California Personal Injury and Insurance Blog

Medical Payments Coverage: What is it?

Every insurance policy, the actual policy, has a provision for medical payments, sometimes called "Med Pay" coverage. Not everyone buys it, but more people should. What is med pay?

Med pay pays all reasonable medical expenses incurred as a result of an auto accident for you or anyone occupying your vehicle. The bills must be incurred within one (sometimes three) years of the date of the accident. So, if you are in an accident, even if it is your fault, the insurance company will pay your medical bills.

If you receive med pay coverage and the other party was at fault, you may have to pay back your insurance company for what they paid. Some insurance companies, like CSAA, do not require you to reimburse them. That makes it a better coverage for most people.

Med pay is relatively inexpensive. When your policy is up for renewal, ask your agent how much it would cost to add med pay to your policy.

The Insurance Company's Obligation to Protect Its Insured

The question of the day: Suppose you are in an auto accident and you have a $15,000/$30,000 policy. (Most of you should not, but let's say you do.) You have injured 3 people. Each claim is worth $15,000. The insurance company will not pay more than $30,000. What happens?

Generally, the insurance company will explain to the injured people that they have to share the money. In a case like this, where the injuries are all similar, a good adjuster will offer each person $10,000. That resolves the claim within your policy limits. Some insurance companies will, instead, interplead the money. This means that they give the money to the court and say "We do not know how to divide it. Please divide it for us." All of the parties to the case will be defendants. Each person can then make their case for why they are entitled to more money.

In either circumstance, remember that the insurance company's first obligation is to you - their insured. It is up to them to try to settle the case within your policy limits. They must make reasonable steps to accomplish this. If they do not protect you, you may be able to sue them for bad faith.

Your Insurance Policy Covers Your Personal Property for What?

Your homeowners insurance policy covers you for damage to your home, your "other structures" and your personal property. The home and other structures are covered for any damage that occurs that is not excluded by your policy. (I know, that is a mouthful, but I will explain it in another post.)

Your personal property, however, is covered only if the insurance policy says that it is covered. So, what is your personal property covered for?

1. Fire
2. Windstorm/hail (but boats are only covered for this damage if they are in a fully enclosed building, and all property is covered for rain if it is in a fully enclosed building, but only if the wind causes an opening in the building)
3. Explosion
4. Riot
5. Aircraft, including missiles (Bet you are glad you have THAT coverage, right?)
6. Vehicles
7. Smoke (but not smoke from agricultural smudging or industrial operations)
8. Vandalism and malicious mischief
9. Theft
10. Falling objects (for property in a building, only if the outside of the building is damaged first)
11. Weight of ice, snow or sleet
12. Accidental overflow of water
13. Sudden tearing apart
14. Freezing
15. Sudden electrical Current
16. Volcanic eruption

There is the full list. If you have damage from something other than these 16 items, your insurance policy will NOT cover your personal property. Some of these coverages have exclusions that are pretty detailed. Theft, for example. I will cover those in a future post.

Your Expensive Jewelry and Insurance

Some of you reading this have a lot of expensive items that you think are covered by insurance. But, they may not be covered. Your insurance policy limits how much it will pay for certain items. Most policies limit jewelry, for example, to $1,000. Each policy, though, has a different limit.

That is where scheduling your jewelry comes in handy. Scheduling means that you provide the insurance company with a list of the items and they cover these items based on a separate agreement. Scheduling jewelry, and other items like art, cameras, fur, musical equipment and the like, has two benefits.

First, these items are covered up to the amount that you have insured them for. However, you have to understand that this is the MOST they will pay. If the insurance company can replace your $10,000 diamond ring for $8,000, then that is all they will pay. Conversely, if your $10,000 ring can be replaced for $15,000, they will still not pay more than $10,000.

Second, these items are covered for more than what is covered in your insurance policy. For example, you insurance covers theft, but not mysterious disappearance. Scheduled property is covered for mysterious disappearance, as well as theft. Therefore, for the extra premium, you get more coverage.

If you have expensive items in your home, talk to your insurance agent about scheduling your personal property.

