Here’s a quiz. Out of the following car insurance coverages, which one is least understood?
- Bodily Injury liability
- Property Damage Liability
- Uninsured/underinsured Motorist Bodily Injury
- Uninsured/underinsured Motorist Property Damage
- Med Pay
- Personal Injury Protection
- Towing and Rental
If you’re like most car owners, there may be a few coverages listed above that you don’t understand, but for someone who has dealt with thousands of car insurance customers (that would be me), I’ve found that virtually no one understands the benefits of Med Pay.
My intention here is certainly not to make me look smart or car owners to look uninformed, it’s simply to point out that auto insurance companies and many agencies do a poor job of educating their customers.
In an attempt to educate the public, here are 5 things you should know about Med Pay coverage on your auto insurance policy.
1. Med Pay only Covers an Insured Person
Your Med Pay coverage is considered first-party coverage and not third-party coverage like bodily injury liability. This means that it will only cover the drivers listed on your policy, passengers in your car, or someone using your car with your permission. Your Med Pay will also cover you if you are a passenger in another vehicle or if you are a pedestrian and struck by another vehicle. Med Pay never covers the driver of the other vehicle that is involved in the accident with you. Med Pay covers medical expenses only and will not pay for pain and suffering or lost wages.
2. Med Pay is similar to an Accident Plan that Follows the Insured
Med Pay will cover the drivers listed on your policy when they are driving the insured vehicle, driving any other vehicle with permission, or hit by another vehicle as while a pedestrian or riding a bike or using public transportation.
3. Med Pay is considered No-Fault Coverage
Like Personal Injury Protection (PIP) Med Pay is considered a no-fault coverage. This means that the insurer will not require evidence of liability before paying a claim. If you live in a no-fault state and are required to carry PIP, Med Pay is a good solution for extending PIP limits. This, way if you are in an accident and end up exhausting your PIP benefit, you can file under your Med Pay for unpaid medical expenses.
In states like Florida which allow you to elect a large deductible to reduce your PIP premium, you could fill that deductible gap with Med Pay and still save money since Med Pay is very inexpensive. The only exception that comes to mind would be the state of Michigan where there is no limit on PIP for medical expenses.
4. Med Pay is required in Some States
Although almost every state requires vehicle owners to carry liability insurance to protect other drivers, there are some states that require car owners to carry med-pay as well. If your car is registered in any of the following states, you must carry Med Pay coverage:
The good news is that with most insurers, med pay is a very affordable coverage and can be purchased with lower limits than bodily injury or property damage liability.
5. Medical Payments will pay in addition to Your Health Insurance Coverage
If you are in an at-fault accident and not in a no-fault state, you will have to depend on your health insurance to pay for your medical expenses. The problem here is that most health insurance policies have deductibles, copays, and coinsurance that typically must be paid out-of-pocket by the insured.
For example, if you are injured in an at-fault accident and require medical care that amounts to $10,000, it’s likely that your insurer will only pay 80% of your medical expenses thus leaving you having to pick up up the balance of $2,000. If you have med pay coverage on your auto policy, it would pay the remaining $2,000 or up to the limit of the coverage you selected if less than $2,000. You cannot, however, collect under your med pay coverage and under another coverage that would pay your medical expenses.
If you are not at-fault in the accident, your insurance company would likely subrogate against the at-fault driver’s insurance company to be reimbursed for any payment made under your med pay coverage.
How much does Med Pay Usually Cost Per Month
Like other coverages a personal auto policy, your cost for Med Pay will depend on the underwriting data regarding the drivers listed on your policy and the type of vehicle you are insuring. We believe the rates you pay for the benefits you receive having Med-Pay on your policy make it one of the most affordable coverages you can purchase.
Here is an example of the monthly premiums that would be charged for a 30-year old driving a Toyota Camry:
|Coverage Limit||Allstate||Esurance||GEICO||Progressive||State Farm|
It’s interesting to note that Progressive Insurance Company charges (in this example) charges more than $28.00 more per month for $25,000 in med pay coverage than State Farm charges.