Understanding Primary Insurance Coverage After A Car Accident

If you've been in a car accident, you may be wondering which insurance policy will cover your injuries and medical expenses. The answer depends on the type of insurance you have and the state in which the accident occurred. In some states, like New Jersey, Personal Injury Protection (PIP) is a required auto insurance coverage that pays for your medical expenses and lost wages after a car accident. In other cases, your health insurance may be the primary payer, with auto insurance providing secondary coverage. Ultimately, it's important to review the terms and exclusions of your specific insurance policies to understand your coverage options in the event of a car accident.

Health insurance as the primary payer

In the event of an auto accident, it is important to understand the interplay between your health insurance and auto insurance coverage. While your auto insurance is typically the primary payer for accident-related injuries, there may be situations where your health insurance becomes the primary payer. Here are some key points to consider regarding health insurance as the primary payer:

Health Insurance Coverage for Auto Accidents

Health insurance generally covers car accident injuries, but it is important to review the details of your specific plan. Some health plans may explicitly state that they are secondary to any auto insurance coverage you may have. In such cases, your auto insurance would be the primary payer, and your health insurance would cover any remaining costs after your auto insurance limits are reached. Additionally, certain types of treatment, such as alternative forms of care, may not be covered by your health insurance.

Coordinated Coverage

In some states, such as Michigan, drivers have the option to coordinate their health insurance and auto insurance coverage. By choosing coordinated benefits, your health insurance becomes the primary payer for car accident-related medical expenses. In return, you receive a reduced auto insurance premium. However, this option may result in reduced auto insurance coverage if you need medical care after an accident.

Excess Medical Bills

Even if you have auto insurance, your health insurance may come into play if your accident-related medical bills exceed your auto insurance coverage limits. In such cases, your health insurance can provide additional coverage for expenses not covered by your auto insurance.

Choosing the Primary Payer

While designating your health insurance as the primary payer for auto accidents can save you money on auto insurance premiums, it may not be the best option for everyone. Health insurance policies often have higher out-of-pocket maximums, deductibles, and copayments. Additionally, health insurance plans may have network restrictions, limiting your choice of medical providers. Carefully consider the terms of your health and auto insurance policies before deciding on the primary payer for auto accident-related injuries.

Auto insurance as the primary payer

In the event of an auto accident, auto insurance is usually the primary payer for medical bills. This is especially true in no-fault states, where each individual injured in an auto accident, with auto insurance coverage, is required to go through their insurer to get their medical bills paid. In such states, injured parties can get their medical bills paid more quickly and are also covered if the other driver does not have insurance.

In New Jersey, for example, the portion of an auto insurance policy that ensures medical bills are covered after an accident is known as Personal Injury Protection (PIP). In this state, drivers are mandated by law to carry at least $15,000 in Personal Injury Protection coverage per person or accident, but they can choose a PIP coverage limit of up to $250,000 for injuries.

In Michigan, drivers can coordinate their health insurance with their auto insurance so that their health insurance is the primary payer for car accident-related medical expenses. This coordination results in a reduced auto insurance premium. However, No-Fault insurance as the secondary payer is only triggered once the health insurance plan's coverage has been exhausted.

While it is possible to make health insurance the primary payer in the event of an auto accident, this is generally not recommended. Health insurance policies usually have higher out-of-pocket maximums and more restrictions on medical provider choice. In contrast, auto insurance provides a broader range of medical solutions that will be covered, including visits to a chiropractor, which many health insurance plans don't cover.

Personal Injury Protection (PIP)

In a no-fault state, each individual injured in an auto accident with auto insurance coverage is required to go through their own insurer to get their medical bills paid. No-fault laws allow injured accident victims to get their medical bills paid more quickly and even if the other driver does not have insurance. In New Jersey, for example, drivers are required by law to carry at least $15,000 in Personal Injury Protection coverage per person or accident.

PIP covers medical expenses for both injured policyholders and passengers, even if they don't have health insurance. It also often provides payments for lost income, childcare, and funeral expenses related to the accident. PIP policies have a minimum coverage amount and a per-person maximum coverage limit. The minimum coverage requirements are set by state governments and can vary, while the maximums are usually set by insurance companies.

