Medical Payments: An Auto Insurance Coverage You May Not Want

Medical Payments: An Auto Insurance Coverage You May Not Want

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. These include:

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 available.

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.

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