Expert: Bennie719 - 10/25/2007

Question
I read other readers question and you stated she had to pay insurance company back the med pay paid to her bills. Why then is this insurance sold as a benefit to the insurer. Why would any one want to pay for insurance to be able to pay medical bills for another liable party?

Answer
Hi Sheila,
Some private health insurance policies contain this clause, all HMO's and Medi-Care contain this clause.
A large number of Auto Insurance policies contain this clause. but as a group, they only insure a small percentage of the population.  These are the small 'high risk' companies, The large companies such as AAA, Allstate, State Farm, Farmers, Aetna, Hartford etc do not contain such a clause.
It only applies in cases where you are not at fault and are able to receive a settlement from the other company.  People purchase this coverage in case they are at fault, perhaps when they have no health insurance or know that many of the people who ride with them on a regular basis have no health insurance.  This group of drivers usually have something wrong with their driving record and just don't qualify to purchase insurance with one of the larger 'preferred' companies.
Since the companies that have this clause are primarly high risk and very expensive, this clause helps them lower the cost of their medical payment coverage.
I hope you now better understand the issue.
Sincerely,
Bennie
San Francisco Bay Area 10-25-07 10:19 AM PST