Medical Payments (Med Pay) In Insurance Policies

Policy holders in Dallas, Fort Worth, Grand Prairie, Garland, Carrollton, Grapevine, Mansfield, Arlington, Weatherford, or any other place in this state usually do not have a very good understanding of the various benefits they have in their auto policy. In Texas, liability coverage is required to on automobiles traveling on Texas highways. The Texas Department of Insurance also requires that uninsured and underinsured coverage be offered on all auto policies. Personal Injury Protection (PIP) is also a required coverage unless it is rejected in writing.
But what about other types of coverage on an auto policy? Collision, towing, rental, etc. Here is one most people are not aware of: Medical Payments coverage, otherwise known as “med pay.”
Med pay coverage is an optional coverage. Under this coverage, the carrier agrees to pay “reasonable expenses incurred for necessary medical and funeral services because of bodily injury caused by accident and sustained by a covered person.” This insuring agreement uses the term “caused by accident” as opposed to the more specific phrase “auto accident” used in the liability insuring agreement. This coverage defines “covered person” as the named insured or any family member while occupying or being struck by a motor vehicle. Also, any other person occupying the named insured’s covered auto is entitiled to med pay coverage. The coverage for those persons other than family members, however, is limited to occupancy in a covered auto.
Med pay coverage is generally broader than PIP coverage. This is discussed in the Waco Court of Appeals case, Dhane v. Trinity Universal Insurance Co., a 1973 case.
Unlike any other provision in the Texas Auto Policy, Texas courts have ruled that med pay benefits can be “stacked.” This was stated in a 1969, Austin Court of Appeals case, Harlow v. Southern Farm Bureau Casualty Insurance Company. In other words, an insured may receive med pay benefits as if the benefits were being paid on two separate policies when a single policy covers two automobiles and the premium charged on the policy has been paid separately on each automobile.
There are similar exclusions under the med pay coverage and the liability coverage, most notable of which are the worker’s compensation exclusion and the owned but not insured exclusion.
As for the workers compensation exclusion, the standard auto policy does not provide med pay coverage for any person for bodily injury occurring during the course of employment if worker’s compensation benefits are available for the bodily injury. Thus, med pay coverage will apply only if the insured does not have worker’s compensation benefits available to him or her.
As for the owned but not insured exclusion, like the liability coverage, med pay coverage does not extend to the named insured while he or she is occupying a vehicle, other than his or her covered auto, which is owned by him or her or furnished or available for his or her regular use. To extend such coverage would force the carrier to accept a greater risk without receiving a corresponding premium.
There are other elements of med pay but the one to be aware of is that med pay is subject to subrogation. The standard auto policy provides a general subrogation right to the insurer for all payments, except payments made under the PIP coverge. This specific right to subrogation of med pay benefits was recognized in Foundation Reserve Insurance Co. v. Cody, a 1970, Dallas Court of Appeals case.
The one thing about med pay that might be the most relevant is: Med pay is a much less expensive coverage than PIP, yet the differences between the two are not that great.