What is Medical Payments Coverage and Why Do I Need It?
If you have purchased home, auto or business insurance, you may have seen a line item for a coverage on each called “Medical Payments”. If you are unfamiliar with insurance, the name of this coverage alone can feel uninformative and ambiguous. You already have liability insurance for a much larger amount; what is this extra coverage for? Is it redundant or necessary?
Simply, this is “No-Fault” coverage. You may have heard that phrase before too. It works differently on the home and auto insurance, but in either case, it pays expenses for injuries without regard to fault.
On the auto:
This coverage pays for injuries to you, your passengers, and your family members. This works as a 1st-party coverage. “Medical Payments” is a generic version used by many states, Missouri for example. Other states may have their own unique coverage that either replaces or dove-tails with “Medical Payments”. For Example, in Kansas, there is a coverage called “Personal Injury Protection” or “PIP”. PIP is required by law on every auto insurance policy. It pays the first $4,500 of medical expenses as well as a schedule of other benefits such as rehabilitation expenses, work loss, essential services, funeral expenses, and survivor’s loss.
There are various levels of PIP coverage that can be purchased. This varies by insurance company, but frequently $4,500, $7,500, $12,500 and $27,500 coverage tiers are offered.
PIP is the primary coverage for the Kansas “No-Fault” statute. Many drivers carry PIP, but do not carry medical payments coverage on their auto. However, medical payments is still available, and does serve a purpose. Medical payments can be used to increase the total PIP benefits. If you purchased the $27,500 PIP coverage level, and also carried $10,000 Medical Payments coverage, you would have $37,500 total medical payments coverage with PIP included.
The primary goal of this coverage is to prevent small lawsuits and to free up the courts. Essentially, if you are injured in an auto accident and the other driver is at fault, your policy pays the first $4,500 of your medical expenses, not theirs. After PIP has been exhausted, remaining damages will be paid by the at-fault parties liability insurance.
Medical payments or PIP can also be of high-value to you if you do not carry comprehensive health insurance. A common cause of injury is an auto accident.
On the Home (and business general liability insurance)
Medical payments on a homeowners, general liability, or a businessowners policy works differently than it does with auto insurance, however, the “no-fault” nature of the coverage still applies. Here, medical payments is a 3rd-party liability coverage, meaning, it is used to pay (most commonly) for guest injuries on a no-admission-of-fault basis. The goal is to prevent a lawsuit. A person whose medical bills are paid for are less likely to walk into an attorney’s office asking “what do I do with these medical bills?”.
Medical payments pays for injuries to others both on and off your property. Due to the no-fault nature of the coverage, coverage amounts usually aren’t very high. Why would you pay too much money for something that wasn’t your fault? The more severe the situation, the more likely your liability coverage would be involved. Medical payments is intended to cover incidents less severe in nature.
Picture a customer or neighbor who comes to visit and slips on your front step. May be carelessness or a fault with the step, but instead of pointing fingers, medical payments coverage would be available to mitigate damage to your relationship with them.
Should I file a medical payments claim?
Absolutely! Sometimes a minor incident can turn into a big one. Rear-ended in an auto accident? It is possible your spine is out of alignment and over-time can get worse resulting in surgery or chronic issues. It is best practice to take care of yourself. It may be difficult or impossible to re-open the claim years later.
Guest injured on your property? You have a duty pursuant to your policy to notify your insurer of an incident as soon as possible. Your claims rep will attempt to get out in front of the incident, smooth the relationship, and coordinate services. This can potentially save you from a BIG money lawsuit down the road (one potentially not covered if you failed to notify the insurer).
Medical payment claims can negatively affect your insurance rate. This is not a reason to forego filing a claim, however, but a reason to prioritize safety in the first place.
Have questions? Contact us to speak to one of our independent insurance agents, licensed in KS, MO, CO and AR who can provide a free consultation today!