Car accidents are not cheap, especially when there are injuries involved: medical bills, lost productivity, emergency medical services, property damage, and other expenses bring the total annual economic impact of motor vehicle accidents up to $242 billion, according to the National Highway Traffic Safety Administration. Some of those expenses are not passed on directly to accident victims; however, data from The National Safety Council reveals that the individual cost of an accident fatality averages over $1.5 million, while a disabling injury costs an average $90,000.
An accident settlement may help you afford some of these expenses, but it may take months — sometimes years — for your case to be resolved. In the meantime, those bills will come due, prompting some to wonder how they’re going to manage expenses while they wait to receive their settlement.
The good news is that victims of serious car accidents do have options that can help them afford medical bills and other expenses while their case is being settled. From personal injury protection insurance to car accident settlement loans, there are many alternative payment structures and plans that can help you afford or defer expenses while you wait for your settlement. Here are a few of those options.
Car Accident Settlement Loans
One way to pay for immediate accident-related expenses is to apply for a car accident settlement loan. These loans, also called pre-settlement loans, can enable you to obtain funds for expenses associated with their accident, and therefore can be helpful in some cases.
After you apply, the lender will contact your attorney to evaluate the likelihood of a settlement and its expected value. If approved, the loan company will then work with your lawyer to negotiate the details of your loan. Once the case is resolved, the amount of the advance, plus fees and interest, will be taken out of your settlement.
Opting for a car accident loan can sometimes help your legal case, as well: your lawyer may have more time to negotiate a favorable settlement, and you’ll be able to afford to go to trial, should it come to that.
However, we caution clients against car accident settlement loans unless they are absolutely necessary. These loans should be used as a last resort only — when other payment methods are unavailable or have been exhausted. There are many negatives to car accident loans:
- Exorbitant “interest” rates. While car accident settlement loans are set up in a way that avoids state laws against usury (unconscionably high interest rates), it is common for settlement loan rates to be extremely high, ranging from 27 percent to as high as 60 percent interest. Typically, your rate increases as your case gets older, so if you case lasts a long time, you could wind up owing a substantial amount in interest. In some cases, the total interest alone is much more than the amount of your initial loan.
- Car accident settlement loans are not highly regulated. When you receive a loan from a bank or credit card company, that organization must comply with consumer protection regulations set forth by the FDIC. Unfortunately, in many states, car accident settlement lenders are not as well regulated as other loan providers. Car accident advance lenders may not be restricted as to how much interest they can charge, and they are not subject to the same requirements for loan term disclosure. This means they may not tell you how exactly loan interest is being calculated, what types of fees are included in your loan, and what type of penalties you will incur if you do not repay your loan.
Additionally, some clients may not qualify for pre-settlement advances. Lenders will only approve your loan application if there is a high chance that your case will settle in your favor. For these reasons, we recommend investigating the alternatives below before opting for a car accident settlement loan to pay for medical bills.
Personal Injury Protection Health Insurance Coverage
The state of Texas requires car insurance providers to offer personal injury protection coverage, or PIP. While this coverage is elective, if you have purchased it, the burden of paying for many expenses associated with your accident falls to insurance carriers. More specifically, PIP policies cover the following.
- Medical costs, including surgery, x-rays and other tests, ambulance rides, hospital stays, prosthetic devices, and professional nursing services
- Funeral costs
- A percentage of provable lost wages due to accident injuries
Your insurance policy will dictate just how much money your insurance provider is required to cover — your PIP may have policy limits that will affect how much you can receive. Our lawyers can help you understand your PIP coverage and work with insurance providers to obtain compensation.
Med Pay Car Insurance
Another route many accident injury victims choose is to use coverage from their car insurance policy. If you have elected for personal injury coverage, known as Medical Payments to Others or Med Pay, you will be entitled to receive compensation for your injuries and the injuries of other parties traveling in your vehicle at the time of the accident.
Med Pay is very similar to PIP, except that the extent of coverage is much more limited and you have to pay it back out of any car accident settlement you secure from the at-fault driver. For example, PIP may pay for lost wages, whereas Med Pay will not. There are also policy limits that will dictate how much compensation you can receive through Med Pay. The most you can expect to receive is $25,000, and that’s only if you have selected the highest level of coverage.
Working with Your Medical Provider
Many accident victims do not realize that medical providers are often flexible with patient payments and may allow you to pay bills through a payment plan or defer payments until you are able to afford them.
A personal injury attorney can work with you to identify medical professionals who can help, and negotiate with those providers to arrange payment alternatives. We may be able to advocate on your behalf to lower your medical bills, as well.
Negotiating a settlement is just one of the reasons to contact a personal injury lawyer. Attorneys can also help you avoid disreputable lenders who prey on accident victims, and identify ways to pay for expenses while you wait for your case to be resolved.
Trustworthy law firms like ours will not only assist you with the legal details of your case, but help with your financial concerns as your case proceeds. Contact us today for a free case evaluation and to have all of your questions about medical bills answered.