Vehicle insurance covers four main elements. These include liability, collision, uninsured motorist and medical payment. Most states require liability insurance and many drivers are already familiar with and understand collision and uninsured motorist coverage. Medical payment insurance can be confusing, however, and require further explanation to determine if this insurance is right for you.
Identification
The Insurance Information Institute defines medical payment insurance as a type of no-deductible, no-fault insurance. Medical payment insurance, also referred to as MedPay, covers the driver and passengers. It pays medical and funeral expenses for injuries or death resulting from an accident even if the driver is not at fault. Twelve "no-fault" insurance states require you to carry either medical payments insurance or personal injury protection (PIP) insurance, while in the remaining states this type of insurance is optional. The 12 "no-fault" states include Florida, Hawaii, Kansas, Kentucky, Massachusetts, Michigan, Minnesota, New Jersey, New York, North Dakota, Pennsylvania and Utah.
Types
Two types of medical payments insurance include straight medical payment and excess medical payment. Both policies provide the same coverage, but excess medical payments will only pay the expenses your personal medical insurance will not cover. Excess medical payments coverage is less expensive than straight and is an option to consider if you have good health insurance. Most insurance companies require proof of additional health insurance before you can purchase excess medical payment coverage instead of straight coverage.
Features
Covered expenses usually include hospitalization, X-rays, medical, dental and chiropractic. In addition, MedPay covers services such as ambulance, nursing and funeral expenses and prosthetic devices. Available coverage amounts depend on the insurance company, but in general, coverage can range from $1,000 to $50,000. According to Progressive Insurance, you cannot purchase medical payment insurance individually but must also maintain liability coverage on the vehicle. Monthly premiums for this insurance depend on the vehicle and coverage you select and can range from $5 to $25 or more each month.
Benefits
A major benefit to medical payments insurance is that it pays medical costs immediately. If the accident is not your fault, you do not have to wait for a settlement in order to begin paying medical costs. In this way, medical payments insurance can help protect your credit rating. This is especially important if you, or your passengers, do not have a separate health insurance plan.
Considerations
Insurance companies determine payment for claims using a "usual and customary" process, much like the process health insurance companies use. If they determine costs are above "usual and customary" limits, you may not receive full reimbursement. In addition, a three-year statute of limitations affects medical payments insurance. Car Insurance Rates explains the statute of limitations as a way for insurance companies to make sure claims are due to the accident and to better calculate their own expenses.
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