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My insurance is covering up to $10,000 of medical expenses but medical bills are exceeding, how does this work?

Jerseyville, IL |

The tortfeasor is underinsured, I have a medpack benefit on my auto policy up to $10,000. My bills so far have exceeded this amount. I plan on sending a demand letter to include all expenses as well as pain & suffering to tortfeasor's insurance company for a dollar amount; but what I need to know is: Since my insurance company is paying the $10,000, will I need to repay the $10,000 to my insurance company? Also, if tortfeasor's insurance company state there is no further money for coverage, will the demand letter need to go to my insurance company and should I deduct the $10,000 from the demand? And should I still ask for a pain and suffering settelement from my insurance?
Thanks so much

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Attorney answers 3


Welcome to my world. This is how personal injury attorneys evaluate cases regularly and some of your questions are good ones.

First off, just recognize that cases with attorneys generally garner much more money that those without. I wish you luck but study after study shows that, even taking into account attorney's fees, claimants get more when they are represented. That said, since you seem to have a good handle on how to initiate this process, you may be taken a bit more seriously by the carrier.

Second, medical payments coverage is contractual, and therefore, almost always requires repayment if you collect from the third party tortfeasor. Generally, most med pay insurers will reduce this amount but you have to negotiate it. Also, the normal reduction is often tied to the 1/3 attorney's fees that rest on the theory that the lawyer created this pot of money and therefore the med pay company essentially retained this lawyer to get it repaid and therefore will reduce by that percentage. It's known as the Common Fund Doctrine.

Keep in mind, the tortfeasor's carrier will know all of this and will have calculated who paid what and likely what you must repay and also probably what you will ask for when they calculate authority on the case. See what happens, but so much depends on who you get assigned to as an adjuster, the office, the company, how you hit it off on the phone, and whether there are any "red flags" on your claim that cause the carrier to fold its arms and say "no." Get a feel for the situation and that should determine how things go for you.

As far as what to include in a demand package, I'd say anything you can prove or think you can prove, or any damage you could argue for in court, should be included.

I wish you luck. Hope things work out for you!

Stephen L. Hoffman
Law Office of Stephen L. Hoffman LLC
Chicago, IL

This answer is provided for informational and advertising purpose and is intended not to be construed as legal advice. Further, please note that this practitioner is licensed in the State of Illinois and only answers questions involving incidents and the law of that jurisdiction.


In short, yes; your insurance company will have a "subrogation" interest in the 10k it pays for your medical billings. This means the company has the right pursuant to the contract of insurance to be repaid out of settlement proceeds.

If the "tortfeasor" (the other driver) is actually underinsured, you may have a claim against your own company pursuant to your own underinsured motorist coverage. This can be a bit confusing. The amount of your underinsured coverage must exceed the amount of the adverse driver's liability coverage in order for you to have such a claim. Note well however that if you settle your claim against the other driver for an amount less than the full extent of his liability coverage (absent written permission from your own company approving such a settlement), you will have no claim under your own underinsured coverage.

Generally speaking, your underinsured claim (should you have a claim) has the same elements of damages as a claim you would make against the other driver.

Coverage matters are more complicated than they might seem to be at face value. You should consult personally with an attorney experienced in these matters before proceeding any further. You certainly should consult with an attorney before accepting any settlement offers from any insurance carriers and signing releases.

Disclaimer: The information contained in this answer is not legal advice, does not establish an attorney-client relationship and is offered for informational purposes only. Individuals with questions or problems in any area of the law should consult a qualified attorney licensed to practice in the individual's jurisdiction.


You have a number of questions I will try to address individually.
First, the $10,000 may need to be repaid out of any settlement money you receive from the tortfeasor's insurer at the end of the case. This will depend upon a number of things including the language of your own insurance policy. If you don't have a copy you should order it right away. If the language of the policy says you have to repay it, this does not necessarily mean you have to pay it back 100%. In IL there is a "common fund doctrine" which basically allows for a 1/3 reduction in repayment of money like this to allow for reasonable collection efforts by you or your attorney. The insurance companies typically don't tell people like you about this. Insurance companies also commonly negotiate subrogation claims so that the insurance company will accept a much less rate, often 50%, to encourage settlement. By cutting its subrogation lien to allow for a settlement offer it recovers some money quickly versus risking all on a trial.
Second, for your demand letter to the tortfeasor's insurance company, you should absolutely include pain, suffering and any other damges you can claim. Remember that the dollar amount you request, no matter how reasonable it is, will be deemed by the insurance company as you highest demand from which it will make a counter offer. If you start with a low demand you will only go lower, not higher. Insurance adjusters are trained to scoff at the first demand regardless of how reasonable it is.
Third, do not deduct the $10,000 from your demand. It is part of your medical bills. It is part of your damages. You may have to repay it (or a portion, see above). Do not leave it out in your demand to any insurance company.
Fourth, I am not sure I understand what you mean by the tortfeasor's insurance company claims there is no further money for coverage. There are minimum coverage amounts that all insurance companies must supply in IL. You have a right to know what the coverage amounts are for the other driver. Find out what it is for the other insurance company. Has the other company paid your medical bills to exhaust that coverage amount? If there truly is no more coverage and if you had full coverage you likely have an underinsured motorist coverage claim through your own insurance company. If that is the case you most likely will need to demand arbitration and make your own claim through your own insurance company. Your company will then essentially be stepping in the shoes of the other driver by challenging you to prove the severity of your injuries.
You have a pretty complicated case. I wish you the best in getting it resolved to your satisfaction.

The information supplied is not to be considered legal advice. I am licensed to practice law in Illinois and in Missouri. (618)692-0011

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