Health vs. Car Insurance: The Interrelation of Personal Injury and Insurance

Madeleine Jones
June 5, 2017

car insurance, auto accidentCar insurance and health insurance both provide payments to satisfy health bills however the policies usually don’t provide which one injured people should use first to pay for their injuries. An often-overlooked question that victims in car accidents deal with is which policy to use, car or health insurance? The answer typically depends on the injured person’s policy and how their insurance companies interact.

Insurance Companies are Businesses First

Unfortunately, insurance companies are businesses that are driven by profits, not altruism. That means when there is a legally gray area, for example, which company should pay for medical bills first, insurance companies will take every opportunity to obfuscate or delay the decision. When it is unclear which policy applies, i.e. a health plan or a car insurance policy, these companies will often deny claims arguing that it is the other companies’ obligation. These submitted claims are tossed back and forth like a “hot potato.”

These actions put the burden of paying medical bills for the injured person, rather than on the insurance companies.

Health Insurance

Health insurance is a general insurance policy that covers medical bills. Depending on the policy it can include catastrophic injuries, prescriptions, doctor visits, specialists, tests, procedures, and surgeries or any combination of these expenses. Health insurance is supposed to be valid any time that a person tries to obtain medical care, whether it is after the flu, car accident, or injuries during a club soccer game.

However, health insurance companies are known to deny claims if it becomes aware that the person submitting the claim was injured in a car accident. The health insurance company will argue that it is the responsibility of the car insurance company to cover those particular costs. Unfortunately, there is no “hard and fast” rule to deal with these situations. Each insurance company is unique therefore how and why a claim is denied on internal company rules and the insurance policy.

However, health insurance companies must pay an injured person’s medical bills. But that insurance company is also entitled to reimbursement from any judgment or award that the injured person receives. Moreover, if that person is seeking coverage after their car insurer denied coverage, the health insurer may initiate a subrogation claim against the car insurer for reimbursement. So, while the health insurance company bears the initial burden, it can and does seek reimbursement from the responsible party.

Car Insurance: Medical Clauses

All car insurance policies include clauses to pay for medical bills related to an accident. It is under these clauses that the insured can file a claim. However, having a medical clause and being able to use it are two different things. Car insurance companies deny medical claims for a variety of reasons including:

  1. The insurer investigates and claims the injury suffered occurred before the accident;
  2. The insured failed to follow policy rules in filing a claim.

In either scenario, the insurance company will usually back its claim up with a threat to sue the insured. Insurance companies proceed through two steps; first, they request all past medical records and, second, they require the insured to meet with a company physician. Both of these measures are also subject to hard deadlines, sometimes as short as two weeks. If the insured fails any of these requirements, it could give the insurance company grounds to deny the claim.

Additionally, even if the insured does follow the steps, the company physician is incentivized to minimize the cost to the insurance company which could result in substandard care or medical opinions.

Unfortunately, the car insurance company has all the power because the injured usually just want their bills paid. However, these tactics can usually give rise to a bad faith insurance claim which can result in substantially more damages.

Bad Faith Insurance

Bad faith insurance is a claim that insured people can bring against their insurance company if their insurance company wrongly denies their claim. To substantiate a bad faith claim, the insured must show:

  1. That they have an active policy;
  2. They tried to use their policy on a valid event (e.g. an injury or medical bills);
  3. The insurance company denied it; and
  4. The insurance company had no good reason to deny the claim (i.e. the claim was denied in bad faith).

If the insured proves that their insurance company acted in bad faith, then they are entitled to substantial additional damages. The purpose behind bad faith claims is to discourage insurance companies from wrongly denying claims.

What to do

The simple solution is usually to proceed with the health insurer and let the insurance companies fight over who is ultimately responsible for paying the bills. Car insurance claims can result in higher insurance (not necessarily for medical insurance) and subject their policyholders to more onerous rules.

In a crash, remember that the insurance company represents the negligent driver – not you, or your family. Their goal is typically to settle the case as quickly as possible, for the lowest dollar amount they can negotiate. The compensation recovered may be far, far lower than you could have achieved with the help of a Las Vegas car accident attorney.

Our reputation as trial lawyers benefits us when negotiating a settlement outside of court; the insurance companies and their attorneys are aware of our achievements. They know we will be prepared to take the case to court if they fail to make a fair settlement offer.