Medical/Property Costs calculated before or after 1st Party insurance?
I was in a car accident where a 4-axle truck improperly changed lanes and rammed the driver's side of my car. I am learning about the claims process, and have this question:
In my demand letter (and in any other correspondence with the at-fault driver's insurance company) can I list the full price of my medical treatment, or just the out-of-pocket costs that my insurance company did not pay through PIP? I've heard both - so now I am confused.
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ANSWER for "Medical/Property Costs calculated before or after 1st Party insurance?":
Hopefully this will resolve some of the confusion. In my humble opinion, you should list the full value of the medical bills and here's why: The insurance company will use this number to put a value on your claim, therefore the higher that number, the higher the settlement.
Where the confusion comes is through a process called "subrogation." When your insurance company has paid all or a portion and you also receive money in the form of a settlement, most policies have a subrogation claim provision which allows them to seek recovery directly from you.
This is typically not a problem because you would have settled with the insurance company and would have the funds to pay through a subrogation claim.
You usually come out ahead because subrogation claims can be compromised. Let's say, for example that you had to get an MRI and it cost $1000.00. Your insurance PIP paid $600.00 leaving $400.00 as a balance owed to the hospital. Your case settles for $3000.00 (settlements are often 3 times the medical expenses).
Well, the $600.00 would be part of the subrogation claim and if argued correctly, you might convince them to settle for $300.00.
In addition, what is owed to the hospital ($400.00) might also be compromised to $180.00, therefore your total out of pocket is $480.00 and you get to keep $2520.
Contrast this with using the smaller figure of $400.00. Applying our "Rule of Three" the case would settle for $1200.00. Even if you got the hospital to take $180.00, that only leaves you with an aggregate settlement of $1020.00.
As you can see, you are in a much better position using the higher dollar amount even with subrogation and hospital claims.
The above is general information. Laws change frequently, and across jurisdictions. You should get a personalized case evaluation from an attorney licensed in your state. Find a local attorney to give you a free case review here, or call (888) 647-2490.
Best of luck,
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