Auto Insurance Medical Coverage: Is $5000 Sufficient?

Auto insurance is a complex topic, and the amount of coverage one needs varies from state to state and person to person. The minimum amount of car insurance required is usually state-mandated liability coverage, which covers some—if not all—injuries and damages for which one is liable in an accident. However, this minimum coverage is often insufficient, and it is recommended to carry more liability coverage than what is legally required. The recommended car insurance coverage is $100,000 per person and $300,000 per accident in bodily injury liability and $100,000 per accident in property damage liability.

Medical payments coverage, also known as MedPay, is an optional form of auto insurance that covers medical and funeral expenses after a car accident. It typically covers the policyholder, family members driving the car, and any passengers, regardless of who is at fault. MedPay coverage limits are usually low, ranging from $1,000 to $25,000, and are intended to cover immediate medical and funeral expenses.

While MedPay is optional, some states require Personal Injury Protection (PIP), which covers medical expenses, lost wages, funeral expenses, and more. PIP is mandatory in no-fault states and optional in others.

In summary, while $5,000 may be sufficient for MedPay coverage, it is generally recommended to have more liability coverage to protect oneself financially in the event of an accident.

What does MedPay cover?

MedPay, or Medical Payments Coverage, is an optional add-on to an auto insurance policy that covers expenses related to vehicular accidents. It covers the policyholder, any passengers in the vehicle, and any pedestrians injured by the policyholder's vehicle. It also covers the policyholder if they are injured in a vehicle as a passenger or otherwise.

MedPay covers a variety of expenses relating to injuries sustained in an automobile accident, including:

• Health insurance deductibles and co-pays
• Hospital visits and stays
• Ambulance and EMT fees
• Doctor's fees
• Surgery, X-rays, and dental procedures
• Nursing services and care
• Rehabilitation costs
• Prostheses and other medical equipment
• Funeral costs

MedPay is supplemental to your regular health insurance and fills the gaps in coverage. It is generally affordable, costing less than $10 per month, and can be a good investment to ensure that medical bills are paid quickly after an accident.

Is state minimum insurance coverage enough?

State minimum car insurance refers to the legal insurance requirement in your state. Most states require some level of liability insurance, but the specific coverage amounts will vary from state to state. While state minimum insurance coverage is better than no insurance coverage, it is often insufficient in the event of a serious accident.

State minimum car insurance is the minimum amount of insurance coverage that is legally required by the state in which you live. The requirements will vary from state to state. The state minimum requirements usually include liability insurance, uninsured/underinsured coverage, personal injury protection (PIP), and medical payments coverage.

Liability Insurance

Liability insurance covers any damages that you cause to another driver. Some degree of liability insurance is a requirement in most states. It is written with three numbers: the bodily injury coverage limit per person, coverage limit per accident, and limit of property damage coverage. For example, in California, the state minimum is $15,000 for bodily injury to one person, $30,000 for bodily injury to multiple people in a single car accident, and $5,000 for property damage.

Uninsured/Underinsured Coverage

While only about half of the states in the U.S. require uninsured/underinsured coverage, it can be beneficial if you're in an accident with an uninsured driver. Uninsured motorist coverage (UM) and underinsured motorist coverage (UIM) pay for your medical bills if someone crashes into you and they do not have liability insurance or not enough.

Personal Injury Protection (PIP)

PIP coverage is only a requirement in about 20% of states. It covers the medical costs of anyone injured in the accident, regardless of who is at fault. PIP is mandatory in states that have no-fault laws and can be purchased in some at-fault states.

Medical Payments Coverage

Medical payments coverage is another option for covering costly medical expenses following an accident. It is a requirement in some states, including Maine, New Hampshire, and Pennsylvania. Medical payments coverage, like PIP, pays for medical and funeral expenses after a car accident. It typically covers the policyholder, family members driving the car, and any passengers.

State minimum insurance coverage is generally not enough. These amounts are often insufficient if you cause a serious car accident. If you total someone else’s car, the property damage coverage won’t be enough to cover the cost of repairs or replacement. And if you’re at fault for a car accident with multiple injuries, medical expenses can quickly exceed the coverage limits.

Additionally, state minimum insurance coverage does not cover damages to your own vehicle that are not from an accident, such as theft or damage from a fallen tree. You will need full coverage for these types of events to be covered. Full coverage car insurance includes the state's minimum requirements, as well as collision and comprehensive insurance.

