If you have been injured in a car accident, you will likely find yourself paying for all manner of accident-related expenses before you have received any compensation from the at-fault insurance company. It is essential that if you are incurring expenses as a result of the accident that you seek fair and reasonable compensation. Determining what is fair and reasonable for your injury claim involves exploring each aspect of your physical and financial damages. One of the most commonly overlooked areas of damages by accident victims is reimbursement of “out-of-pocket” expenses.
What are Out-of-Pocket Expenses?
In many ways, out-of-pocket expenses are really a catch-all category used to define a variety of costs related to your accident and injuries. These expenses, while reasonable and necessary, aren’t considered medical expenses. Medical expenses are typically defined as the costs associated with seeking and receiving medical treatment from a physician or medical doctor.
An out-of-pocket expense is a case related expense arising from the injuries you sustained after your accident. These expenses can range from just a few dollars to thousands of dollars and will more often than not put an unnecessary strain on your already strained pocket book. In order to claim compensation for these costs, you should carefully track all money expended as well as save receipts.
In order to seek reimbursement for your out-of-pocket expenses, it is necessary to understand what expenses may be recoverable from the at-fault driver or their insurance company. It is important to note that not all expenses related to or arising from an accident victim’s medical treatment will be reimbursed. Insurance companies commonly evaluate whether the item or equipment purchased is reasonable or necessary, considering the injuries sustained. For example, if you were involved in a fender bender resulting in only minor neck pain, the insurance company will be unlikely to reimburse you for the cost of purchasing a set of crutches.
Types of Out-of-Pocket Expenses
Expenses Arising from Medical Treatment: These out-of-pocket expenses are typically associated with purchasing items or medical equipment that an accident victim would need to buy in order to survive, function, or heal appropriately. These out-of-pocket expenses typically include, but are not limited to:
- Prescription medications
- Over-the-counter medications
- Medical equipment (crutches, slings, wheelchairs, respirators etc.)
- Cost of hotel stays when your medical treatments require you to stay overnight out-of-town
Transportation Costs: On the other hand, incidental out-of-pocket expenses are those costs that arise out of seeking medical treatment. These expenses are related to your case but are not a major part of your medical treatment plan or recovery. Incidental expenses will be related to the cost of travel to and from doctor’s visits, and may include, but are not limited to:
- Rental car expenses (often part of your property damage claim)
- Mileage reimbursement, set by the IRS
- Parking fees and expenses
- Cost of transportation services (if you are unable to drive)
- Bus fares
- Taxi fares
- Cost of using driver service (Uber, Lyft etc.)
The above-enumerated items are by no means every eligible reimbursable out-of-pocket expense; however, they do provide a brief overview of the type of out-of-pocket expenses you may be able to include in your personal injury claim for damages.
Is the At-Fault Party Responsible for Reimbursing Out-of-Pocket Expenses?
North Carolina law may allow you to recover all out-of-pocket expenses associated with your personal injury from the at-fault party or the responsible insurance company as long as those expenses were both (1) reasonable and (2) necessary.
The reasonableness of an out-of-pocket expense may appear to be subjective. If you are presenting these costs as part of your personal injury claim, be sure to gather and keep proper documentation that supports the cost of the item or equipment purchased. However, if the insurance adjuster or company argues that a particular expense is unreasonable, request that they provide you with an explanation of their position. Additionally, if an insurance adjuster is arguing that the cost of a particular item is unreasonable, consider contacting several other stores or suppliers of that same item and request a quote or gather evidence showing their prices. Using this cost comparison technique, you will be able to show that you paid a reasonably similar price for the same or similar item.
On the other hand, whether an item is ‘necessary’ is naturally a bit more objective than a ‘reasonableness’ determination. If the insurance company is arguing that the expense is unnecessary, consider the nature of the expense in question and act accordingly. For example, if the adjuster states that the wheelchair ramp was unnecessary and should not be reimbursed, undertake the task of documenting the stairs or entrance in front of your home as evidence of the necessity of the wheelchair ramp. Additionally, consider speaking to your medical provider for a written opinion about the expense, should the insurance company refuse to concede the expense as necessary.
How Can I Prove Out-of-Pocket Expenses?
