Colorado Law Basics: Medical Payments Coverage

When you get an automobile policy, you are obligated under Colorado law to have a minimum of liability coverage, in case you injure somebody else driving.  You might have the property damage coverage, to boot.

But, often insurance brokers will ask you to “reject” medical payments coverage. They say your coverage will be more affordable.

But if you sign those “rejection” or “waiver” forms, what are you giving up?

Medical Payments Coverage

Medical Payments Coverage, often called “MedPay,” is a separate coverage under your policy which pays a minimum amount of basic medical care in the event you are injured in an automobile accident.  This also covers relatives and passengers.

Colorado law mandates that you are offered this coverage at a minimum of $5,000.00.  The premiums are generally quite low and affordable.  Some companies will increase the amount if you pay a higher premium.

If you are injured, not only do you get to be compensated from the at-fault person, but you can also pay off the medical bills from this.  Here is an example:

Suppose:

  • you have $8,000 in medical bills after someone rear-ends your car,
  • you have $5,000 in medical payments coverage, and
  • the other driver is at fault.

You are entitled to have that $5,000 in MedPay coverage used to pay off the basic emergency medical bills up to, well, $5,000.  This leaves $3,000 remaining as the balance.

$8,000  Total Medical Bills

–$5,000MedPay

$3,000 Balance

When you settle with the insurance company for the at-fault driver, you are still entitled to have the entire amount of medical bills paid by the at-fault insurance company.

Does this seem fair?  The Colorado Supreme Court says YES.  You have been paying an independent and separate premium for this kind of coverage to your insurance company.  You get the benefits when the event occurs.  To discount it from the at-fault insurance company would create a windfall to the at-fault driver, which wouldn’t be fair.  Further, if your insurance got an reimbursement once the at-fault driver settled, it would in effect, turn the premium paid benefit into a mere loan.  And, that would be unfair, too.   So, this is the system the Colorado legislature created.

And, it can be used to help against those aggressive medical providers who send your bills straight to collections and credit reporting agencies.  So, you don’t have to wait to settle with the at-fault driver’s insurance to take care of pressing medical bills.

Finally, suppose you “rejected” both MedPay and uninsured motorist coverage.  Who would pay your bills in the event the at-fault driver doesn’t have insurance?  Believe me, this happens all the time.   Answer: You are out of luck. You are stuck with the bills, unless you have health insurance. But, even then you don’t get reimbursed for the co-pays and deductibles.

In my opinion, as cost-benefit decision, and in relation all the insurances you might select in life, you are well served by purchasing this kind of coverage.  You never know when you will be the victim of another driver’s poor choices.


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