It is always a good idea to evaluate your own insurance needs and consider how much it will cost to repair or replace your vehicle. Shop around to find a provider who offers you enough coverage at a price you can afford.

How much liability insurance do I need?

The amount of liability insurance you need depends on your state's requirements, your net worth, and the value of your assets.

Liability insurance covers damage and injuries you cause to others in an accident. It is the main type of mandated insurance in most states. The most common minimum limits for liability are $25,000 per person and $50,000 per accident for bodily injury and $25,000 for physical damage. However, your state's requirements may be higher or lower.

If you want more protection, you can purchase liability insurance above your state's minimum limits. This is a good idea if you have assets you want to protect in case you are liable in an accident. To determine how much liability insurance you need, calculate your net worth by adding up the value of your home, vehicles, savings, and investments, and then subtracting your debts. You should have enough liability insurance to cover your net worth.

For example, if your net worth is $90,000, you might want a policy with $50,000/$100,000/$50,000 of liability coverage. This would give you $100,000 in total bodily injury coverage per accident, which would be higher than your net worth.

In addition to liability insurance, you may also want to consider other types of insurance such as collision and comprehensive coverage, personal injury protection, and medical payments coverage. These types of insurance can help cover your own medical bills and vehicle repairs in the event of an accident.

What is full coverage car insurance?

The term "full coverage" is misleading as no single policy can deliver 100% coverage in all situations. In general, when someone describes a full-coverage car insurance policy, they are referring to policies that include liability, collision, and comprehensive coverage.

Liability Coverage

Liability car insurance offers financial protection if you’re at fault for an accident. A liability insurance policy generally includes bodily injury liability coverage and property damage liability coverage. For example, liability coverage can cover the other driver’s medical bills, vehicle repairs, other property repairs, lost wages, and legal expenses in the case of a lawsuit.

Collision Coverage

Collision coverage will pay for damages to your car that result from colliding with another object, such as a vehicle, tree, or retaining wall.

Comprehensive Coverage

Comprehensive coverage pays for vehicle damages resulting from incidents other than collisions. This includes falling objects, hitting a deer, fire, and vandalism. It also covers theft.

Additional Coverages

Full coverage may also include other types of coverage, especially if it’s required by state law. Some additional coverages include:

• Medical payments (MedPay)
• Personal injury protection (PIP)
• Uninsured/Underinsured motorist coverage
• Gap insurance
• Rental reimbursement insurance
• Roadside assistance coverage
• Diminishing deductible coverage
• New car replacement coverage

Who Needs Full Coverage?

Full coverage is generally more expensive than minimum liability insurance. However, it may benefit drivers who want to avoid expensive out-of-pocket vehicle repairs. A full-coverage policy is often required by lenders or leasing companies. It may also be required for certain jobs.

What are the pros and cons of medical payments insurance?

Medical payments insurance, or MedPay, is an optional form of auto insurance that can help pay for medical and funeral expenses after a car accident. It typically covers the policyholder, family members driving the car, and any passengers, even if the policyholder is not in the car. MedPay is required in Maine, New Hampshire, and Pennsylvania, and is optional in most other states.

Pros

• MedPay is relatively affordable, especially when compared to the high cost of healthcare after an accident.
• MedPay policies can help fill gaps in coverage. Traditional car insurance won't cover injuries sustained in an accident that the policyholder is at fault for, but MedPay can cover these expenses.
• MedPay can supplement health insurance by covering things that a standard health insurance policy doesn't, such as ambulance costs, nursing care, or chiropractic care. It can also help pay for deductibles and copays.
• MedPay can help protect your entire family. If a family member is hurt in an accident, including as a pedestrian or bicycle rider, a MedPay policy will pay the bills for their care.

Cons

• MedPay is not as comprehensive as personal injury protection (PIP) insurance, which is another type of insurance that can be added to an automobile policy. PIP covers medical bills and also pays out partial lost wages if the policyholder is unable to work due to injuries from an accident. Some states require the purchase of PIP insurance.
• Coverage under MedPay is limited and typically maxes out at $10,000 or less per person. Medical bills may exceed this coverage limit, especially in the case of a serious injury.
• MedPay only protects the policyholder and their family; it won't pay for the medical treatments of other drivers or individuals injured in an accident caused by the policyholder. Liability insurance is needed to cover these costs.
• MedPay can make auto insurance more expensive, with rates potentially increasing by around 10% to offset the risk of enhanced coverage.

Frequently asked questions