Medical Payments 101: What Medical Expenses are Covered By Auto Insurance?

Posted on June 30, 2019
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About 16% of drivers aren’t insured at any one given time. This means they have to meet their own medical expenses in case of an accident. This not only poses a personal risk to them but is also contrary to the law.

Keep on reading to learn more!

Types of Auto Insurance Coverage

Drivers must hold a minimum amount of car insurance in Canada. Some of the compulsory coverage types are:

1. Third Party Liability Coverage

This insurance protects you if you cause an accident and hurt or kill another person. It also compensates them if you cause property damage to their car. The law determines a minimum amount that drivers should carry, but they can exceed the amount if they can.

2. Statutory Accident Benefits Coverage

This is insurance that covers supplemental medical care. Other costs covered are rehabilitation, attendant care and 70% of your income weekly up to $400.

3. Uninsured Automobile Insurance

This type insures you if you get struck by a hit-and-run or uninsured driver. It also compensates the family of the insured who loses his life in such an accident.

4. Direct Compensation- Property Damage Insurance

Under this insurance, you’ll be compensated for damages caused by another motorist. Note that it only applies if the other driver is the one on the wrong. The other driver must also be insured accordingly.

You can also buy additional coverage to protect yourself in the event of certain accidents.

Medical Expenses Covered By the Statutory Accident Benefits Coverage

As mentioned before, statutory accident benefits insurance covers medical expenses. The policy is availed to cover for the costs of the policyholder and passengers in the vehicle during an accident. Sometimes the policy can pay for injuries you sustain outside the car.

Compensation is given regardless of who is at fault. This is how the policy caters for medical expenses.

1. Personal Injuries

Med Pay can cover any injury you sustain regardless of who is at fault. This policy is especially crucial if you don't have health insurance. Besides, most health insurers don't pay for medical expenses coming from an accident.

If another driver is at fault, you still have a right to claim their insurance. You’ll be eligible for the per-person liability limit depending on the number of people injured.

2. Injuries Caused to Other Passengers

If you’re at fault and you’ve got passengers in your car, the policy will meet their medical expenses too. Some other injuries covered include slamming a hand in the door and falling while alighting.

3. Injuries You Cause to Other People

If you’re at fault and hit another driver and his passengers, there’s a limit to what your policy can cover. Even so, remember that you can be sued for much more liability than what the policy covers. Whenever you're at fault, you can be sued for all expenses incurred because of the accident.

The cost of rehabilitation, medical expenses, and lost wages will often be more than when a passenger accidentally injures himself.

Some of the medical expenses the policy covers are:

  • Hospital stays or visits
  • Doctor visits
  • Ambulance fees
  • Surgery and X-Rays
  • Prostheses
  • Funerals
  • Dental procedures as a result of the accident
  • Injuries sustained as a pedestrian

The medical payments follow the policyholder regardless of how the accident happened. In other words, the expenses will be met whether the insured was walking, riding, or using public transportation. The policy also has no geographical boundaries hence compensates for in and out of state accidents.

Med Pay doesn’t cover other cars attached to the personal automobile insured. These include trailers and related equipment.

How Does Med Pay Work?

Med Pay works in two distinct ways. The first one is through direct reimbursement as primary coverage. The second one is when it’s issued as a supplement to your health insurance coverage.

The reimbursement you get depends on the type of auto and home insurance policies you hold. Check your policy first, since there’s contention on which insurance should offer the primary coverage.

Ideally, if Med Pay can cover the medical bills of a driver, the policy would pay upfront. The auto insurance company would then reimburse the costs. In the case where Med Pay is the secondary coverage, the health insurance policy caters for the large portion of the medical bills.

Med Pay comes in to cover the deductibles or makes co-payments with the health insurance company. Med Pay has a reasonably low limit, intended to meet immediate medical and funeral costs.

Note that Med Pay isn’t designed to replace health insurance. It also doesn’t apply where worker’s compensation should apply.

You now know what the Med Pay policy is and how it works. Here are other things you need to know about the plan.

1. Reasonable Medical Expenses

A reasonable medical bill is one that doesn't exceed the current costs of medical services. A Med Pay insurer can challenge a reasonable bill but not the authenticity of the bills. If the insurer feels the charges aren't fair, an expert must be hired to witness the reasons.  

2. When Is Medical Treatment Necessary?

The necessity of medical treatment depends on two factors. The first one is that medical experts must believe that treatment will relieve pain and cure injuries. Secondly, the treatment must be in direct relation to injuries sustained in the accident.

If it’s established that treatment is being offered for a preexisting condition not related to the crash, Med Pay may withdraw coverage.

3. When Does Med Pay Cover a Medical Expense?

A medical expense is incurred when you pay for it, or you're legally responsible for its payment. You must take into account the contracts between your health care providers and health insurance plan. This will help determine if an expense is incurred and the actual amount spent on the cost.  

The expense must be incurred within three years after the accident date. The cost is not incurred until you've paid for treatment or become obligated to pay for it within three years.

For your medical expenses to be paid under Med Pay coverage, sign a contract with the health care provider. In the arrangement, agree to pay for future medical treatment within the three years. With such an agreement, you can use Med Pay even for procedures given outside the three years.  

4. Amount of Medical Expense Coverage Under Med Pay

The auto insurer should offer a minimum of $2,000 per person for medical expenses. Some insurers offer as much as $50,000, but this isn't the norm.

In some cases, the insurer doubles the medical expense benefit limit. This is if all the passengers were wearing safety belts at the time of the accident. This type of payment is known as a personal auto special provision, limited to a maximum increase of $10,000.

Talk with your insurer for endorsement of this provision.

5. Loss of Income Under Med Pay

Under the Med Pay policy, your insurer can offer $100 per week for loss of income. You’re only eligible if you were working for pay at the time of the accident. Payments commence on the first workday missed after the accident.

The payments will be remitted until the day you return to work, for up to one year after the accident.  

6. Do You Need Med Pay Coverage?

This depends on the state where you come from. In Canada, it’s compulsory for drivers to have the Med Pay policy. The coverage limits range between $5,000 and $10,000. Remember that just because it’s mandatory doesn’t mean it is automatic.

You need to purchase the policy for you to be covered. Your auto insurance company is obligated to notify you of this requirement.

7. Medical Payments Coverage Is Through Reimbursement

In case you don’t have health insurance coverage during an accident, Med Pay is your primary coverage. After receiving treatment and incurring an expense, you and your attorney will submit a copy of the bill to Med Pay insurer for compensation.

If you've got health insurance, use that to pay for the expense and make any co-pay required. Med Pay, in this case, is secondary to your health insurance. Hence, you should get a receipt of the co-pay and submit it for reimbursement.

If you don’t have Med Pay coverage, you’ll be surprised at how little it costs to increase its coverage option in your auto insurance.  

Final Thoughts

If you sustain injuries in an accident, the medical expenses can be expensive if you're not covered. This is why the law in Canada requires you to have a Med Pay policy in addition to your auto insurance.

The benefits that come with the policy are numerous. You never have to take liability for injuries sustained by you or third parties. Different Med Pay companies offer varying limits for the cover.

Talk to your policy provider to find out the details of the policy before signing up for it. Once you find the best deal, ensure you pay your premiums on time. The time limit for making claims is within three years after the date of an accident.

If you're looking for the lowest insurance rates in Canada, don't hesitate to get a quote by reaching out to our team.

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