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Understanding the Medical Payments Coverage in Your Auto Insurance Policy

Understanding the Medical Payments Coverage in Your Auto Insurance Policy

What Is Medical Payment Coverage?

Medical Payment Coverage (commonly known as “Med-Pay”) is an add-on option to your automobile insurance policy which is intended to cover the reasonable medical expenses of the insured driver and/or the driver’s passengers incurred as a result of an auto accident. The amount of Med-Pay available is determined by the specific limits purchased by the insured. The Med-Pay policy add-on is discretionary in California and provides an additional source of funds for individuals injured in automobile accidents without having to establish liability. Nager v. Allstate Ins. Co. (2000) 83 Cal.App.4th 284, 290. Whether you cause an accident, or are simply involved in an accident caused by another driver, Med-Pay is available to the insured recipient and his or her passengers regardless of fault.

Med-Pay is offered by almost all automobile insurance carriers throughout the country. In other States, Med-Pay coverage is mandatory and known as “PIP Coverage” or “Personal Injury Protection (PIP);” For example, the States of New York, New Jersey and Florida have such a mandate.

As referenced above, Med-Pay only covers “reasonable medical expenses” incurred as a result of an auto related accident up to the limit purchased per person in your vehicle. For example, most auto insurance carriers deem the following as reasonable medical expenses:

  • Emergency Ambulance Transport
  • Emergency Hospital Services
  • Radiological Testing (X-Rays, MRI, CT Scans)
  • Surgical Procedures
  • Hospital Bills
  • Physician Bills
  • Pharmacy Bills
  • Chiropractic Care
  • Physical Therapy
  • Pain Management Care
  • Acupuncture Therapy

Typical Med-Pay limits seen in California are $1,000, $2,000, $5,000 and $10,000. Some larger carriers, i.e. Allstate and State Farm, offer Med-Pay Coverage of $100,000 or more per person.

Will My Auto Insurance Premiums Increase If I Use Med-Pay And Was Not At Fault?

No. In California and throughout the county, auto insurance carriers are prohibited from raising   your insurance premiums on account of utilizing your insurance benefits, including Med Pay coverage, if you were NOT AT FAULT in an automobile accident.

Can I Utilize Med-Pay If I Am Injured While A Passenger In Another Vehicle?

Yes. Your Med-Pay coverage travels with you including when you are a passenger in another vehicle or a driver in a rental car. It is also available if you are struck by a vehicle and injured while walking or riding a bicycle.

Why Include Med-Pay On My Auto Policy If I Already Carry Private Health Insurance?

In California, most private medical health plans have exceedingly high deductibles or co-pays the insured is responsible to cover. Med-Pay can be used to offset these costs and to pay for services that your private medical health plan does not cover.

Is My Auto Insurance Company Entitled to Reimbursement If I Utilize Med-Pay Benefits?

It Depends. If you are not found to be at fault in the subject accident, and you initiate a claim   against the third-party for bodily injury, your carrier may require you to pay back a portion of any Med-Pay you receive if you actually obtain a recovery from the third-party. Your carrier’s right to reimbursement is dependent on the language contained in your insurance policy, the total recovery amount obtained from the third-party and several other variables.

Under certain circumstances, your insurance company will waive their right to reimbursement of any Med-Pay they may be entitled to as a result of the “made-whole doctrine.” The “made-whole doctrine” usually comes into play when the insured is not fully compensated for his or her injuries by way of the third-party settlement amount. The “made-whole” doctrine states that a lien claimant   cannot assert its contractual right to repayment until the insured is fully compensated. See e.g., Plut v. Fireman’s Fund Ins. Co. (2000) 85 Cal.App.4th 98, 104; Hodge v. Kirkpatrick Dev., Inc. (2005) Cal.App.4th 540, 548. The nuances of the made whole doctrine vary by jurisdiction.

If you are found to be the at-fault party in the subject accident and obtain no recovery from a third-party, your carrier is not entitled to reimbursement of any Med-Pay benefits you receive.

What Are the Benefits of Adding Med-Pay to My Auto Insurance Policy?

  1. If you or your passenger(s) do not carry private health insurance and for one reason or another are not able to collect under the at fault driver’s third-party liability coverage, as mentioned above, Med-Pay will pay out for your reasonable treatment expenses incurred as a result of the accident. Even if you or your passengers carry private medical insurance, Med-Pay can be utilized to pay for medical costs incurred that are not covered by private insurance such as co-pays, deductibles, and the cost of prescription medications.
  1. Utilizing Med-Pay to pay outstanding medical billing can also prevent the initiation of collection action and subsequent negative credit reporting as the case against the third party can take many months, or years, to resolve.
  1. Med-Pay is extremely inexpensive. For example, an insured party can typically add Med-Pay coverage to their existing policy for only a few dollars a month. In most cases, the benefits greatly exceed the cost.