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Understanding Automobile Insurance Gaps | Legal Advice

Most people believe that if they get “full coverage” they are covered for anything an automobile accident throws at them.  Unfortunately, this is not the case.  Very few insurance agents take the time to truly explain how liability insurance interacts with uninsured/underinsured motorist coverage and medical payments coverage.  Often people do not understand what they are purchasing, they are mostly interested in the number behind the $.  If you understand how the auto insurance coverages work, you can be sure you are protected and know what to expect if you are ever involved in a motor vehicle collision.

Liability Insurance

The liability coverage is what is required by the State, and the current minimum coverage is $25,000.00 per person/$50,000 per accident.  But what does that mean and who does it cover?  If another driver smashes into your vehicle with you and 1 passenger in it, then both you and your passenger may receive up to $25,000 from the other driver’s automobile insurance. If there are three people in your car, then the three of you will be fighting to divide up $50,000 so long as none of you get more than $25,000.

Uninsured/Underinsured Motorist (UM/UIM) Coverage

So what happens when your medical expenses alone exceed the $25,000 minimum limits of the other driver?  Or worse yet, what if they did not have coverage at all?  Was the collision a hit and run?  You have “full coverage” on your car, so why will your insurance only pay to fix your car?  If you are asking these questions, chances are, you may not like the answers.

Full coverage insurance is often nothing more than liability and collision insurance for damages to your vehicle.  You will need to pay your deductible before your insurance company will pay a dime.  Your insurance does not automatically cover your injuries if the other driver does not have insurance or does not have enough insurance.  You must have UM/UIM coverage with limits higher than the other driver’s limits if you want your insurance company to pay.  This is an optional coverage many people decline to purchase.  This is essentially relying on your fellow drivers to have all complied with the law, and gambling on any injury you may receive being relatively minor.

Medical Payments Coverage

You may think that since you have health insurance through your employer, a government program, or a private policy that you are covered no matter what causes your need for medical attention.  If you are involved in a motor vehicle collision you will quickly discover how much this assumption will cost you.

Most medical facilities refuse to bill your health insurance for injuries due to a motor vehicle collision (and certain other circumstances).  After the initial emergency room treatment, many individuals have difficulty obtaining medical treatment because the medical providers refuse to see someone under their health insurance for motor vehicle collision injuries.  The other driver’s insurance is not going to pay anything until your medical treatment is concluded so they can write one check.  This is where having medical payments coverage comes into play.

If you have medical payments coverage, it will cover your medicals until it has been exhausted.  Your ambulance bill, ER bill, radiology bills, emergency physician bills, family physician, specialist, therapy, etc. can all bill your insurance company under this medical payments coverage and be paid 100%.  Sadly, most people have $1,000 or $5,000 in medical payments coverage.  This is exhausted just from the emergency treatment, so then they are back in the same boat.

Getting counsel early in the process will help make sure you can make the most of your medical payments coverage.  Not only can that, but having a lawyer can help you force your insurance company to pay the bills.  There are deadlines for submitting medicals to health insurance companies and your auto insurance may have subrogation on the final settlement that will need to be addressed before you can settle the claim.

Interaction of Coverages

Most serious collision injuries will involve some or all of the above insurance coverages.  When there is insurance coverage available, the medical payments coverage will kick in first. If you have this on your auto policy, they will help you pay for medical treatment right away.  Once that coverage is exhausted, your health insurance should kick in and pay for the remainder of treatment (minus your deductible and copay).

Once the treatment is completed, the other driver’s insurance should pay for the injuries up to the limits of their policy.  When they do, your health insurance and your medical payments coverage will want to be paid back.  After the other driver has tendered the full amount of their policy limits, the UM/UIM coverage will kick in to pay the remainder of your damages.

Insurance companies are in business to make money.  The do this by delaying payment or denying payment on legitimate claims, offering less than a case is worth, and getting people to settle before their medical treatment is finished for less than the case is worth.  Too many people are trying to save money by trimming their insurance to the State minimums or canceling their insurance altogether.  This leaves them unprotected if they are injured, and leaves anyone they injure without adequate compensation for their injuries.  Knowing how these policies interact will help injured persons understand what options they have when purchasing coverage for their families and when they are the injured party.  Skilled and knowledgeable counsel can assist you in getting the most out of your claim and your insurance.

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