Streetsmart insurance Blog
If you operate a company that has a fleet of commercial vehicles, or if you are the owner and operator of a trucking business, then you will need to select a commercial insurance policy for your vehicles. The definition of “commercial vehicle” can vary from state to state, so to start, it is a good idea to check what that definition is in your state.
In some areas, a “commercial vehicle” is defined simply as any vehicle that is used for business. In other regions, a vehicle needs to clear a certain minimum weight to be considered a “commercial vehicle.” Determining where you fall on this scale is imperative because it will tell you whether you need commercial vehicle insurance or regular auto insurance for your business vehicles.
Choosing the Right Commercial Insurance Policy
If you check you state’s definitions and determine that you do indeed need commercial vehicle insurance, you can turn your attention to selecting the right policy. To make an educated decision on which policy is best for you or your company, you need to be familiar with two key pieces of commercial vehicle insurance jargon: PIP and Med Pay.
PIP and Med Pay are two types of coverage that can be included with a commercial vehicle insurance policy. Med Pay is essentially short for “medical pay,” while PIP is an acronym for “personal injury protection.” These two terms seem like they should mean the same thing, but there are major differences between them that can impact your choice in commercial vehicle insurance. Below, we’ve defined PIP and Med Pay in layman’s terms.
Personal Injury Protection:
If you think of PIP and Med Pay as the two different tiers of medical insurance possible for a commercial vehicle insurance policy, then PIP can reasonably be classified as the higher-level tier of coverage. If your commercial vehicle is involved in an accident, a policy including PIP will offer coverage for medical expenses and lost wages. PIP policies will pay for the majority of injury expenses related to the accident, including hospital costs, physical therapy, rehabilitation, psychiatric therapy, and more. PIP coverage and also pay for funeral expenses, if the accident results in death.
Med Pay coverage is the lower tier of the medical benefits that you can get with a commercial vehicle insurance policy. In the case of an accident, Med Pay can provide medical coverage for the driver of the vehicle and their passengers. Typically, Med Pay won’t cover all of the health expenses that PIP will. However, hospital bills or other medically-required costs or procedures (including surgery, dental care, chiropractic care, and more) will usually be covered under Med Pay. Med Pay may also cover funeral expenses, depending on the policy.
Understanding the Pros and Cons of PIP and Med Pay
By definition, you cannot have—and do not need—both PIP and Med Pay. Your options, then, are to choose one or to go without this type of coverage as part of your commercial vehicle insurance policy. The question is, which type of medical coverage is best for you?
First off, check your state’s laws. 16 states currently require you to buy PIP as part of your commercial vehicle insurance. If you live in one of these states, your decision is already made. There is no need to weigh the pros and cons further.
The only major drawback with PIP is that it is more expensive than Med Pay. However, commercial vehicle insurance policies that include PIP also cover a more comprehensive array of medical and recovery costs. Also, Med Pay offers no coverage for lost wages, which is the deciding factor for many insurance buyers—particularly independent owner-operators.
It’s also worth noting that, if you and/or your drivers already have personal health insurance plans, having Med Pay might be redundant. Med Pay only applies to injuries incurred as a result of an accident in the insured commercial vehicle. Personal health insurance has broader coverage and may be perfectly adequate if you already have a good policy. If you have both health insurance and Med Pay and you are involved in a commercial vehicle accident, you would be doubly insured, which isn’t necessary.
To learn more about your options, speak with your insurance agent about commercial vehicle policies and about their PIP and Med Pay coverage. Finding out more about your specific policy choices and the medical expenses that they do and do not cover should help you come to a final decision if you are on the fence.