Auto Insurance: Saving Money on Medical Coverage

From Insurance for Dummies by Jack Hungelmann

I’ve stressed the importance of buying high protection limits for injuries you cause as well as for injuries caused to you. Both of these strategies increase your insurance costs. In this section and the next, “Dealing with Damage to Your Vehicle,” I show you strategies that lower your costs and help you afford better coverage for the big stuff, like higher liability coverage. Coverage for your medical bills (and sometimes lost wages and replacement services — help around the home you have to hire) is generally offered by car insurance companies. Depending on your state’s laws, this medical coverage generally comes in two flavors:

• Medical Payments ( Med Pay) coverage
• Personal Injury Protection ( PIP) coverage

Both coverages are similar in the sense that they pay your medical bills suffered in a car accident, regardless of fault, up to the limit you purchased. Personal Injury Protection has the added advantage (at a considerably greater cost) of also reimbursing you for some of your lost wages or replacement services. Some states even allow you (for an additional premium) to add together the medical coverage limits per car (called stacking) to cover a single injury. ($5,000 coverage per car ´ 3 cars on the policy = $15,000 total medical coverage for a single injury.)

I don’t attempt to cover all the different requirements or costs relating to these coverages. Keep in mind three things when buying either coverage: First, check the law in your particular state. State laws on Med Pay or PIP coverages vary dramatically. Second, buy only as much medical-related coverage as the law requires. Medical and disability costs should be covered under other policies you have; and therefore, having additional car insurance coverage is redundant. Third, buying additional coverage for your medical bills and/or lost wages from car accidents only is betting that those particular kinds of expenses will happen just from an auto accident: Don’t buy Las Vegas insurance.

Not buying more than minimum coverage limits for either Med Pay or PIP is an area where you can save money on your insurance. To fully transfer the risks of medical payments and personal injury, not just those arising from car accidents but from any illness or injury, you need major medical insurance and long term disability insurance — both of which cover financial losses no matter how the losses are caused, rendering special insurance to cover the damages caused only by car accidents superfluous. If you do not already have major medical and long-term disability coverage in your insurance portfolio, I urge you to consider adding both immediately.