How Much is Enough to be Safe: MedPay and Uninsured Motorist Coverage

I was asked to write this blog by a former client. So, here goes:

A. MedPay:
Simply put, this is medical coverage on your car insurance. Click here if you need an explanation of Medpay. The laws changed in January of 2009 and now there is, at minimum, $5000 of coverage on all covered vehicles unless you sign a waiver rejecting the coverage. Don't do that! But even $5,000 will generally only cover about one day in an emergency room and perhaps the ambulance bill. It simply is not enough. We have seen cases where our clients have had and actually needed as much as $25,000 worth of MedPay coverage. However, if you have good health insurance, you might not want to buy excessive MedPay either.

1. You have Minimal Health Insurance or No Health Insurance at all?
If you do not have health insurance, with the mounting costs of medical care, I suggest you purchase the largest MedPay policy the insurance company will sell you. I would recommend at least $25,000. However, if it's affordable and the insurance company will sell it, try and purchase $50,000 or $100,000. In any major accident you will burn through even these limits.

The great news is that this is the only type of coverage that will pay your medical bills related to a crash, and yet your auto insurance cannot ask for their money back once you settle your case with the at-fault motorist. No other coverage will do that.

2. You have Good Health Insurance?
If you have really good health insurance, with lower deductibles, to be safe, I still would not go much lower than $25,000 in MedPay. Under no circumstances would I carry less than $10,000 in MedPay.

There is a statistic that recently documented that 60% of all personal bankruptcies are due to medical bill costs. And 75% of those medically-related bankrupt individuals ACTUALLY HAD health insurance!

Accordingly, we all know that in a serious injury accident co-pays and deductibles can drain anyone's nest egg. We encourage our clients to use their MedPay to reimburse themselves for their personal deductible and co-pays as they proceed with paying their auto-related medical expenses with health insurance. Thus, $25,000 would be my personal rock-bottom MedPay. If you are feeling lucky, go with no less than $10,000 in MedPay.

B. Uninsured/Underinsured Motorist:
If you do not have health insurance and have limited or no MedPay, you definitely should consider beefing up your Uninsured/Underinsured motorist coverage. For details on UM/UIM coverage click here.

If you do not have health insurance, I would purchase UM/UIM coverage, if affordable, of 4-5 times your annual income. I recommend high coverage limits both because after an accident you may not be able to work, and also because you will be incurring large bills related to medical treatment. If you make $50,000 a year, I would insist on a $250,000 UM/UIM policy.

If you have good health insurance and expect that not to change, and also have the recommended higher limits on MedPay, I think you could probably get away with 2-3 times your annual income.

Remember, there are no set rules with respect to the proper amount of coverage. These are very personal decisions. However, being a generally cautious person who has spent years seeing families financially devastated from large injury accidents, I believe these higher limits will serve as a good safety net for you and your family.

At Anderson Hemmat, we are always willing to speak with you one-on-one at no cost to discuss how insurance coverage can be used to your benefit if you have been injured in a car accident.