No-fault insurance
No-fault insurance, often referred to as personal injury protection (PIP) and/or medical payments (MEDPAY), can help cover you and your passengers’ medical expenses, loss of income and more in the event of an accident, no matter who is found “at fault.” If you live in a “no-fault” state, drivers are required to purchase no-fault coverage as part of their regular auto insurance policy. Other states are referred to as “tort” states.
No-fault states
12 states and Puerto Rico are no-fault states. Those states are:
- Delaware
- Florida
- Hawaii
- Kansas
- Massachusetts
- Michigan
- Minnesota
- New Jersey
- New York
- North Dakota
- Oregon
- Utah
- Pennsylvania*
*Pennsylvania law requires drivers to carry medical benefits coverage, not PIP specifically.
Some states on this list may offer drivers their choice of tort or no-fault coverage.
Tort states
In Arizona, no-fault coverage is optional. When purchasing auto insurance, you may be required to either accept or reject no-fault coverage. Some auto insurance carriers do not offer this coverage up front so you may have to request it specifically as an add-on.
Do I need no-fault coverage?
No-fault coverage applies to you and your family regardless of who is at fault in the accident. It also applies to all passengers in the vehicle at the time of the accident. This coverage applies to practically all forms of medical care including reimbursement for out of pocket costs reasonably related to the auto accident. If you are injured in an accident, you do not need to worry about paying for the gaps in your medical care coverage: which sometimes includes ambulance rides, surgery, and urgent care.
Unlike health insurance, no-fault insurance has no requirement on providers for network status. In other words, no-fault coverage covers the provider YOU want to see, not the provider your insurance wants you to see.
However, no-fault coverage is no substitute for broader health insurance. Few companies are willing to sell more than $25,000 worth of MEDPAY coverage. Common MEDPAY limits are $1,000, $2,000, $5,000, $10,000 and $25,000.
PIP vs. MEDPAY
MEDPAY generally covers reasonable and necessary expenses for medical, surgical, dental, and chiropractic treatment. It also covers hospitalization, EMT or ambulance services, X-rays, lab tests, nursing services, prosthetic devices, and funeral services.
PIP, on the other hand, covers the same services as MEDPAY. But PIP also covers psychiatric, physical, occupational therapy and rehabilitation, plus any other professional health services (check your policy for exact details). In addition, PIP covers lost wages, reasonable costs other than medical and work-loss expenses and a small death benefit.
Like PIP, MEDPAY covers medical bills without regard to fault. However, MEDPAY only covers medical expenses, so it can’t help with other costs like income loss or childcare expenses.
MEDPAY’s biggest advantage is that it never makes the consumer pay deductibles or coinsurance for medical care, and it can pay for the deductibles, coinsurance and copays of other types of insurance, including your PIP coverage or reimburse you for cost already paid out of pocket.
No-fault insurance vs. Health insurance
Having both no-fault coverage and health insurance can be confusing for the policyholder.
If you have no-fault coverage as part of your car insurance, filing a claim requires several steps.
Generally, you pay for your treatment, but your insurance company will reimburse you. If you use no-fault coverage to cover medical expenses, tell the doctor or hospital your auto insurance will pay for the treatment.
Some insurance companies let the policyholder decide which coverage (no-fault or health insurance) to use. But your health care provider may require you to use your no-fault coverage first if you were injured in an auto accident. MEDPAY and PIP are designed for immediate and short-term care and generally used first. Once their limits are exhausted, your health insurance kicks in.
If you live in a state without no-fault insurance, and have MEDPAY or PIP on your auto policy, always use it first to pay for medical expenses related to car accidents. Your health insurer may deny coverage until you have exhausted your no-fault coverage or seek reimbursement for claims already processed.
Auto premiums and MEDPAY
The state of Arizona has laws in place to ensure insurance companies only raise your premiums if and when your risk as a driver increases. Whether or not you caused an accident does not influence coverage of MEDPAY, nor does using MEDPAY cause an increase in premium.
If you caused an accident and were determined to be at fault, that raises your risk. As a result, your premium goes up.
ARS Title 20, Chapter 2, Article 2, §20-263 vehicle insurance; prohibited act by insurer; hearing; penalty:
A. No insurer shall increase the motor vehicle insurance premium of an insured as a result of an accident not caused or significantly contributed to by the actions of the insured. Any insurer which increases the premium as a result of accident involvement shall notify the insured of the reason for such increase.
B. The director, after a hearing, shall order an insurer that has raised the premium of an insured in violation of subsection A to refund the amount attributable to such premium increase and shall impose a civil penalty not to exceed three hundred dollars. In determining whether an insurer has violated subsection A, the director may conduct such investigation as he deems necessary and the costs shall be paid by the insurer pursuant to section 20-159.
Told to use the other driver’s insurance first?
This is bad advice.
MedPay coverage and the other driver’s insurance have different responsibilities. Your MedPay will have a relatively low limit, and your insurer has to pay you immediately. In Arizona, you can use up to $5,000 of it before you have to pay your insurer back.
The at-fault driver’s policy only pays once all of your damages have been assessed. Given your treatment, that could take months and even years.