When purchasing or renewing an automobile insurance policy, you may be tempted to try to make your premium as low as possible. Your insurance agent might even tell you that medical payments coverage (also known as “medpay”) isn’t much different from underinsured/uninsured motorist coverage, and so why pay for it at all?
Think twice before rejecting medpay.
In Colorado, there are at least three major differences between medpay and underinsured/uninsured motorist coverage (known as UM/UIM coverage).
First, UM/UIM coverage is generally not available if you are found to be at fault for causing a motor vehicle collision. Medpay is.
Second, UM/UIM coverage is as a practical matter not available immediately after the collision. For an injured person to be entitled to UM/UIM coverage, it needs to be established that the at fault driver was uninsured or underinsured, which can often require waiting for a coverage investigation by his or her insurance company, and if there is even minimal coverage you may need to wait until your damages clearly exceed that coverage before your own UM/UIM coverage will be available. Traditionally, insurance companies often did not extend underinsured motorist benefits at all until the injured party reached a policy limits settlement with the at fault driver’s insurance company. In contrast, medpay benefits are generally available as soon as you have incurred collision-related medical bills.
Third, under Colorado law your insurance company generally has no right to be repaid for medpay benefits if you reach a settlement with the at fault driver’s insurance company. This is in contrast to other ways of paying for collision related medical bills, such as health insurance or medical liens. For example, if you incur $5,000 in medical bills for chiropractic care, have $5,000 in medpay benefits, and your automobile insurance company pays the chiropractor with your medpay, it will have no right to be paid back if you later settle with the at fault driver’s insurance company. This is true even if the at fault driver’s insurance company’s offer includes the chiropractor’s bills.