MedPay is the short form for Medical Payment Reimbursement which is a provision of the Medical Expense Coverage of auto insurance. Med-Pay laws vary with each state. In California the law protects the right of reimbursement to the insured.
This can be explained through an example. When you are involved in a car accident damaging your car and you are injured. Since you have auto insurance coverage you will be paid by your insurer for both your injuries and the damage to your car. After paying you your insurance company will seek reimbursement from the other at fault driver’s insurance company, knowing that he is covered. This is known as subrogation.
The insurance company seeks reimbursement for the medical payment from the person who is legally responsible for the accident after paying out the claim of its insured client. Having made the payment to you your insurance company is subrogated to the rights with respect to your policy and steps into your shoes to demand reimbursement of the medical expenses on your behalf.
Auto insurance subrogation is advantageous to you only when the other driver is at fault. If you are found at fault for the accident, your insurance policy rate will go up in addition to loss of huge amounts of money. When the at-fault driver does not have enough insurance cover or not insured at all, subrogation will still be attempted by the injured driver’s insurer for recovery to the extent permitted by law. In the case of both drivers insured by the same insurance company, the adjusters of both sides meet and decide the percentages of liability of each driver. If they cannot arrive at a decision, a supervisor will make the decision on the responsibility for the crash. If the at-fault driver does not have auto insurance, the subrogation will be collected directly from the party. These processes take a long time and involve payment plans as well.
It is therefore important to know the state laws and insurance requirements so that you can get all the coverage that would make you feel protected and comfortable in the event of an accident.