Injuries are an unfortunate outcome for many motor accidents, and as such, car insurance comes with ways to make sure you can pay for medical costs. The three parts of car insurance concerned with health are bodily injury liability (BI), medical payments and personal injury protection (PIP).
In Texas, PIP and BI are mandatory, however you cannot have PIP and Medical Payments on the same policy.
So what’s the difference between the two?
Med Pay Coverage
If you are involved in an accident, Med Pay may cover your expenses for medical, surgical, dental and chiropractic treatments that are considered necessary and reasonable. Some of these services include ambulance transportation, hospitalization, X-rays, nursing care, prosthetics and funeral expenses. If you already have health insurance or HMO coverage, you may not need to add Med Pay coverage to your insurance.
Med Pay is not a substitute for regular health insurance; it covers you only in the event of an accident. Some companies offer $25,000 or more in Med Pay coverage. Keep this in mind when it comes to your insurance needs.
Personal injury protection also provides coverage for medical expenses as the result of an accident. However, PIP insurance covers more than Med Pay. Additional expense coverage includes physical and occupational therapy and rehabilitation costs, psychiatric expenses and other professional health services. PIP also offers insurance coverage for wages lost from work, other reasonable non-medical or work related losses and a death benefit.
You need to check your policy for the exact benefits included in your PIP plan. In some states, PIP coverage is mandatory. In other states, you must either accept or reject the coverage. You cannot be covered by both Med Pay and PIP insurance; you must select one of the two plans if you are interested in the protection.
Under Texas Law:
Personal Injury Protection is coverage you purchase with your auto insurance policy that covers medical expenses and lost wages as a result of injuries sustained in a car accident.
PIP is required under Texas law. The Texas Insurance Code provides that all policies of automobile insurance issued in Texas must provide for PIP coverage for a minimum of $2,500 per person, unless rejected in writing by the insured. If you choose not to carry PIP coverage, then the insurance company is required to obtain your signed rejection of the PIP coverage. Therefore, unless you rejected PIP, then you would be entitled to the minimum coverage even if you were never charged a premium for it.
Minimum Coverage. Texas law requires that PIP coverage be provided at a minimum of $2,500 per person. You may carry more coverage if you like.
What if I’m at fault in the accident? PIP provides “no-fault” coverage. This means that you are entitled to PIP benefits regardless of fault in the accident.
Does PIP cover medical bills and lost wages? PIP covers reasonable and necessary medical bills and 80% of your lost wages.
Do I have to re-pay my PIP benefits if I get a settlement? No. Texas provides that PIP has not right or subrogation or reimbursement in the event you get a settlement for your personal injuries. That means that you can collect medical benefits on your PIP coverage and also submit those very same bills as part of your injury claim. “Subrogation” is explained in more detail below….
What if I’m at fault in the accident? PIP provides coverage to you even if the accident was your fault. This is called “no-fault” coverage.
Medical Payments Coverage (Med-Pay) operates differently than PIP. Med-Pay is not mandated by Texas law. Additionally, Med-Pay coverage may be issued in any amount: $500, $1,000, $2,000, etc. There is no state mandated minimum. Although Med-Pay also provides no-fault coverage, it only covers medical bills and does not cover lost wages.
However, there is one major difference between PIP and Med-Pay that can make a big difference in your case. Unlike PIP, Med-Pay coverage is entitled to subrogation and reimbursement rights.
Subrogation (http://www.dmv.org/insurance/subrogation.php) refers to the right of an insurance company to get reimbursed in the event you make a settlement with a liable third party.
Consider this example:
Let’s say you are injured in a car accident and have $5,000 in medical expenses. You also carry $2,500 in PIP coverage on your auto policy. Once you are done treating and are released from your doctor’s care, your lawyer will submit your case to the other driver’s insurance company as well as your own for PIP benefits. If you settle your case for $7,500 with the other driver’s insurance company, you can also expect to get another $2,500 from your policy under the PIP coverage. Likewise, your total recovery is $10,000.
However, if you had Med-Pay coverage, then your insurance company would be entitled to reimbursement of the $2,500 in Med-Pay benefits. In the example above, if you collect the Med-Pay benefits of $2,500 and also enter into a settlement for $7,500 with the other driver’s insurance company, you would not have $10,000 in total funds to work with. You would have to account for reimbursement of the Med-Pay benefits, thereby leaving you with a total recovery of $7,500. In the end, you just paid premiums for Med-Pay coverage and received no real benefits from it at all. This is the most important part of Med-Pay coverage that your agent may not clearly explain to you.
If you find yourself in an accident and have questions about your coverage, call us to learn more about how we can help you or to set up a free consultation.
Reyes Browne Reilley is a Dallas, Texas, based Martindale-Hubbell AV-Rated personal injury law firm. Our Dallas personal injury lawyers have a nearly combined 100 years experience representing plaintiffs in personal injury, business, and dangerous prescription drug & device litigation.