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UPDATED: Apr 8, 2020
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When it comes to car accidents, damage coverage is very straightforward: Either a car will be repaired by insurance, or it won’t. Injury coverage is much more complicated, however, and depends upon a number of factors. Injury coverage is determined largely by state law, so specifics coverage will vary from one state to the next. For the most part, however, there are generally three types of medical coverage that can be carried on an auto policy: bodily injury liability, uninsured/underinsured motorist and personal injury protection/medical payments coverage.
Bodily Injury Liability (BI)
Generally, BI coverage pays for bodily injury that you are liable for. If you are responsible for a car accident, your bodily injury liability coverage will pay toward medical expenses for the other driver and his passengers. BI also pays for lost wages, pain and suffering, and other miscellaneous expenses. Usually your BI coverage will have a limit of at least $100,000 per person up to $300,000 per incident, but limits can be higher if you choose.
Uninsured and Underinsured Motorist Bodily Injury Liability (UMBI)
Unfortunately, not every driver has insurance. UMBI pays to cover your medical expenses in the event that you are injured in a collision with a driver who does not have insurance. There is no deductible on your uninsured motorist coverage, and the limits are usually the same as the limits on your BI policy. Underinsured motorist coverage is essentially the same, but is used when the at-fault party’s insurance limits are maxed out. In other words, if a person has a $300,000 limit on their BI coverage and causes $500,000 in injuries, the remaining $200,000 is paid from the injured party’s underinsured motorist coverage.
Personal Injury Protection and Medical Payments Coverage (PIP and Medpay)
Essentially serving the same purpose, both PIP and Medpay are first-party coverage that pay for injuries sustained to an insured person regardless of who is at fault for the accident. PIP coverage is usually meant to be a supplemental insurance to an existing medical insurance policy, and will have a fairly low limit of less than $5,000. PIP coverage would pay to cover medical insurance deductibles and minor bills. Medpay coverage usually has a higher limit, although a deductible may apply. Most people will have one coverage or the other, but not both.
Does Medical Insurance Cover Passengers?
Depending on who your passengers are, different coverage will apply to injured passengers. If the passengers in your vehicle are your resident relatives, then first-party coverage like PIP and Medpay will apply. For insurance purposes, resident relatives are defined as your spouse and any blood-relatives who reside in your home. Relatives who do not live in your home are not eligible to receive PIP or Medpay benefits.
Instead, passengers who are not resident relatives will have the claim paid through your BI coverage. If the accident is not your fault, the portion your insurance company pays under BI will be reimbursed from the at-fault person’s insurance.
Additionally, passengers can seek medical coverage from their own insurance to cover a portion of their expenses. They may file a PIP/Medpay claim under their own insurance policy; this claim will pay for injuries sustained no matter what car they’re riding in or who else might be paying the bill. Their insurance company may then pursue the at-fault party to recover the funds spent under this coverage.
A further complication to the issue of medical coverage is the phenomenon of stacked coverage. Some states allow you to pull coverage from one vehicle and apply it to an accident with another vehicle. For example, if you have exhausted the limits of your BI coverage for an accident, your insurance company may be able to use BI coverage from another vehicle on your policy to make up the difference.
Some states also handle injury claims differently than others. For example, New York and Florida both expect people to use their own insurance to pay for medical expenses, regardless of who is at fault. These states and other “no-fault” states have much higher PIP/Medpay limits than others.
Because injury claims can be very complicated, it’s best to speak with your claims adjuster directly to clarify how your claim will be handled. You can also ask your agent to explain your coverage to you; he will know exactly how coverage is handled in your state and can advise you as to how to best handle an accident that causes injuries to your passengers.