing with aggressive lien or subrogation claims that threaten your net recovery.
You need help quantifying future damages or negotiating with high‑stakes medical liens.

Expert tip: early counsel preserves evidence, handles complex liens, and often increases net recovery even after attorney fees in moderate and severe cases.

Quick FAQs

Q: If PIP pays my bills, can I still sue?
A: In many no‑fault states you can still sue if you meet the statutory threshold (serious/permanent injury or expenses exceeding statutory limits). Filing PIP does not automatically waive your right to sue, but follow statutory rules and retention of evidence. (iii.org)

Q: Does PIP cover vehicle damage?
A: No — PIP covers people (medical and economic losses). Vehicle damage is handled through collision, property damage liability, or your own repair coverage. (investopedia.com)

Q: What if the at‑fault driver is uninsured or underinsured?
A: Your UM/UIM coverage (if you have it) is the protection for uninsured/underinsured scenarios. Evaluate UM/UIM early if at‑fault coverage looks insufficient. See state guidance for UM/UIM rules.

Final checklist — what to do after the crash (one‑page)

Seek immediate medical care; document everything (provider notes, xrays). (0–14 days critical in many states.) (coveragecriteria.com)
File a PIP claim promptly with your insurer and preserve claim numbers. (investopedia.com)
Photograph scene, injuries, vehicle damage; get witness info and police report.
Track all expenses and lost wages; keep paystubs and employer statements.
Consult an attorney early if injuries are moderate to severe, if PIP limits will be exceeded, or if liability is disputed.
Research your state’s tort thresholds, statute of limitations, and PIP opt‑out rules (if any). See: Insurance claim statute of limitations by state: avoid missed deadlines that could cost you thousands.
If offered a quick settlement, verify the amount covers billed medicals, outstanding liens, future care, and non‑economic harm — and get legal review before signing.

This guide gives the framework for deciding whether to rely on PIP (first‑party) or to pursue liability (third‑party) claims in no‑fault jurisdictions. The right path depends on your state’s statutes, the severity and permanency of injuries, available insurance limits (including UM/UIM), and real cost projections for future care. For state‑specific procedures and negotiation tactics, consult the linked state and strategy resources above — and if in doubt, get a local attorney involved early.