Vegas Personal Injury Law Blog

Collision coverage pays for the repair of your automobile if you are involved in an accident. It is not fault-based. It will pay for the repair or total loss of your vehicle if you are involved in either an at-fault or a not at-fault accident.

Generally speaking, there are no coverage limits associated with collision coverage. If your insurance company insures your new Mercedes, and that vehicle is a total loss as a result of the accident, they will pay the actual cash value of your vehicle.

On collision coverage, most people believe an insurance company would pay you the Kelley Blue Book price on your vehicle. Insurance companies do not use retail value to determine the total loss value of the vehicle. They use something called “Actual Cash Value”. Actual Cash Value lies somewhere between the price that you would pay if you purchased the vehicle from a private owner and the retail value of your vehicle.

Obviously, if a vehicle is sold for retail value on a car lot, it will be more expensive than what you pay when you buy the same vehicle for from a private owner. Used car dealers usually invest at least $1,000.00 of repairs into vehicle before they place it on the lot to sell it for retail value. All insurance companies subscribe to computer services which determine the actual cash value of vehicles.

With collision coverage, one problem often arises. In the event you buy a new vehicle, and you drive it off the lot, the vehicle is worth less than what you paid for it. This is due to the depreciation in value between a new vehicle and a used vehicle. If you have a loan on your vehicle, the actual cash value of your vehicle can be less than your loan. We call this difference in value “a Gap”. If your vehicle is financed, you can purchase Gap insurance from your finance company. When a vehicle is leased, the residual payments on a lease can be greater than the actual cash value. If you are leasing a vehicle, once again, you should consider Gap insurance.

In the event you have a “classic” vehicle or a “collectors” vehicle, an insurance company will not pay you the value of that vehicle. For example, if you have a 1962 fuel-injected Corvette, which is in pristine condition, and it is worth $250,000.00, rest assured your insurance company will not pay you the value of that vehicle. If you own this type of vehicle, you should obtain “Stated Value” insurance for that vehicle. This insurance, in the event of a total loss or theft, will pay the stated value of that vehicle. There are companies that specialize in insuring classic vehicle such as Hagerty Insurance. My partner, Donald C. Kudler, Esq. had a good experience using them to insure his classic vehicles.

Comprehensive coverage will pay for the repair or replacement of your vehicle in the event your vehicle is damaged by anything other than an auto accident. For example, if a tree falls over on your vehicle, and your vehicle is damaged, this loss or total loss will be covered under your comprehensive coverage.

Collision and comprehensive coverages usually have deductibles associated with them. Your deductible can be zero, $250.00, $500.00, $1,000.00, or higher. Collision and comprehensive coverages with no deductible are more expensive than collision and comprehensive coverage with a $1,000.00 deductible. You should consider your financial status and the differences in premiums to determine which deductible is best for you

Medical payments coverage (also known as Med Pay) is the best bargain that you have on your auto insurance policy. The premium for this coverage is relatively cheap. Medical payments coverage is single-limit per person coverage. The coverages offered by insurance companies are generally $1,000.00, $2,000.00, $5,000.00, $10,000.00, $25,000.00, $50,000.00, and $100,000.00. This coverage pays for reasonable and necessary medical expenses resulting from an auto accident.

One thing to remember about this coverage, it is not fault-based. If you are driving your vehicle down the road, and you drive into a brick wall, and the accident is entirely your fault, your med-pay coverage still applies.

Your med-pay coverage also pays for the medical bills of every passenger in your vehicle at the time of the accident, regardless of fault. If you have five (5) passengers in your vehicle at the time of an accident, then you and your five (5) passengers all have med-pay coverage up to your limits. If you have $5,000.00 in med-pay coverage, you and every one of your passengers has this limit available to them for an accident.

The great thing about med-pay coverage in the State of Nevada, is that there is no right of subrogation. If your auto insurance coverage pays for your medical bills, and you receive compensation for the value of your injury claim from the adverse driver’s bodily injury liability coverage, you are not required to pay your company back for the medical expenses that they pay under your med-pay coverage.

In the event you use health insurance coverage to pay for accident-related medical bills, your health insurance company will most likely have a “Right of Subrogation”. In other words, if you receive money from the adverse driver’s bodily injury liability coverage, you must pay back your health insurance carrier for what they paid out on accident-related medical bills. Some health insurance carriers will require you to sign a Subrogation Agreement before they pay your medical bills. The benefit of using health insurance coverage on an auto accident claim is that you obtain the benefit of any provider discounts which are associated with your health insurance policy. You are only obligated to pay back your health insurance carrier what they paid out, not the full amount of your medical bills.

We, as personal injury attorneys, always attempt to maximize the use of med-pay coverage and health insurance coverages on an auto accident claim. In the event you are involved in an accident, and you are transported from the scene by ambulance to a hospital, and the Trauma Team is involved, it is not unusual for your emergent bills to total $25,000 – $30,000.00. If you utilize your health insurance to pay these bills, you will reduce the costs of these bills substantially by plan provider discounts.

In an ideal situation, you will be able to use your automobile med-pay coverage to reimburse your health insurance carrier for their Subrogation Lien. As little as five thousand dollars ($5,000.00) in med-pay coverage may extinguish your responsibility for all medical bills and the Subrogation Lien of your health insurance carrier.

One thing to consider about auto insurance, is that the first layer of coverage costs the most. Raising your bodily injury liability limits, property damage liability limits, UM/UIM limits, and med-pay limits to higher increments of coverage, generally results in only a minimum increase in premium. In other words, if you double your coverages, your premium does not double.

Some insurance companies offer excess med-pay coverage, which only pays for bills which your health insurance carrier does not pay. This is not ideal med-pay coverage for you in the event you have health insurance.

Med-pay coverage is also not vehicle-specific. Once again, it follows you and your family to protect them in any accident involving an automobile. Also, auto med-pay coverage applies to auto v. pedestrian accidents and accidents which occur when you are not in your own vehicle.

Caveat: Offset. In the event you utilize med-pay coverage and UM coverage or UIM coverage on the same accident claim, your insurance carrier will obtain an offset for the amount of med-pay coverage paid by them.

In other words, if you have a UM claim, which has a value of $20,000.00, and your insurance company pays $5,000.00 in med-pay coverage, they will offset the value of your claim by the amount of your med-pay coverage. On a $20,000.00 claim, they will only pay you $15,000.00. This concept of offset was established by Nevada case law. If your claim is worth $25,000, and your carrier pays $5,000 in med-pay benefits on your claim, your carrier will pay you $20,000, if your UM coverage is above 15/30. Remember offset is subtracted from the value of your UM claim, and not from your UM limits.

Offset also applies to UIM claims. On UIM claims, your carrier also gets a reduction for the adverse driver’s BI limits and offset for med-pay benefits paid from the value of your claim.

Med-pay coverage is the biggest bargain that you have on your auto insurance policy. Auto insurance carriers do not advertise med-pay coverage. I have never heard a commercial by an auto insurance carrier informing the public they offer med-pay coverage to their insureds. If you do not have health insurance coverage, med-pay coverage is a must, because you are more likely to be injured in an auto accident than by any other type of accidental injury.