How rising medical costs affect auto insurance rates

Americans spend $3 trillion on health care each year. This reflects the costs associated with chronic and long-term care, as well as the rising costs of new drugs and medical technologies. Paying for health care is a major concern, with 25 percent of American families reporting that they are more concerned about health care costs than household bills or unemployment. With hospital stays costing $1,791 to $2,289 per night, doctor visits costing $130 to $240 per visit, and prescriptions costing the average American $1,370 per year, it's easy to see where these anxieties come from. An illness or accident can set back a financially stable family $10,000 or more. These higher health care costs also affect auto insurance premiums, especially after a faulty accident. Many drivers see an increase in their premium as punishment, but the increase is necessary for insurance companies to continue to provide quality coverage. High cost of medical care Larry is usually a safe driver, but one morning, in a hurry to get to the office, he doesn't come to a complete stop at an intersection. Larry's vehicle collides with another vehicle. Although there is a lot of damage to the vehicle, both drivers, Larry and Greg, seem unharmed at first. The next day, Greg's back hurts so much that he can't get out of bed. He blames it on whiplash and takes a sick day. When the pain didn't improve the next day, Greg decided to call his doctor, who ordered an x-ray. They tell him that the fracture should heal with regular physical therapy, and his doctor recommends that he take three weeks of disability leave. Greg is also prescribed strong painkillers for the first three weeks of recovery. Even with time off from work and physical therapy, Greg suffers debilitating pain. A follow-up appointment with the doctor shows that the injury is worsening and a spinal fusion is recommended, which will take at least a month or two of recovery and physical therapy. The costs associated with a spinal fusion can be as high as $169,000, depending on the extent of the surgery and the length of the hospital stay. This estimate does not include costs for recovery time, doctor's appointments, x-rays, pain medication and physical therapy. How are insurance rates affected? Your insurance may help cover the cost of an accident. Where do the funds come from to cover this cost? When you and other insureds pay your premiums, that money is pooled and used to pay the claims of insureds who suffer losses. Therefore, because the accident was Larry's fault, Larry's insurer will use the premiums paid by Larry and the other insureds to cover Larry's accident and Greg's medical expenses. Please note that while there is a fixed price for Greg's vehicle, there is no fixed price for Greg's medical bills. With personal injuries, these costs can continue to add up weeks and months after an accident, especially if the injured person requires hospitalization, emergency services, surgery and long-term care. And, as health care costs continue to rise, insurers are paying more and more for personal injury claims. What does this mean for your insurance premium? To pay for the most expensive claims, insurers must charge higher fees, not only for Larry, but for other insureds as well. It may seem unfair to pay for someone else's accident, but remember that with an insurance pool, everyone helps cover everyone else. This means that if you are ever at fault for an accident, your insured colleagues (including Larry) will help pay for it. Also keep in mind that if you are in an accident and your premium goes up, that extra cost probably won't be anywhere near the actual cost of the accident. If you cause $30,000 in property damage and $10,000 in bodily injury, even if your rates go up $500 a year for the next three years, you will only have to pay $1,500 in additional costs. That's less than what you would have paid if you didn't have insurance. MedPay Even if your condition does not require medical (MedPay) coverage, consider keeping it on your policy if it is available. MedPay covers you and your passengers regardless of who is at fault for the accident. For example, if you select a MedPay limit of $2,000 and your teenage driver accidentally runs over your foot while pulling out of the driveway, the doctor's visit, x-rays and treatment will be covered up to $2,000. Uninsured and Underinsured Motorist Coverage As if a car accident isn't bad enough, colliding with an uninsured or underinsured motorist can make matters worse. Uninsured/underinsured motorist coverage covers the cost of bodily injury or death to you and your passengers if you are hit by an uninsured (i.e., uninsured driver or "hit and run") or underinsured driver without sufficient insurance to cover the damages they are legally entitled to recover) at-fault driver. It is advisable to set this coverage at the same limit as your BI. Protect yourself and your passengers, and don't rely on other drivers to do the right thing. How to lower your insurance premiums Having a higher BI limit, MedPay and uninsured or underinsured motorist coverage can increase your monthly premiums. But these coverages are extremely important and should not be overlooked. Yes, it's okay to want a lower monthly insurance premium, but there are other ways to do it.Survey your arrangement to ensure you're getting the most ideal cost. Is it true that you are credited with being a long-lasting guaranteed or a decent driver? You can likewise package your accident protection with your home protection, whenever offered, for an extra rebate Don't make the mistake that many drivers make by not planning properly for a car accident. Having the right car insurance can help give you peace of mind when you're on the road.