The year was 1971. The Commonwealth of Massachusetts passed its first No-Fault Insurance Law. Two of the fundamentals of the law provided, with some exceptions, that you could not bring a claim for personal injuries resulting from an auto accident unless your medical bills exceeded a certain threshold limit and a certain portion of your medical bills would be paid for treatment to injuries suffered in an auto accident regardless of who was at fault so the insured, in exchange for paying their insurance premium, would not get stuck with medical bills for health care treatment. This second fundamental is referred to as Personal Injury Protection. At the present time most of the drivers in Massachusetts can count on $8,000.00 in coverage for medical bills and lost wages. If you have a group health insurance policy the limit available for medical bills is $2,000.00, your health insurance company is responsible for medical bills in excess of $2,000.00 and the balance is available for lost wages while totally disabled as a result of the injury. If you do not have a group health insurance policy the total $8,000.00 is available for health care reasonably related to the injuries.
The law further provides that if another driver’s insurance company becomes responsible to pay you for injuries suffered in the accident, either by settlement or at trial, your insurance company gets reimbursed by the other driver’s company for the amount paid. The term for this right that your company has is known as subrogation. If you have settled your case you may not even be aware that your insurance company is being reimbursed. If you have received a court judgment against the other driver in the accident you will be made aware of the right of subrogation because before you get paid your insurance company will get reimbursed and the amount reimbursed will come out of the award that the court has given you.
WHEW! Sorry to take so long to get to the crisis but this background information is critical to understanding how some insurance companies are now taking advantage of consumers and how you can prevent yourself from becoming a victim of unsavory insurance marketing practices.
From 1971 things went pretty well until the advent of purchasing insurance on the internet without the advice of a broker and the introduction into Massachusetts of so-called discount insurance companies who base their sales practices on claiming that you can name your own price. Let’s be clear – you get what you pay for and when you name your own price you are almost always getting less coverage than you may need in the event of an accident and will pay a steep price if you are injured in an accident for dealing with these companies.
The major victim of inadequate insurance coverage is the purchaser (you) because you must always have coverage to benefit someone else you injure in an accident but to save a very small amount of premium you may, without knowing it, be losing the right to be paid for your own medical bills and lost wages if you are in an accident. When you buy insurance on the internet, more often than not, the first choice offered has what is referred to as an $8,000.00 deductible on the Personal Injury Protection portion of your policy. The savings are meager and you may not even be aware of what you are giving up unless you are a very sophisticated consumer. Once you have an accident, however, you will find that there is no automatic payment for your medical bills and lost wages. You are out there on your own. Thank your insurance company for the beating that you are about to take.
Here is why you are going to take a beating. First, even if you do not have Personal Injury Protection because you purchased from a discount company, and your medical bills are not paid, and you have not collected lost wages, Massachusetts law allows the other driver’s insurance company, the driver that caused your injuries, to have their right of subrogation and deduct the amount that they would have paid to reimburse your insurance company from your settlement or court award even though you have not received any benefit and will have to pay these expenses out of what is left of your settlement after the deduction. So you are losing up to $8,000.00 in benefits from the at fault insurance company and have not received ten cents in benefits from your discount insurance company. After payment of your medical bills you may end up with nothing in your pocket for your non economic losses for such things as pain and suffering and disability.
In addition let’s say that you have chosen the $8,000.00 deductible because you have your own group health insurance through work or otherwise. Now your medical bills are getting paid by your health insurance carrier and not your auto insurance company but here is the problem. Under Massachusetts law your group health insurance company has an absolute right to be reimbursed for anything that they have paid if you collect from a third party as the result of settlement or a court award. Once again after your health insurance company gets paid there may be little, if anything, available for you for your paid and suffering and disability.
Our advice – stay away from these so called discount insurance companies and their misleading TV ads that state that you can name your own price. They are giving you just what you a paying for which is generally inadequate coverage. Where ever you buy your auto insurance make sure that you have Personal Injury Protection for yourself not just for other people who may be in your car or other third parties such as pedestrians. Buy your insurance through a reputable agent or reputable company that will make sure that if you are involved in an accident you will not end up being shocked by the terrible coverage that you have received by some dealing with some inanimate screen on your computer or laptop.
If you have friends of family who you care about, pass this information on.