Out-of-Pocket Expenses

When you get injured in an accident, you will have many expenses. Many do not fit neatly into the categories the insurance company lists on its claim application. As a result, you will pay many of these expenses hoping for reimbursement from the insurer when your claim settles.

Here is an overview of the out-of-pocket expenses you might incur after an accident and how the insurer decides whether to reimburse them.

Insurance in New York

New York uses a no-fault auto insurance system. This means vehicle owners in New York must buy certain  insurance coverage:

Personal Injury Protection (PIP)

PIP coverage is the “no-fault” part of no-fault insurance. When you get injured during an accident, your insurance company will pay:

• Medical expenses
• Loss of earnings from work
• Necessary and reasonable out-of-pocket expenses up to policy limits

Your insurer will pay PIP benefits regardless of who caused the accident. But in exchange for these guaranteed benefits, you cannot seek compensation from the at-fault driver unless you meet certain conditions.

Liability Insurance

Liability insurance covers third parties when the insured customer causes an accident. For example, suppose that a negligent driver has legal liability for a car accident. The driver’s liability insurer has a contractual duty to pay claimants on the driver’s behalf.

There are two types of liability insurance. Bodily injury liability (BIL) coverage pays for necessary and reasonable expenses resulting from an injury. Since New York is a no-fault state, you can only make a claim against the at-fault driver’s BIL insurance under two conditions:

• You exceed your PIP limits
• You suffer a serious injury as defined by the law in New York state

Unlike PIP, you will not have a hard cap on out-of-pocket expenses if you file a claim against the at-fault driver’s BIL coverage. Instead, you should get reimbursed for out-of-pocket expenses caused by your injury that were reasonable and necessary.

New York also requires you to buy property damage liability (PDL) coverage. This coverage pays to repair or replace your vehicle after a car accident. Again, PDL coverage will pay for any reasonable and necessary out-of-pocket expenses caused by your accident.

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Examples of Out-of-Pocket Expenses

The types of expenses and the amount of reimbursement you can seek will depend on the nature of your claim.

Claims for Bodily Injury

Bodily injury claims, whether filed as PIP claims or BIL claims, cover all necessary medical expenses for:

• Hospital stay
• Surgery
• Nursing
• Dental
• Ambulance
• X-ray
• Prescription drugs
• Prosthetics
• Psychiatric
• Physical therapy
• Occupational therapy and rehabilitation

Your bodily injury benefits cover everything on this list. Thus, if you pay a copay for your prescription drugs out of your pocket, your insurer will fully reimburse you for that co-pay. Even though you paid the co-pay out of pocket, insurers consider the co-pay a medical expense rather than an out-of-pocket expense.

Out-of-pocket expenses include reasonable and necessary expenses other than medical and job-related losses. Some examples of out-of-pocket expenses for bodily injuries include:

• Transportation if you cannot drive due to your injuries
• Childcare
• Assistance with daily needs
• Delivery charges if you cannot leave home due to your injuries
• Over-the-counter medication
• Travel expenses for out-of-town medical appointments

If you file a PIP or uninsured motorist claim, you can only claim $25 per day in out-of-pocket expenses. If you file a BIL claim, you have no limit. Under either type of claim, these expenses must be:

Reasonable

You must have paid a fair amount for the good or service. If you overpaid, the insurer can deny reimbursement or reduce the reimbursement to a reasonable rate.

Necessary

The expense must be necessary based on your injury. If you fractured your leg, you might need your groceries delivered. If you fractured your rib, you might not.

Caused by Your Injury

You must show some causal link between the expense and your injury.

While you might believe that getting a haircut will relieve your depression after suffering a concussion, your insurer might not agree. Conversely, if your concussion causes post-traumatic stress disorder (PTSD) that prevents you from driving, an insurer may reimburse you for the taxi fare to get the haircut.

Claims for Property Damage

Insurers will also reimburse you for out-of-pocket expenses for the loss of your vehicle. These reimbursements often cover additional expenses that you might not get under a bodily injury claim.

For example, if the at-fault driver disabled your vehicle in the accident, you can seek reimbursement for a rental car regardless of how badly you got injured. Similarly, an insurer may pay grocery delivery charges if their customer totaled your car even if your injuries allow you to drive.