I have health insurance so why do I need medical payments coverage on my auto insurance policy?
The first step to saving money on your auto insurance is understanding the coverage you are paying for. Insurance coverage is not a “one size fits all” type of product, so it’s extremely important to asses your own risks to get a clear picture of your personal needs.
One of the biggest complaints I hear from new clients is that their past company charged them for something they never even knew they had. With rates on the rise you need to be able to cut your costs if needed while still keeping your piece of mind. Insurance is based on risk, so the more risk you take, the less you will be charged. It’s great to pay less however, we all want our insurance to be there for us when we need it.
With that in mind I want to talk to you about a very common policy addition called medical payments coverage. You may have heard of it before or you might be paying for it and not even know. It can be very valuable in certain situations but can also cost hundreds of dollars per year. You can have auto insurance medical payments, motorcycle medical payments and home insurance medical payments. Here is what I believe you need to know.
Medical payments coverage is a set sum of money available to you, or your vehicle passengers, that pays for injuries caused by an accident. In other words if you or someone in your car is hurt, it pays for the medical bills. It is usually a set number, starting around $5,000 and going up from there. Some states do require it, and if you want to remove the coverage you will have to sign a waiver. The most important thing to understand is that these payments can be issued regardless of who is at fault for the accident.
So what does that mean?
Picture you and your family or friends driving down the highway. On the other side is an accident, what does everybody do? Slow down to check it out while staring at the action instead of the road. This phenomenon alone causes thousands of accidents a year and usually they involve multiple cars. The unfortunate part is, even if YOU are paying attention and slow down, someone behind you may not be, and then WHACK! This can’t be avoided but this does bring up a situation where medical payments can be really helpful.
If the person who rear ended you has cheap insurance, or no insurance at all, the process to get paid from them or their carrier can take months and sometimes even years. If you are hurt you need to go to the doctor and that costs money, this is where you can use the medical payments on your policy. They are paid out very quickly and you can use it to offset costs for missing work, hiring a lawyer and paying your hospital bill.
Even if you have health insurance you usually have a deductible which is your “out of pocket” in a medical claim. Having medical payments means you don’t have to touch your savings and hope you get the money back someday down the road.
They are also not considered in the claim payout amount, so if your injuries are lets say $15,000, they would not subtract the $5,000 or more paid to you with med pay. You would still get the $15,000 plus the amount of your medical payments coverage. Though it can cost you more on your policy, having one claim will usually make up for years of the actual amount you have paid for the coverage.
I hope this information helps and also know that if you want to remove your med pay your company will always require a waiver be signed. If they don’t than double check because something is amiss.
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