Visitor Question

Medical/Property Costs calculated before or after 1st Party insurance?

Submitted By: Jake (Quakertown, PA)

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.


Disclaimer: Our response is not formal legal advice and does not create an attorney-client relationship. It is generic legal information based on the very limited information provided. Do not rely upon the information in our response, or anywhere else on this site, when deciding the proper course of a legal matter. Always get a personalized case review from a local attorney.


Dear Jake,

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 a licensed attorney. Find a local attorney to give you a free case review here , or call (888) 647-2490.

Best of luck,

Published: May 14, 2010

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