Two or More Policies Insure One Car

Lets say you have more than one insurance policy covering a car. (This is based on a true story!) You have a policy with company A to insure the car. You then take out a policy with company B. And you do this accidentally. In other words, you thought policy A had expired but it did not. And you did not intend to defraud anyone.  Then you are involved in an auto accident. Do you call company A or company B?

You should call company A AND company B. Each company insures you. If your damages are $10,000 to your car, they would each be willing to pay $10,000 if the other policy did not exist. But, insurance companies are smart, usually. They have a clause in your policy that says that if there is other insurance that covers the loss, they will only pay a pro-rata share. A pro-rata share is, essentially, their potion of the loss.

Example: Liability insurance with company A is $100,000 per person, $300,000 per accident. Liability insurance with company B is $300,000 per person, $900,000 per accident. If you injure someone, company A will pay 1/4 of the claim and company B will pay 3/4 of the claim. For your collision coverage, they would each pay half.

Why do you have to notify both companies? Because you have the policy and they need to be aware of it. If you do not notify them, you may be committing fraud.

The simple solution is to make sure you only have one policy covering you at a time. But, if this situation comes up, notify both insurance companies.

Man Charged with Selling Fake Insurance Policies

The California Department of Insurance has arrested a Texas man for selling fake insurance policies. Apparently, this individual had his insurance license expire, but continued to sell policies for almost 4 years. He had offices in Texas, California and New York.

There is a lesson out there from this: check to make sure your agent and/or broker is licensed. The Department of Insurance website allows you to do this pretty easily. Also, Google your agent and/or broker. It is an easy way to see what is out there. This guy had a 2002 cease and desist that I found online. I know it can be a pain, but by taking a few minutes, you can avoid becoming the victim of a scam.

Do Not Burn Your Own Car

Apparently, due to high gas prices, some people are burning their own cars. This would be a bad thing to do.

Burning your own car is insurance fraud. It is a felony in California. If you cannot afford your car, sell it. But, as a former insurance adjuster, I can tell you that catching someone burning their car is easy. Most crooks will not burn a car. Even if they do, they will not burn it completely.

Even though the gas companies are gouging us, this is not the way to go.

Who Owns The Car After A Claim?

Someone reported that they had their car stolen. The insurance company was processing the claim when the police called and the car was found. Who owns the car now?

This is an interesting question. If the insurance company had just received the claim and had not done anything, then the insured still owns the car. If, on the other hand, the insurance company had paid the claim, then they own the car. But, before the claim is paid, who owns it?

This is a bit trickier than it seems. If the insurance company has made an offer, and they are sending a check, I believe that they own the car. If they have made an offer, but have not sent the check, then you still own the car. Each situation, however, is a little different. Some insurance companies want you to sign over the title before they will pay you. In that case, it is clear that once you sign the title, you no longer own the car.

If this situation comes up, your best bet is probably to talk to the insurance company and come to an agreement. You may want the car. They may not want it. Figure out what works best and resolve it that way.

Questions to Ask Your Insurance Company Before You Rent a Car

The general rule is that your insurance company will provide you coverage when you rent a car on your vacation. However, its a general rule, and does not apply to every policy. But, if your policy covers you, you will save a lot of money.

Courtesy of United Policyholders, here is a list of questions to ask your insurance agent before you rent a car:

1. Does your policy have comprehensive and collision coverage?
2. Does your policy cover rental cars?
3. Are there any restrictions on your policy?
4. Will your policy cover the full value of the rental car?
5. Are all of the drivers of the rental car covered under your policy?
6. How much is your deductible?

After you ask those questions, remember that your credit card may provide you insurance, sometimes on a limited basis, for a rental car.

Renting a car on vacation can be a lot of fun (especially when you rent that convertible!). However, make sure you are properly insured before you waive the insurance.

Insurance Fraud - Again!!!!!!

This is a story that really annoys me. An attorney has been accused of insurance fraud. He was, allegedly, the mastermind behind an insurance fraud operation that would recruit people to get into accidents. Apparently, some of these people were recruited in a church bible study. He has now been arrested.

All I can say is that this is frustrating. Attorneys are supposed to be, rightly, held to a higher standard. That means we should not do things like this. We are in a position of public trust. The Department of Insurance should go after people like this. And if you are ever solicited to join a ring like this, remember that insurance fraud is a felony. Report these people to the local police.