Image: Car Accident © Robert J. Bennett,age fotostock

An auto accident may do more than just wreck your vehicle. It may cause long-term damage to your credit reports and scores as well. We've heard from many accident victims over the years who wound up with medical bills in collections while they waited for insurance companies to sort out who would pay what. One of our readers, whom I'll call "Jennifer," recently wrote:

"I was hit by an uninsured DUI (driver). One of my medical treatments involved an ambulatory surgery center, to whom I provided my health insurance and auto insurance information. Recently I received a letter indicating they would turn my account over to collections because it was not paid by the auto insurance."

Jennifer went on to explain that she has health insurance and provided that information to the surgery center, but because they failed to bill the health insurance company in a timely manner, the claim has been rejected. Now she feels stuck.

"Coordination of benefits" is often the culprit here. "When a person has more than one insurance policy, coordination of benefits is the process of determining which policy has the primary responsibility of processing and paying a claim and to what extent the other policies will contribute to that claim," explains Katie Vahle, a co-founder of Copatient, a website that offers a free review of medical bills. The goal is to "prevent double dipping by both consumers and providers (i.e., sending the same claim to multiple policies to receive additional payment)."

That process can be confusing for providers and patients.

Various types of insurance coverage may come into play in the case of an auto accident, including personal injury protection, which is mandatory coverage on auto insurance in some states and optional in others. This may also include medical payments coverage, which is optional on auto insurance policies, private health insurance, supplemental accident coverage and Medicare. But it's not always clear who has primary responsibility to pay in the case of an accident, though some states have no-fault laws that "circumvent the often lengthy process of determining liability," says Vahle.

Even when it is clear who should pay, there can be problems. Insurance companies may deny claims or drag out payment, or bills may be incorrectly coded or sent to the wrong insurer. Any of those scenarios can create further complications that could leave you on the hook for all or part of the bill.

Your goal throughout this process is to minimize your expenses by getting insurance companies to pay covered claims. But ultimately, you are responsible to your medical providers for the medical bills you incur, so you should also be mindful of keeping your medical bills out of collections. Once they get to that point, it may be too late to protect your credit from damage. The collection agency will likely report the item as a collection account on your credit reports, and your credit scores can drop dramatically as a result.

Following are some steps you can take to help protect yourself and minimize the chance that your credit will take a hit.

Provide complete insurance information to all your providers. Don't assume one insurance company will or won't pay. If you have both auto and health insurance, for example, provide complete information about both policies to all the health care providers involved. "When you are in an auto accident, it's critical to immediately report it to your insurance company and get a claim number and make sure that you give the auto insurance claim number and your health insurance information to all of the medical providers that treat you," recommends Bill Robertson, an attorney with the law firm Kirk-Pinkerton Sarasota, Fla.

Don't wait. "It is important to report an accident to your insurance company promptly. An insurance company may try to use a delay by the accident victim in reporting the accident as grounds for denial of the claim," warns Eric Deming, an attorney with the law firm Morgan & Morgan in Orlando, Fla.

While most health care providers understand that processing auto accident insurance claims is complicated, don't assume they are going to wait forever for payment. "Confirm that your provider is willing to do this coordination on your behalf!" says Copatient's Vahle.

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