If the cost of necessary medical care exceeds the auto insurance policy's PIP limits, health insurance sometimes covers further expenses. PIP is a valuable part of a car insurance policy, especially in states with no-fault laws, as it ensures that individuals can get their injury-related expenses covered promptly, regardless of who is at fault for the accident.

Choosing between health and auto insurance

If you've been in a car accident, your priority should be your health. You need to get medical help as soon as possible to prevent your injuries from worsening and causing you unnecessary pain. If you have health insurance and/or auto insurance, you won't have to worry about paying your medical bills alone.

In some states, auto insurance is required to cover your medical expenses after a car accident. This is known as Personal Injury Protection (PIP) or medical payments (MedPay) coverage. PIP is required in about a dozen states and offered in about ten others, while MedPay is available in most states and is required in Maine and New Hampshire. Both cover injuries to you and your passengers in an accident, regardless of who is at fault, and they also cover injuries you suffer while riding in someone else's car, or if you're hit by a car as a pedestrian or cyclist. However, MedPay coverage tends to have low limits, often $10,000 or less.

In "no-fault" states, each driver is required to cover their own medical payments after an accident through MedPay or PIP. No-fault laws allow injured accident victims to get their medical bills paid more quickly and even if the other driver does not have insurance.

If you have the option, you can choose to designate your health insurance or auto insurance as the primary source of payment for your medical bills after a car accident. If you choose your health insurance as the primary source, your healthcare insurer will pay for your medical bills first, and then your auto insurer will provide secondary coverage. This can save you money on your auto insurance premiums, but it might not be in your best interests. Health insurance policies often have higher deductibles, copayments, and even co-insurance than auto insurance, and your out-of-pocket maximum is typically higher under your healthcare coverage. Additionally, health coverage usually has network restrictions, limiting your choice of medical providers. On the other hand, PIP does not have network restrictions and usually covers medical bills as long as the treatment is deemed medically necessary. Furthermore, if you choose your health insurance as the primary source, you might end up paying for a PIP coverage that you cannot use.

Therefore, it is generally recommended to use your auto insurance coverage first if you have the option, as this can save you money and provide more comprehensive coverage for your medical bills after a car accident.

Subrogation clauses

When it comes to auto accidents, determining which insurance is primary depends on various factors, including the type of coverage and the state where the accident occurred. In no-fault states like New Jersey, each individual with auto insurance coverage must go through their own insurer to get their medical bills paid, regardless of who is at fault. This is where subrogation clauses come into play.

Subrogation refers to the legal right of an insurance carrier to pursue a third party that caused a loss to the insured. It allows the insurance company to "step into the shoes of the policyholder" and seek reimbursement for the claim amount paid to the insured. Subrogation is commonly found in auto insurance policies but also occurs in property, casualty, and healthcare claims.

In the context of an auto accident, subrogation allows the insured's carrier to recover the costs associated with a claim, such as medical bills, repair costs, and deductibles, from the at-fault party's insurer. This process helps keep the policyholder's insurance rates low.

The subrogation process is passive for the accident victim when another party is at fault. The insurance companies of the two parties involved work behind the scenes to mediate and reach an agreement on payment. The insured typically receives prompt payment from their insurance company, which then pursues reimbursement from the at-fault party or their insurer.

It's important to note that insurers are not obligated to pursue subrogation, but some states require them to inform their customers if they decide not to. In such cases, customers may attempt to recover their deductible on their own.

The subrogation process can be lengthy, sometimes taking weeks, months, or even years, depending on the complexity of the case, state regulations, and other factors. Additionally, subrogation may be waived in certain situations, such as when a settlement includes a waiver of subrogation, preventing the insurer from pursuing the at-fault party for reimbursement.

While subrogation primarily benefits the insurance company by allowing them to recoup claim costs, it also provides advantages for the insured. Subrogation enables accident victims to receive claim payments more quickly and helps keep their insurance premiums low.

Frequently asked questions