We routinely recommend to clients that they buy as much auto insurance
coverage as they can afford. There is a good reason for this. Over the
years, we have seen many unfortunate cases where seriously injured people
have not been able to get their medical bills paid because there's
not enough insurance coverage to go around.
While we generally give this same advice today, there is one form of auto
insurance coverage we don't recommend. That coverage, called Medical
Payments or Medpay, has gone from a good idea to a bad one because of
policy changes made by insurance companies.
In Florida, virtually every auto insurance policy is required to contain
personal injury protection ("PIP") coverage. PIP coverage, sometimes
referred to as no-fault coverage, pays medical bills, lost wages, and
other benefits up to specified limits.
Medical payments is basically a supplement to the PIP coverage everyone
must carry. Because PIP covers only 80-percent of medical bills, medical
payments will cover the 20-percent difference and prevent you from having
out-of-pocket medical expenses. To some extent, it will also pay on top
of PIP coverage and provide more coverage for medical costs.
For many years, medical payments served this supplemental coverage function
well. However, it isn't what it used to be. There are now some real
drawbacks to this coverage which people buying insurance should consider.
PIP coverage has been substantially restricted by recent changes in Florida
law. In many cases, PIP will not provide the same level of coverage as
it did in the past. For example, all PIP policies in Florida used to provide
$10,000 in coverage. Now, the full $10,000 is only available in cases
involving serious injuries. For less serious injuries, there is only $2,500
Even though changes in the law were designed to apply only to PIP, many
insurance companies have adopted the same limitations for their medical
payments coverage. Insurance companies often stop paying medical payments
benefits at the same time as PIP benefits, leaving Florida accident victims
with unpaid medical bills.
Insurance companies have become more aggressive about trying to get amounts
they paid for medical benefits reimbursed from settlements. This can be
an unpleasant surprise for people who make injury claims.
Suppose you get injured in a car wreck, and your insurance company pays
under the medical benefits coverage. Several months later, you recover
a settlement from the at-fault driver's insurance company. When that
happens, your insurance company then comes to you with its hand out demanding
that you repay the medical payments benefits out of your settlement. At
least initially, some refuse to negotiate and push for 100-percent repayment.
We have seen this even in cases where the injured person was required
to pay an attorney to recover the settlement, or was underpaid because
so little insurance was available.
There are "fine print" terms and conditions in medical payments
coverage, and insurance companies are becoming more aggressive about enforcing
them. For example, insurance companies may require you to give a statement,
go to a doctor they choose, or provide many different types of records
before you can receive your medical payments coverage. Many people may
feel they are being harassed and may find that trying to comply with the
demands isn't worth it.
Every case is different, and there are some situations where people might
still want to have medical payments coverage. However, in general, it's
safe to say that this coverage does not help the way it once did. People
buying auto insurance might be better off buying more uninsured motorist
coverage for themselves, or spending the money on something else entirely.