Medical payments coverage, also known as MedPay, is an optional add-on auto insurance coverage that can come in handy if you or any of your passengers are injured in an accident. It can also pay for medical expenses if you or your family members are injured as a pedestrian or as a passenger in someone else's car.

Out-of-pocket medical costs can add up quickly, even if you have health insurance. Think of medical payments coverage as an extra support that could help ease the financial burden. MedPay is available in most states, but not all.

Learn more: How does car insurance work? The basic explained.

What does MedPay cover?

If you have MedPay insurance and get into an accident, the following expenses are typically covered – even if you're the one who caused the accident:

• Hospital bills

• Surgery

• Doctor's visits

• Nursing services

• Ambulance fees

• EMT services

• Health insurance copays and deductibles

• Related dental care

• X-rays

• Funeral costs

Like other types of car insurance, MedPay is subject to coverage limits. MedPay coverage limits tend to be in the range of $1,000 to $10,000, but can also go higher than that. The specifics of your policy and your state's minimum car insurance requirements will likely come into play. For example, Progressive recommend using your healthcare deductible as a guide. Carrying at least this much coverage could significantly reduce your out-of-pocket costs if you're injured in an accident.

How does medical payments coverage work?

Let's say you're injured in a car accident or hit while crossing the street while out for a walk. If you have medical payments coverage, you could file a claim with your insurance company to help cover any related medical bills. Depending on your state's laws and your policy, MedPay might be used as your primary insurance. Alternatively, you might keep your health insurance as your primary coverage and use your MedPay policy as secondary financial support.

Either way, if you have MedPay coverage, you can immediately file a claim without having to wait for the other driver's insurance company to assume liability and pay your medical expenses. Your insurer might pay your medical providers directly or reimburse you for expenses you pay out of pocket. An added benefit is that MedPay coverage typically doesn't come with a deductible.

How much medical payments coverage do I need?

It depends largely on where you live. States like Maine, for example, require drivers to carry a minimum amount of MedPay coverage. If it's optional in your state, consider your financial situation and personal risk tolerance when deciding how much coverage might be right for you.

As mentioned earlier, it might be wise to have at least enough to cover your health insurance deductible. You could opt for a higher coverage limit if you would struggle to keep up with surprise medical bills.

Learn more: How much car insurance do I need?

States where MedPay is required or available

MedPay is currently required in three states:

• Maine: Drivers must carry a minimum of $2,000 per person, but it may be possible to have coverage upwards of $25,000.

• New Hampshire:Drivers aren't required to have car insurance, but if they want to opt into coverage, they must carry at least $1,000 in medical payments coverage.

• Pennsylvania:Drivers must carry at least $5,000 in MedPay coverage.

MedPay is not offered in Minnesota, New York, North Dakota, and Oregon. Instead, these states offer personal injury protection (PIP).

What is the difference between MedPay and PIP?

Personal injury protection (PIP), sometimes called no-fault car insurance, is typically used in no-fault states . These are states that restrict a driver's ability to sue following an accident. Some states require PIP; others offer it as an optional add-on coverage. It generally offers more robust coverage than MedPay. If you already have PIP, then you probably don't need to add MedPay, which is less comprehensive.

What's the difference between MedPay and liability coverage?

If another driver causes an accident, their liability insurance should cover your car repairs and medical bills (up to the coverage limit).

However, if you're at fault in an accident, you'll need collision insurance to help repair or replace your vehicle. As for medical costs, you'll be on your own. But if you have MedPay or PIP, you can use that insurance to cover your medical bills, no matter who's at fault.

Learn more: Most common types of car insurance explained

Why buy MedPay if you already have health insurance?

Even if you have the best health insurance, MedPay can help with out-of-pocket costs like deductibles and copays. That's no small thing – especially if you encounter costly medical bills after an accident. If you have a high-deductible health plan, your total costs could be steep. MedPay can work with your insurance to provide primary or secondary coverage. Your coverage also applies to your passengers and family members.

Tim Manni edited this article.