Do you know what your auto insurance coverage is? Do you know how much your limits are? If you do, you’re the exception. When I speak to groups and ask this question, usually less than 10 percent of the people raise their hands. The first step in optimizing your insurance coverage is to know what you already have.
Not all personal injury claims result from car accidents, but these accidents are by far the most common cause of injury claims. As a result, I spend a lot of time talking to people about auto accidents and auto insurance. Every state has some requirement for auto insurance. Because of this requirement, nearly everyone has some kind of insurance. However, I am continually surprised by how little people actually know about auto insurance. This blog series breaks down auto insurance into its most common components, explains what each coverage does, and advises you on the essential coverage you should make sure you have to protect yourself and your family.
The most common types of insurance coverage are a liability, uninsured or underinsured coverage, and personal injury protection (PIP). In addition, you can usually purchase comprehensive coverage, rental car coverage, roadside assistance, and many other options.
In Part 1 of this series, we discussed liability insurance. In Part 2 we discussed uninsured and underinsured motorist coverage (UM/UIM). Now, let’s take a look at personal injury protection (PIP) and Med-Pay coverage:
PERSONAL INJURY PROTECTION COVERAGE (PIP)
Where liability and UM/UIM require a showing of fault, which can often take months, or even years to establish, if you’ve been injured in an accident, you have medical bills that need to be paid now. PIP coverage addresses this problem. PIP is a no-fault medical payments coverage, which means you do not need to establish responsibility for causing the accident in order to get paid. Instead, you need only show that the treatment you are claiming was reasonable, medically necessary, and causally related to the collision, and the bills will be paid, up to the limits of your coverage.
Even if you were riding in someone else’s car when you were hurt, if that person doesn’t have PIP coverage, your PIP will cover you. Many insurance companies exclude coverage for injuries that take place while using mass transit, so if you frequently ride the bus, call your insurance company and make sure your medical bills will be covered if you are injured while riding a bus.
In a way, PIP coverage is like health insurance for injuries caused by an accident, only without deductibles, co-pays, preferred providers, etc. In addition to medical payments, your PIP provides coverage for lost wages, and some essential services such as housekeeping. In Washington, the most common amounts of PIP coverage are $10,000 and $35,000. I strongly recommend at least the $35,000 level of coverage.
In addition to PIP coverage, it is possible to get a second layer of no-fault medical payments coverage called “Med-Pay.” Unlike PIP, Med-Pay coverage does not cover lost income or essential services. It is limited to medical payments. However, having this extra layer of coverage could save you from a lot of stress if you suffer a serious injury with high medical bills.
Following a motor vehicle collision in Washington, your PIP coverage is primary. That means your insurance company has the first obligation to pay your accident-related bills. Only after your coverage is exhausted or denied does your Med-Pay coverage or your regular health insurance come into play.
Sometimes, during the course of your treatment, your insurance company will require you to attend an “independent” medical examination (IME). I usually refer to these as insurance medical examinations because all of the insurance companies routinely use the same few doctors for these examinations, and those doctors know where their bread is buttered. Those who don’t say what the insurance companies want them to say don’t keep getting this business for very long. As a result, IMEs often result in your auto insurance cutting off your PIP coverage. However, your insurance policy contains a duty of cooperation, and if you refuse to attend the IME, it will terminate your coverage anyway.
It’s a very good idea to have an attorney involved if your insurance company is demanding an IME. An attorney can set limitations or guidelines on the examination, and he or she can even arrange to have a medical professional or paralegal attend the IME to document independently exactly what is said and done.
At the conclusion of your claim, your PIP or Med-Pay carrier has a claim to be reimbursed for the payments it made. This claim is called subrogation. Because your recovery from the person who caused the accident includes all of your medical bills, part of this money has to go back to the insurance company that paid those bills. Fortunately for injured people in Washington, our Supreme Court has held that because the PIP insurer benefits from the lawyer’s work, it must also pay its share of the lawyer’s fees and costs. This ensures that the injured person is only paying an attorney fee on the money he actually received and the insurance company pays a fee on the medical bills the attorney recovers for it.
Some people are worried about using their PIP coverage because they don’t want to make a claim on their own insurance. Some of them are afraid their rates will go up. Others just don’t think it’s right that their company should have to pay for damages caused by someone else. As for the first concern, the criteria insurance companies use to make rate determinations are a mystery, but in general, your rates should not go up for an incident that was not your fault. Further, you have a duty under your insurance policy to report any accidents to your insurer, so you might as well get the benefit of the coverage you have paid for. Finally, when you make a recovery from the insurer of the person who caused the accident, your insurer will get paid back. We have insurance for a reason. If you are injured in an accident, you should use it.
If you have questions about PIP or Med-Pay coverage, or any other aspect of the personal injury claims process, please explore our website or just give us a call.