How rising medical costs are affecting 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, and 25 percent of American families report 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. Significant expense of clinical consideration Larry is generally a protected driver, however one morning, in a rush to get to the workplace, he doesn't arrive at a stand-still at a crossing point. Larry's vehicle slams into another vehicle. Despite the fact that there is a ton of harm to the vehicle, the two drivers, Larry and Greg, appear to be safe from the start. The following day, Greg's back harms such a lot of that he can't get up. He pins it on whiplash and requires a day off. At the point when the torment didn't work on the following day, Greg chose to call his PCP, who requested a x-beam. The x-beam uncovers that he has a spinal crack. 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 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 gauge does exclude costs for recuperation time, regular checkups, x-beams, torment drug and non-intrusive treatment. How are insurance rates affected? Your insurance can help cover the cost of an accident. Where does the money come from to cover this cost? When you and other policyholders pay your premiums, that money is pooled and used to pay the claims of policyholders 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 more 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 colleague (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. Do you have enough coverage? In life, you get what you pay for, so trying to reduce your monthly auto insurance premium to the lowest possible price may not be the right path to take. In the event of an accident, you want to have enough insurance to cover your needs. Saving $200 a year by selecting the least amount of coverage required could end up costing you several thousand dollars if you are at fault in an accident. Personal Injury Coverage All states except Florida* and New Hampshire require bodily injury (BI) liability insurance, but each state differs in the minimum amount required. For example, in Arizona and California, drivers are required to carry at least $15,000 of personal injury coverage per person, but as our example illustrates, car accident injuries can cost more than $100,000 if they result in hospitalization and surgery. Consider having at least $100,000 in coverage per person and a total of $300,000 in coverage per accident. MedPay Even if your state does not require medical coverage (MedPay), 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. 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.