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Medical payment coverage is an optional coverage offered by most carriers. It provides generally low-level coverage for medical and funeral costs to occupants of an insured vehicle. Under this coverage, the inured party receives compensation either because of a connection to the policyholder or a connection to an insured vehicle. Medical payment (med pay) coverage is no fault and is merely contractual, so generally using it will not cause an increase in premiums. While it is good that using the coverage will not increase premiums, the conditions under which it may be used will be governed almost exclusively by the language of the policy itself.

A question presents itself then. Say you are injured in a car accident. You are a member of a household with three vehicles, all of which are insured, including the optional med pay coverage. Can you collect med pay benefits from multiple vehicle policies? This is known as policy stacking, and the answer to the question depends in large part on state law and the language of the various policies.

In North Carolina, generally, one cannot use the coverage for multiple vehicles insured through one policy (so-called intra-policy stacking). However, if you are a passenger in a car insured under a separate policy (inter-policy stacking), you may be able to obtain coverage under both policies. If, for instance, you are going to a movie with a friend and are injured, you may be able to recover under both his insurance and your own.

This whole calculation may be complicated by an insurance concept known as a “setoff.” A setoff is essentially a counterclaim that one insurer may assert against another. Or possibly against you, if you have already been paid by one or more insurers. It means that insurers would like to determine what total dollar amount is required to make you whole, and then reduce the particular amount they owe by whatever you have received from other insurers.

Application of the setoff concept to med pay has been controversial in North Carolina law. In 1993 the Supreme Court of North Carolina held that it could not be used to reduce compensation paid under uninsured (UM) or underinsured (UIM) motorist policies. Baxley v. Nationwide Mutual Ins. Co., 334 N.C. 1, 430 S.E.2d 895 (1993). However, recently insurers have begun changing the language of the contracts themselves, in an effort to introduce a contractual setoff whenever med pay benefits interact with UM/UIM coverage. This issue remains in flux.

In short, the lesson for the consumer of automotive insurance policies remains the same. Insurance law is complicated. Its application in the wake of an automobile accident is no less so. If you have been injured in an auto accident you are entitled to the benefits for which you have paid. It is a cliché, but still true, that insurance companies don’t make money by paying claims, they make money by finding ways to not pay claims. If you have been in an accident, before you accept any agreement or settlement, always speak to an attorney who is highly familiar with the law and practices in your jurisdiction.

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