Insurance interactions

[civvver]

One thing I've never understood since ACA was passed, well, even before that, is how auto, homeowners, medical and other types of liability insurance interact with each other and why. No one ever seems to be able to say why either.

Here's the biggest example. I live in Michigan which is a no fault auto state. That means if you are in an accident your insurance pays for your bills regardless of who's fault it is. The good part of this means it doesn't matter how much coverage the other guy has, or if he's too poor to pay your bills, as long as you carry enough coverage for yourself. You control your own outcome if you will. The bad part is the rates are higher for good drivers, since your insurance pays whether or not you are at fault.

You also have the option of carrying uninsured motorist coverage which covers you if someone without insurance hits you. This one I never understood cus it's mandatory to carry insurance so how can someone uninsured hit me? I also don't understand this one cus it's a no fault state, so my insurance should cover me whether or not the other guy has insurance. Don't get it at all, but it's pretty cheap like $5 a month so I carry it.

We all pay into this pool in Michigan that covers people who are permanently disabled from auto accidents. I don't remember what this is called. But it too makes our rates a lot higher. If you are a paraplegic from an auto accident this money will pay for nursing care for you the rest of your life. Seems like a pretty neat idea, though it is expensive.

So here's what I don't get, shouldn't all of that crap be covered under my medical insurance anyway? If I am hurt in any other way I go to the hospital and pay my deductible and my medical insurance kicks in. But if I'm in an auto accident my auto insurance pays. Why? Do I have redundant coverage then? Is my medical insurance premium lower because I live in a no fault state? I seriously doubt it. I feel like I'm paying for excess coverage.

On the other hand, I do see how a pool could cover me if I wasn't able to work because not being able to work I would lose my insurance, and it takes time to go on medicare for disability right? Like two years?

Same thing with your house, you have to carry some liability insurance in case someone hurts themselves on your property but why? Shouldn't they by ACA mandate have health insurance coverage? Let's say they got hurt but it wasn't anything grossly negligent, like they just slipped on your porch and needed an xray of their leg. Why would I have to cover their medical bills if they are supposed to have their own insurance? I think the most I should have to cover would be their deductible, and even then it should be capped cus some plans are much lower than others.

If anyone knows the answers to these questions I would love to hear them. It's just very confusing where one insurer's responsibility ends and another's starts. If we had universal health coverage would our other insurance rates go down? I think they *should* but I'm not confident they *would*.

 

[Timsup2nothin]

First off, you are misunderstanding what "no fault" insurance means. It does not mean "we crashed, my insurance pays for me and yours pays for you, no one is at fault." Your insurance pays for YOUR injuries, and it also pays for MY car. Or my house that you ran into, etc. So if I am violating the law and blew off getting insurance you are gonna have to fix your own car, unless you paid extra for the uninsured motorist policy.

In my state if I was injured my insurance company will only pay if they can't make your insurance company pay by showing that it was your fault. If they can show that it was your fault, and you blew off getting insurance, they will only pay if I got the more expensive here uninsured motorist policy. Same for fixing my car, which is basically the same as it is in your state.

Where this all butts up against health insurance is that most health insurance has limited coverage for accidental injuries, such as car accidents, because that's what car insurance is for. Similarly there is limited coverage for such things as being hit by a foul ball at a major league baseball game because the stadium liability insurance is supposed to cover that. Again similarly work related injuries should be covered under the employer's liability insurance, etc. It is up to the consumer to examine what is and is not covered in the way of accidental injury and make sure they don't try to claim "health" if the insurance company can respond "injury that someone else is responsible for, screw you," because if they can they certainly will.

Did that help?

 

[Arwon]

You also have the option of carrying uninsured motorist coverage which covers you if someone without insurance hits you. This one I never understood cus it's mandatory to carry insurance so how can someone uninsured hit me?

Presumably, drivers from outside Michigan are permitted on your roads?

 

[Timsup2nothin]

Presumably, drivers from outside Michigan are permitted on your roads?

Unless they drove all the way from Virginia their state also required them to have insurance.

 

[AppleDumplingHead]

Presumably, drivers from outside Michigan are permitted on your roads?

People still drive, all the time, without insurance, everywhere. When caught, be it in an accident or traffic citation, there is a significant fee, I think in the neighborhood of $500 plus court fees. There is uninsured motorist insurance, because there is still a chance a non-compliant person will be culpable in an accident. It's not like we have a little scanner to start our vehicles with an insurance bar code, although some do have breathalyzers if the person's prior behavior merits it.

 

[Arwon]

Unless they drove all the way from Virginia their state also required them to have insurance.

Is the same comprehensiveness mandatory as it is in Michigan, or do some states only require third party insurance rather than insuring yourself as well? And what of Canada?

(Plus the other thing is presumably a fraction of drivers are driving illegally uninsured.)

 

[Timsup2nothin]

Is the same comprehensiveness mandatory as it is in Michigan, or do some states only require third party insurance rather than insuring yourself as well? And what of Canada?

(Plus the other thing is presumably a fraction of drivers are driving illegally uninsured.)

The main thing is that people drive uninsured. As far as the comprehensiveness, different states have different minimum requirements, but they are all more or less in line with each other. I'd be curious what happens if a Michigan driver goes out of state and gets in a wreck where they are at fault though. Their lack of personal injury liability coverage may pose some unique problems.

 

[AppleDumplingHead]

The legal requirement of auto insurance is "liability" in most states. This means if you are found at fault in the accident you pay for that person's property damage (but insurance companies fight to only pay as much as they possibly have to) and, I "think" 25k in medical. Under such a policy, you are responsible, then, for your own costs. So you can buy additional coverage, there are packages considered "full coverage", which include collision (any damage to your vehicle by any reason including act of God) and additional medical as well as road assistance, and then, of course, you can buy more additional coverage as you see fit. They're not going to talk you out of buying whatever coverage for which you'll give them money.

