If you live in a state that has some sort of “no-fault” insurance laws, you will be required to purchase either MedPay or Personal Injury Protection (PIP). In a nutshell, MedPay pays for the medical expenses, or for funeral costs, of anyone involved in an accident with the policyholder—passenger, other drivers, even a pedestrian—regardless of whose fault the accident is.
The limit of most MedPay policies is $25,000. To that end, it’s important to understand that MedPay is not a substitute for health insurance. However, MedPay can fill in important gaps, and is particularly helpful if you have high health insurance deductibles.
When do you use your health insurance, and when do you use your MedPay? Typically, if you are injured in an auto accident you would use your MedPay first, then your health insurance would kick in once limits were met. You generally must pay for your treatment up front, get a receipt for treatment, and then submit this receipt to your car insurance company, who will then send you a reimbursement check.
What is the difference between MedPay and PIP? MedPay covers most medical expenses, including hospitalization, surgery, x-rays and imaging tests, nursing services, ambulance services, and funeral services. PIP covers all of these things as well, but goes one step beyond by covering psychiatric, physical and occupational therapy, and other professional health services. In addition, PIP will pay for lost wages.
If you have good health insurance or belong to an HMO, it most likely makes more sense to purchase PIP. On the other hand, if you don’t have good health insurance, frequently drive with others who aren’t in your family, or have large health insurance deductibles, MedPay may be the way to go.