Drivers, Your Auto Insurance Might Not Cover Your Medical Bills

If you’re the driver in an accident, you could be liable for the injuries of everyone in your vehicle. Every state has its own laws, auto insurance limits and coverage options, so it’s important to understand your coverage before you get behind the wheel.

Health care treatments won’t wait for a liability determination, and improper insurance coverage can be a costly mistake.

State laws

States use either “no-fault” or “tort” law when deciding what costs must be paid and who will pay them. Most states use tort law, meaning you’re free to sue the other person for damages resulting from their actions. But there are over a dozen states that follow the no-fault model, meaning you cannot sue the other person, regardless of who’s at fault. Some no-fault states allow a few exceptions where lawsuits are concerned, but only in cases of extreme injury.

State auto insurance laws can be complex when it comes to covering your interests. Personal injury protection and medical payments are two ways to cover yourself and your passengers.

Personal injury protection (PIP)

PIP, or no-fault insurance, covers the auto policyholder, their passengers and their household members regardless of who’s at fault. Most no-fault states require drivers to file injury claims with their PIP insurance rather than the at-fault driver’s bodily injury liability coverage.

Depending on the laws of your state, PIP may cover the costs of necessities resulting from an auto accident, such as:

  • Medical procedures (surgical, dental, optometric and others)
  • Health care services (like ambulance rides, nursing, X-rays, MRIs, medications, medical supplies, rehabilitation and prosthetic devices)
  • Funeral expenses
  • Lost wages
  • Child or household care

PIP may also cover you for injuries sustained while riding in another person’s vehicle or as a pedestrian.

PIP usually doesn’t pay 100% of the costs and could potentially leave you with 20% of the bill. You may be able to recoup the excess costs under your medical insurance, but that won’t be the case for your passengers.

Check with your insurance agent for strategies to cover these gaps. Ensure your limits are high enough to cover everyone who uses your vehicle, including your household members and passengers (think carpools).

Even though most tort states don’t offer PIP coverage, they do provide alternative coverage for medical payments.

Medical payments (MedPay)

Tort law states are based on who’s responsible for the accident (at fault). Since it can take a while to determine responsibility, especially if there’s a lawsuit, you may have to pay out of pocket for medical care until there’s a final determination.

If you live in a state that offers it, MedPay can help with medical costs for you and your passengers regardless of who’s at fault. MedPay typically covers:

  • Medical procedures (surgical, dental and optometric)
  • Related health care services (like ambulance rides, nursing, X-rays, MRIs, medications, medical supplies, rehabilitation and prosthetic devices)
  • Funeral expenses

MedPay does not cover lost wages or other essentials. But it also doesn’t have a deductible, which can help offset your medical costs.

If you’re at fault in an auto accident, your auto liability won’t cover you or your passengers, leaving you to rely on medical insurance. If your passengers don’t have health insurance or are on a high-deductible plan, they might sue you to recoup the costs. While your passengers might not want to sue you, they might not have a choice.

For example, your passengers’ medical insurance provider might pay the medical bills initially, but then seek reimbursement from your insurance after the fault is determined. This is called the “right to subrogation,” meaning the insurance company can recoup its costs from the at-fault party.

MedPay can help stop a lawsuit in its tracks because it pays your passengers’ medical bills regardless of fault.

A word on interstate and international coverage

Always check with your agent to make sure you’re protected for special circumstances, such as:

  • If you travel out of state for a short road trip or work commute — You’ll generally be covered if you have the minimum required auto insurance in your state of residence.
  • If you’re in the military — Your auto insurance is typically based on your legal state of residence, even while you’re stationed away from that address.
  • If you have multiple residences — States usually require you to register your vehicle based on the residence you usually stay at.
  • If you’re a college student attending school out of state — College students living out of state are usually exempt from registering their vehicle in their school’s state since it’s not considered their permanent address.
  • If you’re traveling over international borders, especially in Mexico — Canada has laws recognizing American auto insurance coverage for short trips, but Mexico does not recognize U.S. auto insurance. Even a quick excursion over the Mexican border is a risk that could land you in jail if you’re in an accident without Mexican auto insurance.

Review your auto insurance

If you’re not sure about what’s covered, ask your agent! Review protection levels for things like:

  • Property liability if you damage another person’s property, like driving into a fence or building
  • Collision coverage for damage to your car after an accident involving a rollover, another vehicle or an object (like a tree)
  • Comprehensive coverage for damage to your car caused by other things like hail, theft, vandalism or animal collisions
  • Uninsured or underinsured motorist coverage for protection against other drivers who don’t have enough insurance
  • Umbrella insurance to extend defenses over your vehicle and home (for homeowners or renters)

Call your agent for solutions to your unique needs.