 

[Arwon]

Yeah that's roughly what's mandatory here, same across all states but run at a state/territory level.

Compulsory Third Party insurance is paid together with registration and covers injuries/death. Basically you're indemnified against injury claims via your CTP.

Everything else is up to you - if you cause an accident and don't have comprehensive insurance, you pay for the property damages. Often that involves informal negotiations, formal demands, and sometimes going to the Small Claims court or the general courts for larger claims.

It's um better to have comprehensive.

 

[AppleDumplingHead]

The answer to op is simply, "who is culpable" for the injury. The only insurance you "need" in most states is liability auto and the base health with 6(ish)k deductible. If you own a nice car worth over 15k, it would behoove you to have collision auto. If you have a nice home, it would behoove you to insure it. If you have nice things, it would behoove you to have homeowner's or renter's insurance in the event of fire, theft or other loss, but it's rarely required unless you share property with other people, as in a condo association. If you have people regularly up and down your driveway or other parts of your property, it would behoove you to have property liability insurance, but this is generally pretty cheap, like 150 to 200 bucks a year depending on the size of property and method of use. (Businesses are another matter) (Employees are another matter)

So no, it's not redundant. If a person you invited to your home falls on ice you didn't clear, where it is their method of access, they might file a claim to have the initial medical costs covered by their hmo, but that embodiment is going to come after you and ask "why the hell did we have to pay for this, do you have property liability insurance", and if you don't, "they" are actually suing you, not the person. Most injuries, be they auto, accident, work, sports, et. al. are rarely handled between individuals anymore. The companies discovered long ago it's not in their best interests to simply tell a covered person, "we're not paying, you go after them", because that loses customer faith in the plan. If you're covered, you're covered. If you're not, be very careful.

 

[Arwon]

I feel like the New Zealand universal no fault accident system might be worth exploring as an alternative to all our multiple systems of liability insurance. One big insurer, run roughly on cost recovery basis via various fees and levies (unsure if there is a transfer from general revenue), for all forms of personal injury. The tradeoff being mostly there's no ability to make at-fault claims against individuals.

It certainly keeps amateur sport registration costs down compared to Australia.

 

[AppleDumplingHead]

We live in a very litigious country. Selling seemingly extraneous policies is one way insurers keep the industry strong. It is, after all, a commercial industry, even with so many efforts to institutionalize it.

 

[civvver]

The answer to op is simply, "who is culpable" for the injury. The only insurance you "need" in most states is liability auto and the base health with 6(ish)k deductible. If you own a nice car worth over 15k, it would behoove you to have collision auto. If you have a nice home, it would behoove you to insure it. If you have nice things, it would behoove you to have homeowner's or renter's insurance in the event of fire, theft or other loss, but it's rarely required unless you share property with other people, as in a condo association. If you have people regularly up and down your driveway or other parts of your property, it would behoove you to have property liability insurance, but this is generally pretty cheap, like 150 to 200 bucks a year depending on the size of property and method of use. (Businesses are another matter) (Employees are another matter)

So no, it's not redundant. If a person you invited to your home falls on ice you didn't clear, where it is their method of access, they might file a claim to have the initial medical costs covered by their hmo, but that embodiment is going to come after you and ask "why the hell did we have to pay for this, do you have property liability insurance", and if you don't, "they" are actually suing you, not the person. Most injuries, be they auto, accident, work, sports, et. al. are rarely handled between individuals anymore. The companies discovered long ago it's not in their best interests to simply tell a covered person, "we're not paying, you go after them", because that loses customer faith in the plan. If you're covered, you're covered. If you're not, be very careful.

I was only referring to liability, not to auto collision or homeowners to cover my house in a fire and such.

But what I don't get is why are the health insurance companies allowed to sue in that situation? If you buy health insurance, shouldn't it cover all injuries no matter the cause? It makes more sense logistically to have one point of coverage.

Also what I'm really interested in is when a health insurance company does a risk assessment, do they deduct risk int he cases where I should be covered by aditional insurance and charge a lower premium? My guess is hell no, why would they ever do that? but if as a healthy young person one of my major risks factors is probably being in an auto accident, but those costs will most likely be paid by another insurance it seems that the risk factor on my health insurance should be less.

Are we getting double charged or not is my question. And it's probably one no one outside the insurance industry can answer unfortunately. But every year the costs of my auto insurance go up and by quite a bit too, usually 5-6% annually. And they always say it's because of rising medical costs. It just irks me.

 

[Timsup2nothin]

Also what I'm really interested in is when a health insurance company does a risk assessment, do they deduct risk int he cases where I should be covered by aditional insurance and charge a lower premium? My guess is hell no, why would they ever do that? but if as a healthy young person one of my major risks factors is probably being in an auto accident, but those costs will most likely be paid by another insurance it seems that the risk factor on my health insurance should be less.

Your guess is wrong on this one. The risk assessment is not adjusted for risk of accidents because the risk of accidents isn't included in the risk assessment to start with. That's why health insurance premiums for two people the same age and with similar health histories will be roughly the same even if one works in an office and the other is a garbage collector (one of the most dangerous jobs in the US) and one drives forty miles on the freeway to work and the other works from home. None of those factors are considered in figuring the health insurance premiums because for one thing those factors are subject to change, for a second thing they are way too much of an additional complication, and for another the problems that they cause would be covered by other insurance not health insurance.

It does occur to me though that people in high risk jobs and such probably should have lower health insurance premiums since if they get killed they become low risk for health problems...but I don't think that gets accounted for.

 

[Hygro]

Let's be real though, civvver is right that it's kinda weird.