Proving the out-of-pocket expenses associated with your personal injury does not have to be a difficult or complicated task. There are simple steps that you can take to ensure that these expenses are documented properly, so that you can easily support your claim for reimbursement. Here is a step-by-step guide to supporting and proving your claim for reimbursement:
Step 1: Gathering Documentation
When asserting a claim for out-of-pocket expense reimbursement, begin by documenting what expenses you have incurred and what documents may exist to support your contentions. If you have paid expenses associated with your prescription medications, save your receipts for each time you have to fill or refill the prescription. These receipts are essential to proving to the insurance company how much you paid for the medication that was prescribed by your doctors.
As a golden rule for proving damages, be sure to save all receipts and documentation related to the expense. However, if you are unable to find a receipt associated with an out-of-pocket expense, there are several ways to verify the amounts you paid.
For example, an expense for prescription drugs, ordered by your physician, can be supported by your pharmacy records, and copies of lost receipts may be retained if you provide the store with the debit or credit card used to make the purchase. Failure to provide receipts (or other evidence) to prove out-of-pocket expenses sometimes result in the at-fault party (or their representative) refusing to pay for the expenses.
If you have incurred expenses for prescription drugs, contact the pharmacy that filled the order and request a copy of your pharmacy bills and records. Many pharmacies will have a HIPAA release that you will need to complete ensuring that your confidential records are only disclosed to intended recipients. However, if you do not have a HIPAA release, you may download our blank HIPAA form here. (LINK). Your pharmacy bills and records will contain a list all prescribed medications purchased over the requested time period.
Please be sure to review the pharmacy bills and records carefully and note any potential issues that may be documented within the records.
Do not permit the at-fault party or the insurance company to gather the documents or evidence supporting your claim for you. It is common for insurance companies to provide you with a HIPAA Privacy Authorization Form in the hopes that you will permit them to gather the records themselves. However, we recommend that you refuse to provide a HIPAA Privacy Authorization Form to an insurance company. It is always a better practice to collect the information yourself when attempting to prove your out-of-pocket expenses. More information on why this is a best practice can be found here.
Step 2: Document your out-of-pocket expenses and amounts paid.
Keeping a list of your out-of-pocket expenses is a simple yet effective way to ensure that you are tracking every expense for which you may be entitled to compensation. One of the easiest ways to track out-of-pocket expenses is to use an Excel spreadsheet or Microsoft Word document. If you do not have access to these software programs, you can acquire a free version similar to Microsoft Office Suite here. Additionally, even just keeping a journal with the name of each expense, the date, and the amount will ensure that every expense is tracked.
Step 3: Send the demand package.
Once the demand letter has been written, attach the itemized list of out-of-pocket expenses to the demand letter along with the copies of the documents to support your contentions.
What Can I Do When the At-Fault Party Disputes My Out-of-Pocket Expenses?
Once you have received the response from the at-fault party, it is important to know what to do if you do not agree with the amount that the at-fault party or their insurance company is willing to pay for your out-of-pocket expenses.
First, any amount the insurance company is offering to pay for your out-of-pocket expenses will typically be given as one lump sum amount. However, the at-fault party is required, upon your request, to give you a list of what specific out-of-pocket expenses are being covered and what expenses are not being covered. Second, if you decide to contact the at-fault party to negotiate out-of-pocket expense payment, try to get everything in writing, if possible. If communications can only be verbal, you should record those communications, whenever practical. The application Tape-A-Call Pro can be downloaded onto any Android or Apple smart-phone and allows you to record all incoming and outgoing phone calls. For the cost of under ten dollars, it is worth the expense.
In most cases, your response to disputed out-of-pocket expenses would be to provide more information to prove that the disputed expenses are reasonable and necessary. For example, a doctor’s note stating why a specific denied medication is necessary for the treatment of your personal injury would be the perfect additional evidence for a denied prescription drug cost.
Tip: Most lump sum offers you initially receive from an at-fault party will not only include the amount they are offering to pay for out-of-pocket expenses, but will often be the total amount of compensation the at-fault party is offering to pay for your personal injury as a whole.
Remember that in order for your out-of-pocket expenses to be reimbursed by the at-fault insurance company, you should attempt to preserve any evidence used to prove your expenses, verify you are owed reimbursement for the out-of-pocket expenses by sending the at-fault party proof of the incurred expenses, and be prepared to provide additional evidence to prove these costs in the case that the at-fault party disputes the amount of expenses to which you are entitled.