Med pay coverage (medical payment coverage) is a type of car insurance coverage that is provided by automobile insurance companies. While the details may differ from state to state, in general, med pay coverage pays medical expenses for you and any passenger in your vehicle after a car accident, regardless of who was at-fault.
There are always exclusions to any type of insurance coverage, and one important exclusion in med pay coverage that is relatively standard is that it will not provide coverage if your car was being used to carry passengers for hire, unless you had purchased some type of commercial coverage.
Do I Need Med Pay Coverage?
Med pay coverage is optional coverage in most states, meaning the driver can add it on to his or her coverage. It's only mandatory in a handful of states, including Maine (minimum of $2,000 per person required) and New Hampshire ($1,000 per person minimum required).
Med pay coverage limits are not generally very high. Most people who add on med pay coverage usually get $5,000 to $10,000 in coverage.
Med Pay, No-Fault, and PIP
Med pay coverage is similar to "no-fault" and personal injury protection (PIP) coverage.
Some states are mandatory no-fault car insurance states (including Florida, Hawaii, Kansas, Massachusetts, Michigan, Minnesota, New York, North Dakota and Utah). In those states, your own automobile insurer will pay some or all of your medical bills (and lost earnings) if you get into a car accident, regardless of who was at fault for the accident. Like med pay, no-fault also covers injured passengers. You make a no-fault insurance claim (sometimes called a personal injury protection or PIP claim) against your own automobile insurer under your state’s no-fault insurance laws.
If you live in a no-fault state, you might be able to purchase extra medical coverage over and above the no-fault limits, depending on state laws.
Making a Med Pay Claim
If you have med pay coverage and are involved in a car accident, you would simply report the accident to your insurer and make the claim directly with the company.
But what happens if the total amount of med pay claims exceed your med pay coverage limits? Let’s say that you were involved in a car accident and you had three passengers in your car, all of whom were injured. You had $10,000 of med pay coverage, but the three passengers had $40,000 of medical bills among them. They all made claims against your insurer’s med pay provisions. What happens next?
In any case where the insurer suspects that it is going to receive med pay claims that exceed the policy limits, it will typically wait a while to let all of the claims come in. Then it will usually pro-rate the claims. So, if, for example, each passenger submitted $13,333.33 of medical bills, your insurer will pay each passenger one third of the policy limits, or $3,333.33.
If one passenger submitted $20,000 of bills, and the other two submitted $10,000 of bills each, then the insurer would pay the first passenger $5,000 and the other two passengers $2,500 each. That's how pro-rating insurance claims works.
Generally, med pay claims are not part of any personal injury lawsuit. Almost always, the insurers work out the med pay issues long before any injured person files a lawsuit as a result of the accident. It is very rare for a med pay claim to linger on after the lawsuit has been filed.