In NJ, health ins can be primary over auto ins. Pros/Cons?

Question

You can select to have your health insurance be the primary carrier in an auto accident. It reduces your auto premiums. Are there any cons to doing this?

Answer 1

Pro:  It saves money on your auto insurance

Cons:  It doesn't save very much.

Your deductible & co-payments on your health insurance apply & you may have a higher deductible than on your PIP on your auto policy.

Your health insurance can ask for reimbursement from any possible bodily injury settlement you receive, PIP will not do this.

You probably have a lifetime maximum on your health insurance.

PIP has a per occurrence limit (used to be $250,000 I have not heard that this changed).  So if you have more than one accident with serious injuries,  you can be using up your health insurance quickly, but the PIP will be there each time.  

You can file under your health insurance for the deductible & co-payments on your PIP but I don't believe you can do the opposite.  Also, if your PIP limit is exhausted, you can then file under your health insurance.

Health insurance can change or be cancelled & applies as you get bills, if you cancel after the accident, they stop paying.  But, as long as your auto policy was in effect on the day of the accident, you have the PIP coverage.  The PIP will still apply even if you cancel the policy the day after the accident.

Your PIP also applies to passengers who do not have their own autos or any autos in their household, so if you make your health insurance primary & your passenger has limited or no health insurance, there could be big issues.  Also, Medicare cannot be primary in an auto accident.  If you have your elderly grandmother in the car who lives alone & does not drive, I would think you would want your PIP to cover her.

I would never make health insurance primary when I was in NJ & always advised against it.  I would also quote the difference to show my insureds that the savings was minimal compared to what they would lose.

Answer 2

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