When Full Coverage Isn't!
April 2001
I cannot tell you how often I interview a prospective client, who has been injured in an automobile accident, and hear that client say that the insurance policy on his or her own automobile carries "full coverage". This same client is always surprised and shocked to learn that such "full coverage" did not include one of the most important, and least expensive options - medical payments.
Medical Payments coverage (a/k/a "Med-Pay") on your automobile insurance policy is actually a fund of money available to pay any medical bills incurred by the driver and/or any passenger who is injured through the operation of your automobile. The amount of funds available to pay such medical expenses depends on the limits of coverage you select. Med-Pay is most often offered by automobile insurance companies in limits of $1,000, $2,000, $5,000 or $10,000 per person, which means that the full limits of coverage applies to each person who is injured in any given incident. Another interesting feature of Med-Pay coverage is that the limits apply to each car that is insured under your policy, which allows to you "stack" such limits. In other words, if you select Med-Pay limits of $2,000, and have three (3) cars insured under your policy, then you actually have $6,000 of Med-Pay coverage available to each person injured in your car.
Here's how it works: Assume that you are rear-ended while driving your car and, as a result, you are examined and treated at the Emergency Room of a local hospital. Let's assume, further, that your visit to the ER results in a bill of $300. Your health insurance company may pay 80% of such bill, or $240; leaving you with $60 to pay out of your pocket. HOWEVER, if you also have Med-Pay coverage, then your automobile insurance company will reimburse you the full $300.00, thereby resulting in a net "profit" to you of $240.
The most attractive, and significant, feature of Med-Pay coverage has to be the fact that payments under such coverage is in addition to, and not instead of, any benefits paid by your health insurance . This situation is due to the fact that Virginia has enacted an "anti-subrogation" law that prohibits a health insurance company from seeking reimbursement from the patient for medical bills it has paid, when that patient has had the same bill paid by Med-Pay coverage. There is also a very practical explanation for what appears to be a "double payment" for a single medical bill; namely, you own two separate insurance policies - health and auto - for which you pay two separate premiums. The health insurance policy will pay for medical bills regardless of why the expense is incurred, while the automobile Med-Pay coverage will pay only for medical bills that result from the use of your car. Therefore, in the limited circumstances where a medical bill is incurred because of an injury arising from the use of your automobile, that bill can be submitted for payment under both of your policies.
You will find that automobile insurance agents seldom, if ever, take the time to explain the advantages of Med-Pay. Often, the "full coverage" they offer for your automobile insurance will not include Med-Pay. Now that you know the benefits of such coverage, be certain to ensure that your coverage is, indeed, "full" with Med-Pay included in it.