Financial Self-Protection Letter
1. Medical Payments (Med Pay) Coverage
Every car insurance company that does business in Arkansas is required to offer medical payments coverage of $5,000 per person injured in a car wreck for reasonable and necessary medical expenses caused by the wreck and incurred within two years of the wreck.
If you do not have health insurance, you should, if at all possible, have med pay (as it is also called) because it is cheap compared to health insurance and because you or a family member may be injured in a wreck and have medical bills that you must pay.
If you do have health insurance, you also should have med pay.
Most family medical practices will not bill health insurance for car wrecks. Nearly all of them require payment at the time of service. Med pay will reimburse you for those out-of-pocket expenses.
If you have an 80% / 20% health insurance policy, med pay could pay for that 20%.
If you have a deductible that has to be met, med pay can step up and reimburse you for the amounts you have to pay for deductibles. Sometimes you may need to pay a specialist in advance for an office visit. Med pay can help in all of these situations also. Med pay is very beneficial. If you are in a wreck, it will be very beneficial for you as well.
Med pay, unlike uninsured and underinsured, does not depend on fault. If you are injured in a wreck, it pays.
Like uninsured and underinsured, med covers you if you are injured in someone else’s vehicle.
Let’s say you are driving your best friend’s vehicle and you are injured in a wreck that is either your fault or not. If you have med pay on your vehicle, it pays. If you do not have med pay and he does on his vehicle, his med pay pays.
But, if neither you nor your best friend have med pay, then there is no med pay coverage and you will have medical bills which you can’t pay.
2. Total Disability Income Coverage
This coverage pays up to a maximum of $140 per week, beginning after the first week, for 52 weeks. To qualify you have to have been employed or hired to work at the time of the wreck and be unable to work, according to your treating physician, because of injuries from the wreck.
You have to show your pre-tax weekly gross income and your insurance company will pay two-thirds up to $140.
The total disability income coverage pays whether the wreck was your fault or not. This is an extremely inexpensive coverage that you should have on your vehicle if anybody driving or riding in it is employed. No one can live on $140 per week but, when you cannot work, every little bit helps.
Total disability insurance goes with you and, in most situations, pays whether you were in a wreck in your vehicle or in someone else’s vehicle and whether it was your fault or not.
3. Underinsured Motorist Coverage
Underinsured motorist coverage is for your financial protection from the at-fault driver / vehicle that has some but not enough liability insurance to fully compensate you or a family member for injuries and damages. Arkansas requires that liability insurance be a minimum of $25,000 per person and $50,000 per wreck.
If you are injured and have $20,000 in medical bills, $10,000 in lost wages and the loss of a leg, $25,000 minimum limits on the at-fault vehicle would not fully compensate you. The at-fault vehicle would be underinsured.
You should have underinsured motorist coverage so your own auto insurance company will step in to provide the additional compensation that will fully or more fully compensate you for your injuries and financial losses.
As with med pay and total disability income coverage, in most cases your underinsured coverage goes with you and protects you if you are injured in another vehicle by an at-fault underinsured vehicle.
Let’s say you were driving your best friend’s car, you were injured by an at-fault driver whose vehicle has minimum limits of $25,000, your friend does not have underinsured motorist coverage, and you have $20,000 in medicals bills, $10,000 in lost wages and the loss of a leg.
The at-fault vehicle’s $25,000 minimum limits would not fully compensate you. Your underinsured motorist coverage with your own insurance company would then step in and could provide up to the limits of your underinsured motorist coverage. You should have at least as much underinsured coverage as you do liability coverage.
4. Uninsured Motorist Coverage
This coverage will provide compensation to you and any other family member injured in a wreck because of the fault of a driver and/or vehicle that has no liability insurance. If this happens, your own insurance company steps in to provide compensation for your injuries for which you have paid the premium.
This is important because I have read reports in the past that state one (1) out of four (4) vehicles on the road in Arkansas was not insured. I have also recently read reports that, because of our severe recession, many owners are dropping their liability insurance because they simply cannot afford to pay for it. I estimate that now at least one (1) out of three (3) vehicles in Arkansas is not insured.
As a result, if the wreck was caused by the fault of the driver of an uninsured vehicle and you do not have uninsured motorist coverage, you could suffer financial losses.
It is very important for you to financially protect yourself and your family by obtaining uninsured motorist coverage which will compensate you and your family for injuries and damages if injured by an at-fault uninsured motorist. Your uninsured motorist coverage covers your vehicles, and in most cases, also goes with you and protects you if you are injured in a wreck while driving or riding as a passenger in someone else’s vehicle.
Let’s say you are driving your best friend’s car, you are injured in a wreck caused by the fault of another driver who is uninsured and your best friend does not have uninsured motorist coverage. Then, in most cases, your own vehicle’s uninsured motorist coverage will step in and provide compensation for your injuries. You should have at least as much uninsured coverage as you do liability.
5. All of Your Vehicles Have to be Insured to Have Coverage in Someone Else’s Vehicle
Now, there’s one thing I need to make crystal clear: Medical payments, total disability income, underinsured motorist and uninsured motorist coverages will protect you and your family in someone else’s vehicle, in most cases, BUT only if all of your vehicles have medical payments, total disability income, underinsured and uninsured coverages.
Here’s one example. Let’s say you have two vehicles. The newer one has medical payments, total disability income, underinsured, uninsured coverages and the older one has liability only. You would be protected if you were injured in a wreck in your newer vehicle but not the older vehicle. You would also not be protected in someone else’s car in a wreck because the old vehicle did not also have medical payments, total disability income, underinsured motorist and uninsured motorist coverages.
6. Prior Rejections of Medical Payments, Total Disability Income, Underinsured Motorist and Uninsured Motorist Coverages Last Forever if Not Changed
Arkansas law requires every automobile insurance company that does business in Arkansas to offer these coverages. It also provides for rejection of them. If you do not have medical payments, total disability income, underinsured motorist and uninsured motorist coverages, it is because you or somebody acting on your behalf has checked and signed a document, when the insurance was first purchased, or later, which rejected these coverages.
Understandably, many people try to get the lowest price possible on their vehicle insurance and only get what is the minimum required by law . . . which is liability for bodily injury and property damage and what may be required for a car loan which would be uninsured motorist property damage, comprehensive and collision to pay for the car if it is wrecked.
If your spouse or a friend goes to buy the insurance, he or she can reject medical payments, total disability income, underinsured motorist and uninsured motorist coverages for the vehicle and that rejection stays in effect for both spouses and friends for all subsequent vehicles until it has been changed.
For example, if you do not have uninsured or underinsured motorist on your car now, and you trade it in and buy a new car and transfer your insurance policy to your new car, you will still not have these coverages.
If you do not have these coverages now, you will not have them until you go to your insurance agent or company and get these coverages on your vehicle(s).
In my experience representing clients who have been injured in car wrecks, my clients that have had medical payments, total disability income, underinsured and uninsured coverages have come out in much better shape financially than those who did not.
Again, call your car insurance agent or company to find out if you have these four (4) coverages and, if you do not, obtain them. A binder is a document from your insurance agent or insurance company which states that an insurance coverage has been issued. Request a binder when you obtain these coverages because they go into effect at that moment.
Finally, if you are still undecided or have questions about these coverages, I will be happy to meet with you or talk to you about them for free because these coverages have been so financially beneficial to my clients injured in wrecks.