When you suffer a personal injury from being in a motor vehicle accident caused by someone else, there are many possibilities concerning the role of insurance in compensating you for your loss and/or covering your medical expenses and lost wages. The primary question concerns whether the responsible party has liability insurance. Current statistics indicate that almost 22% of Texas drivers are not insured. That means that almost every fourth vehicle you encounter on the road is without insurance. You can protect yourself from this potential disaster by selecting Uninsured Motorist coverage with your own automobile insurance policy. This coverage will, in essence, act as if the party responsible for the collision had liability insurance.
Personal Injury Protection (PIP)
Another coverage available with your own automobile insurance policy is Personal Injury Protection (PIP). This coverage will reimburse you for the medical bills that you incur. PIP is offered in increments of $2500.00. It also pays a percentage of wages you lose as a result of being off work due to your injuries. Under Texas law, minimum PIP coverage of $2500 is required, unless rejected in writing when you first take out the policy. PIP benefits are payable so long as you are injured in a vehicle accident, regardless of who is at fault. I once had a client who suffered a severe injury from a passing vehicle?s mirror. She was entitled to PIP benefits.
Medical Payments coverage (Med-Pay)
Another type of coverage available with your auto policy is Medical Payments coverage (Med-Pay). Med-Pay also provides coverage regardless of who is at fault in the accident. However, Med-Pay only covers medical bills (not lost wages). Med-Pay is not mandated by Texas law and may be issued in any amount. There is no state mandated minimum. Med-Pay coverage only covers medical bills, while PIP also covers lost wages.
A significant difference between PIP and Med-Pay is the right of ?Subrogation?. Subrogation refers to the right of your insurance company to be reimbursed in the event you receive payment from the party that caused the collision. So, if you were to receive $2,500 from the responsible party?s insurance, you would have pay it back under Med-Pay, but not under PIP. In effect, you paid premiums for Med-Pay coverage and received no real benefit. This would not happen with PIP benefits.
So, if your insurance agent tells you that there is no real difference between PIP and Med-Pay, that is simply not true. All things being equal, select PIP coverage. You could be wasting your money with Med-Pay.