Auto Insurance–Medical Payments Coverage

One area of auto insurance many policyholders don’t understand is “medical payments” coverage. In a standard auto policy, the insurer undertakes the obligation to pay all reasonable expenses incurred within one year from the date of accident for necessary medical, surgical, x-ray and dental services, including prosthetic devices and necessary ambulance, hospital, professional nursing and funeral services. In most policies, insurers offer medical payments coverage in $1,000, $2,000.00 & $5,000.00 increments.

If you choose medical payments under your policy, you and every passenger “occupying” your vehicle during an accident will be entitled to collect up to the maximum amount of medical payment coverage purchased—regardless of whether you are at fault, or not. These medical expenses, however, have to be incurred within one year and they must be causally related to the accident. In some cases, medical treatment extends beyond one year from the date of accident and these bills may be submitted up to three years after the accident date for payment or re-imbursement.

The Courts have liberally construed what it means to be “occupying”’ a vehicle for medical payments coverage to apply. For example, an insured was sitting on top of his automobile watching a parade and was injured by a thrown trinket or bottle and was permitted to collect under his medical payments coverage. The issue of “occupying” one’s vehicle can be a bit tricky and it advisable to consult an attorney if one believes he/she may fall into one of these grey areas.

Those with health insurance may ask “why do I need medical payments coverage if I have health insurance?” One of the simplest answers is that health insurance still requires costly deductibles and ever-increasing co-pay percentages. Medical payments coverage will cover these costs (provided you purchase sufficient coverage amounts). Moreover, medical payments coverage may be a source of funds to pay for your personal injury claim against an at-fault driver. If an at-fault driver is carrying the minimum liability limits required by law, there may not be enough funds to fully compensate you for all your medical bills, wage loss and pain and suffering. If the at-fault driver does not have sufficient insurance coverage, your auto insurance company will waive subrogation (right of re-imbursement) from the at-fault insurer for money spent on your bills.  In other words, more money in your pocket. Health Insurance companies are not so forgiving when it comes to their right of subrogation.

For those who don’t have health insurance, medical payments coverage is even more critical. I have read several articles that suggest people don’t need medical payments coverage, as the at-fault driver’s insurer will be responsible for the bills; this is utter nonsense. (Oddly enough, this article had ads for a major insurer all around the article). The other driver’s insurance company is not going to pay your medical bills up-front to help you build your case against them. They will ultimately look at settling your case once you are through with your treatment; but up to that point, you are on your own regarding how you will pay all your medical bills and diagnostic testing. And if the injuries are severe enough, treatment can drag on for months if not years. Health care providers will not wait around until your case is resolved. You will hear from their collection agency or lawyers long before that happens.

There are also instances where an insured may be able to stack medical payments coverage under two separate automobile policies. I will address this issue in a future blog, as stacking can also apply to underinsured/uninsured motorist coverage as well.

All in all, “medical payments” coverage is a valuable coverage to have and I recommend to my clients to purchase it along with “underinsured motorist” coverage. On a side note, always elect to have “regular” underinsured motorist coverage. Never let an insurance agent sell you “economic only” underinsured motorist coverage. Until next time, drive safely.

Alvin D. Hunt
Attorney-at-Law