When you purchase a no-fault policy for your vehicle, your insurance company should give you the option of buying either uncoordinated auto insurance or coordinated auto insurance.
The question then becomes, what’s the difference? And which type of policy do you choose?
The difference is this. If you have uncoordinated auto insurance coverage, your Michigan no-fault insurance is primary and pays first if you’re injured in a car accident. On the other hand, if you have coordinated no-fault coverage, your health insurer and/or disability insurer pays first — in other words, your Michigan no-fault benefits are secondary.
Most consumers go with a coordinated no-fault policy. Why? Because it’s cheaper.
But be forewarned: cheaper isn’t always better. In fact, it’s highly recommended that Michigan drivers pay a little more for uncoordinated auto insurance coverage. Here’s why.
Uncoordinated Auto Insurance Offers Medical Freedom Of Choice
If you have coordinated no-fault coverage and you’re insured by an HMO (or similar managed health plan), you must exhaust all medical treatment available under the health plan before your no-fault insurer must pay medical expenses incurred as a result of seeking treatment outside your plan. Why is this important? Because it can end up in a loss of choice for those patients who believe their injuries are better treated by non-plan medical providers.
But with uncoordinated auto insurance coverage, you can be treated anywhere you want. The only limitation is that the services must be “reasonably necessary” and the charges must be “reasonable” in amount.
Liability Settlement? An Uncoordinated No-Fault Policy Protects It
If you have coordinated auto insurance and you end up getting a liability settlement for your injuries, you may have to pay all, or a portion of, that settlement to your health insurance plan if it has an enforceable lien. It’s important to remember that these liens may be enforced even though the settlement is for non-economic damages and your health insurance plan only paid medical benefits.
However, with uncoordinated no-fault coverage, your auto insurance provider pays your medical benefits and wage loss first. This is important because, under current law, a no-fault insurer cannot claim reimbursement from a liability settlement that represents only non-economic loss. Therefore, any settlement you might recover is protected from being depleted by a health insurance plan that has a valid lien or reimbursement rights.
Fewer Hassles With Uncoordinated Auto Insurance Coverage
If you have a coordinated no-fault policy, you must first exhaust all benefits payable by any health plan, etc. In other words, you must first submit a claim to these other insurers, get payment, obtain an explanation of benefits and then submit the balance to your no-fault insurer for payment. This forces you to process numerous claims with various insurers in order to be fully compensated.
The insurance claims process is much simpler under an auto insurance policy with uncoordinated benefits. Why? Because you only have to deal with your no-fault insurance carrier, which must pay your claim as the primary insurer.
Uncoordinated No-Fault Benefits Prevent Health Insurance Depletion
Your health insurance pays first if you have coordinated auto insurance benefits. But be careful: if your health insurance has lifetime coverage limits and you’re seriously injured in an auto accident, you may substantially deplete your health insurance and be left with inadequate protection should you have future substantial expenses due to illness, etc.
Under an uncoordinated auto insurance policy, however, you never have to worry about diminishing your health insurance due to a car accident injury because your no-fault insurance is the primary payer.
If you’ve been injured in a crash with another passenger vehicle or involved in a semi-truck accident in Michigan, our experienced Lansing car accident lawyers and Grand Rapids auto accident attorneys are here to answer your questions about your right to no-fault insurance benefits. Contact us today.