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The Confusing Maze of Accidents and Insurance Coverage

You have been involved in an auto accident and as a result of that accident your car is badly damaged and you are injured. Who pays to fix your car and how do you get your medical bills paid?
Seems like the answer should be easy. If the accident was your fault then your insurance pays for everything, and if it was the other driver’s fault then their insurance pays for everything; right?
Actually, it is not that simple. In every accident regardless of who is at fault the first layer of insurance coverage for your medical bills comes from your own insurance company under Personal Injury Protection (PIP), also known as no-fault insurance. In the State of Florida, everyone must carry at least $10,000.00 in PIP coverage. You can also choose to have additional coverage called Medical Payments or Medpay which is also no- fault insurance and can cover your medical bills regardless of who is at fault for the accident.
PIP insurance can also reimburse an insured for a percentage of lost wages and mileage to and from your medical providers while Medpay only pays for medical bills.
Now you might be thinking, ok I get it, my PIP will pay my medical bills and lost wages regardless of whether I am at fault. Again, not that easy. PIP pays 80% of your medical bills that are reasonable, related and necessary. In other words, PIP does not pay 100% of your medical bills and can reject part or all of the medical bills that do not fit their criteria. Your insurance company can also cut off your PIP coverage by sending you to a doctor who says that current or future treatment is not reasonable, related or necessary. To muddy the waters even more the law regarding PIP benefits was revised January 1, 2013, requiring an injured party to get medical treatment within 14 days from the date of the accident which must qualify as an emergency medical condition (EMC). If you do not meet the EMC qualification then your PIP coverage will go from Ten Thousand ($10,000.00) dollars in coverage to only Two Thousand Five Hundred ($2,500.00) in coverage.
Assuming you meet all of the PIP criteria and you get the full $10,000.00 in PIP coverage, what happens after that coverage has been exhausted? What if you still need more medical treatment? Who is going to pay those bills? Hopefully you have a health insurance policy that can start paying for any medical bills once your PIP has been exhausted. If your health insurance does pay for any medical treatment and you later recover from the other driver, your health insurance will have a right to get reimbursed for what they paid. This is called a right of subrogation which entitles the health provider to assert a lien against any recovery.
What if you do not have any health insurance, then what happens? There are a few options. You can pay the bills yourself with the hope of recovering the money back when you resolve your case against the other driver, assuming they are at fault. Another option is that you can ask the provider to wait for payment until the case has been resolved against the other driver, again assuming they are at fault. In that case the provider will usually require you to sign a “Letter of Protection” (LOP) which is a contract that ensures that they will get paid out of any recovery/settlement you get.
Can the other driver’s insurance company pay for your medical bills once your PIP has been exhausted? Typically, the other insurance company will not directly pay any medical bills and instead they will offer a settlement that they feel adequately covers all of your damages, and from that settlement your medical providers will be paid for outstanding medical bills and your health insurance company will be reimbursed for any bills they paid.
Will the other driver’s insurance, assuming that driver was at fault for the accident, automatically cover all of the outstanding bills and health insurance liens?
Again, unfortunately it is not that easy. The insurance company will only offer settlement funds for damages that they believe are related, reasonable and necessary. They will only pay up to their insured’s policy coverage. In the State of Florida there is no legal requirement to have Bodily Injury (BI) insurance which is the coverage that pays for damages related to an accident in which you are at fault. So what happens if the at-fault driver does not have any BI coverage or they only have a very small policy that is not sufficient to cover your damages? Hopefully, you have what is called UM/UIM coverage which stands for Uninsured or Underinsured coverage. If you do have that coverage then that will be the next level of insurance to which you can look to cover your damages. Keep in mind that unlike your PIP insurance, in the case of UM or UIM, you must prove that the other driver was at fault and that they do not have any or a sufficient amount of bodily injury insurance coverage to fully compensate you for your damages.
Who pays for the damage to your car? If the other driver was at fault then their insurance company will pay for any damage to your car related to the accident up to their insured’s policy, which under Florida law must be at least $10,000.00. This insurance is called Property Damage (PD). Other insurance that can pay for the damage to your car is on your own policy and is called Collision insurance. Not everyone has Collision on their insurance policy and Collision insurance typically has a $500.00 deductible that you have to pay. Under both of these coverages you will be limited to the policy limits. The insurer can also choose to total-out the vehicle rather than having it fixed, if repairing the vehicle will cost more than totaling it. In a total-loss the insurance company will pay what it deems to be the current market value of your vehicle which is not the same as the replacement cost for the vehicle.
Guaranteed Asset Protection (GAP) is an optional coverage you can purchase when buying a vehicle that will pay the difference between the actual cash value of the vehicle and the balance still owed to financing. Keep in mind, the second you drive the vehicle off the lot following the purchase, the value of the vehicle drops substantially, so GAP protection is always recommended.
As you can see, this blogpost was appropriately titled. Insurance and auto accidents are complicated, which is why if you are involved in an accident with injury you should always consult a Board Certified Civil Trial Lawyer who specializes in personal injury cases. A good attorney will know all the hoops that have to be jumped through to ensure that any and all insurance coverage is available to you. In addition, your attorney will make sure that all of your legal rights are protected and that you have all the information you need to make informed decisions regarding your case. A good attorney will always put their clients’ interest first and will be someone to whom you will be comfortable referring your family and friends.

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