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Does Auto Insurance Cover Medical Expenses?

How would you pay a $15,000 hospital bill if you were involved in an auto accident today? What would you do if you caused a serious injury to someone else? Unfortunately, paying a hefty auto insurance premium means nothing if you did not purchase the right coverage to pay for medical expenses. Whether you are injured or you caused injury to someone else, here is how your auto policy can help you pay for medical expenses one coverage at a time.

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Bodily Injury Liability

Most states require auto owners to purchase and carry Bodily Injury Liability (BI) coverage on their auto policy. This coverage pays for medical expenses when you have caused an injury to someone else, such as your passengers, pedestrians, or the occupants of the other vehicle. The medical expenses covered include medical bills, mileage to and from doctor’s visits, prescriptions, lost wages, and pain and suffering. A claim is resolved under the BI coverage through the payment of a one-time lump sum settlement in exchange for a signed release of claims, which releases the at-fault driver, owner, and insurance carrier from any further claims or legal action.

If another driver causes an accident resulting in your injuries, the BI coverage on the at-fault driver’s policy will pay for your medical expenses only after you have completed your full course of medical treatment. Until you have finished treatment and you can be reimbursed, you have to figure out a way to pay for the ongoing medical expenses on your own. This is where Personal Injury Protection and Medical Payments coverage can help.

Personal Injury Protection and Medical Payments

Personal Injury Protection (PIP) and Medical Payments (MP or Med Pay) coverage can pay for the medical expenses you and your passengers incur from an auto loss regardless of who caused the accident. PIP and MP can pay for medical bills, mileage to and from appointments, prescriptions, medical equipment, lost wages, essential services (help mowing lawn or cleaning house if incapacitated), death benefits, and funeral expenses. The extent of what is covered depends on state guidelines, the policy contract, and selected coverage options.

PIP and MP coverage also pays for your medical expenses if an auto hits you as a pedestrian.

You should consider that the payments under PIP and MP might be subject to reductions as dictated by state laws and auto contract. This means that the medical provider may not be paid 100% of the bill. The provider may accept the reduced payment, submit the rest of the bill to your health insurance or bill a balance to you to pay out of pocket.

If you as the driver are at-fault for causing the accident, PIP and MP coverage is your only option to pay for your medical expenses outside of health insurance.

No-Fault Laws

You may have heard of no-fault laws in certain states. No-fault laws dictate that you (the vehicle owner) have to carry a specific limit of PIP coverage on your auto policy, to pay for injuries to the occupants of your vehicle regardless of fault. In fault states, you are not required to carry or use PIP and MP coverage but have the option if you choose to. In no-fault states, you are required to use your PIP coverage first for loss related medical expenses, whether you want to or not. If you live in a no-fault state and you did not cause the accident, you are still owed a bodily injury claim in most cases.

Uninsured/Underinsured Motorist Bodily Injury Coverage

As an auto owner, you also have the option to purchase Uninsured Motorist Bodily Injury (UMBI) and Underinsured Motorist Bodily Injury (UIMBI) coverage. If you do not want these coverages on your policy, you are often required to sign paperwork rejecting the coverages.

UMBI applies when the at-fault driver does not have a valid BI policy in force for you to be able to settle your bodily injury claim. You can think of it as a safety net in the absence of the BI coverage. UMBI and UIMBI coverage works the same way as the BI coverage, except that the bodily injury claim is asserted against your own insurance policy.

UIMBI is applicable when the at-fault driver has BI coverage, but your bodily injury claim value exceeds the amount of BI coverage they have. For example, if the at-fault driver’s BI policy is $25,000 but your medical expenses are $30,000, you would look to your UIMBI coverage to satisfy the remainder of your claim.

Think About Your Needs

You as the consumer have an array of choices when picking auto coverage. These choices come with a cost but so does a peace of mind. Review and educate yourself about your auto policy today to make sure you are financially fit to assume the burden of today’s high medical expenses. More importantly, protect the physical and financial health of you and your family with an auto policy that works for you.