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BLAKE: Check insurance bill closely

Peter Blake

Published January 15, 2009 at 12:05 a.m.

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The semi-annual packet from Little Green Lizard Inc. told me that my auto insurance premium for the next six months was going up by almost 20 percent.

That seemed unreasonable. There'd been no accidents, no claims, no tickets. But buried deep in the pile of paperwork was a "Dear Policyholder" letter that explained most of the hike: Under a new Colorado law, I must buy at least $5,000 in "medical payments" coverage "unless you, the named insured, reject the coverage in writing."

Ah! The ever popular negative-option purchase. If a company tried such a ploy on its own, the attorney general's office would go after it hammer and tong, just as it did in the bad old days when record companies and book clubs would send you unsolicited products and bill you if you didn't return them.

But what's a legislature for if not to mandate scams that would otherwise be illegal?

If you haven't recently received a similar letter from your car insurer, you will, just before your next premium comes due. The law became effective Jan. 1.

Medical payments coverage provides extra money for you and your passengers in the event of an accident, even if it's not your fault. It is already an option, in amounts from $1,000 to $100,000, from most companies. But you have to select it.

Only an estimated 32 percent of Colorado policyholders choose to purchase it. Why? Because if you are a senior on Medicare, or already have health insurance, it's a redundant cost. You've already got such coverage.

The annual rate for $5,000 in medical payments coverage varies from company to company, but it is about $60 per car per year, said Carole Walker, director of the Rocky Mountain Insurance Information Association. My company is asking a little more than that.

The medical payments bill, which received virtually no media coverage, was promoted by something called the Trauma Care Preservation Coalition, made up of ambulance providers, first responders, hospitals and emergency room doctors. They argued that they weren't getting paid as quickly as they did under the no-fault insurance law, which Colorado had from 1974 to 2003.

But no-fault is expensive. A study commissioned by Gov. Bill Ritter last year found that premiums dropped 35 percent in the five years since the tort system was readopted.

But no-fault keeps crawling up out of the swamp because lawyers, ambulances, first responders and the various tangential health providers (remember the aroma therapists?) profited from it. They have lobbyists and the average health consumer doesn't. The legislature responds more quickly to lobbyists.

Auto insurance companies were opposed to the medical payments bill, which was an amalgam of three separate measures. But Walker said the industry finally agreed to the final version on grounds that it was the "least onerous" alternative.

To be sure, there is another negative option in insurance law: Uninsured (and underinsured) motorists coverage. But more than 90 percent of our policyholders are happy to have it. They know what's out there on the road.

The medical payments bill included one more peculiar provision: For the first time in Colorado (or any state's) history, it prioritizes payments by the insurers. The first specified payee is the ambulance company, followed by the ER docs, then the various levels of trauma centers.

Prioritization means delay. If the ambulance company is slow to bill, everybody else has to wait longer than usual.

Read your next auto insurance packet closely and discuss medical payments with your agent, if you have one. Don't pay again for coverage you might already have, or don't want.

I signed the opt-out page and then presumptuously subtracted the $100 for medical payments from the total bill. But then I forgot to put the opt-out page in the same envelope as the check. I sent it along later. I expect the little green lizard himself to show up on my doorstep demanding an explanation for my confusion.

Peter Blake is a former Rocky Mountain News political columnist. He can be reached at pblake0705@comcast.net.

Comments

  • January 15, 2009

    6:20 a.m.

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    Mike_In_Hartsel writes:

    One step closer to socialized medicine. Isn't that Ritter's goal?

  • January 15, 2009

    6:36 a.m.

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    VVVV writes:

    I guess we need to pass a new grassroots law that forces the legislature to leave auto insurance alone. If they can't fix the problem between the health insurers and ambulance companies, and they listen to lobbyists instead of their constituents, perhaps it's time for another TABOR like law to tie their hands. They obviously didn't learn their lesson last time.

    The public doesn't play nice. You mess with us and we can return the favor tenfold. They need to be less worried about lobbyists, and start considering working with the people that voted them in. Don't bite the hand that feeds.

  • January 15, 2009

    9:07 a.m.

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    DougH writes:

    Peter, unlike the previous posters to this blog, I actually read your column. What I do not understand is that you say the average cost of this insurance is about $ 60.00 a year , or $ 30 every 6 months, and your company charges a little more, but then you deducted $ 100.00 from your payment, Sounds like the Little Green Lizard is really sticking it to you.

    And as you say the $ 100.00 is about 20 % of your bill , then your bill is only about $ 400.00 every six months, now that is really cheap. Are you not carrying comprehesive coverage ? Are you driving some old clunker ?

    Seems like your math doesn't really add up in this piece,

  • January 15, 2009

    4:18 p.m.

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    Clarence_Boddicker writes:

    DougH writes:"And as you say the $ 100.00 is about 20 % of your bill , then your bill is only about $ 400.00 every six months, now that is really cheap. Are you not carrying comprehesive coverage ? Are you driving some old clunker ?
    Seems like your math doesn't really add up in this piece,"

    My insurance is half that every six months. You must be a high risk driver (or just high)

  • January 16, 2009

    5:37 a.m.

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    44roger writes:

    I got my bill from Hartford, AARP, and it went up, checked with previous insurer, and they cut their price by half. (farmers insurance) Don't believe these people when they say seniors get discounts. we both switched to Farmers and saved $348.00. New insurance charged $9 for the optional coverage. Shop around. these ads on TV is where your money goes. If I ever see that green lizard on the road---

  • January 16, 2009

    10:53 a.m.

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    td writes:

    Nice investigate report! Lets see, you posted your view and that of the insurance industry. Where is the view of the evil medical people? Do you really know the reasons why this law changed? If so, you did not report it! One side of the story is all you give so, nice job...the press does it again.

  • January 16, 2009

    1:39 p.m.

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    stsholes writes:

    Hey, I just got my auto insurance bill, too. My increase from State Farm was $7.54. Is it possible you exaggerate?

  • January 16, 2009

    8:27 p.m.

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    TysonLiverant writes:

    I personally pay about $34/year for one car, and about $45/year for my wife's care for the $5,000 in "medical payments" coverage...

    And since I am an insurance agent (not for the "little green lizard") - I was curious to see what the highest & lowest amount of premium there could be charged for this coverage
    (using as many factors as I could that could affect the premium for this coverage) --

    IT'S PROBABLY A LOT MORE OF A DIFFERENCE THAN YOU MIGHT THINK!

    For the additional cost of the $5,000 in "medical payments" coverage...

    I think I got a quote to be as low as about $6/year -

    But up to about $1,000/year!!!

    EVEN I DIDN'T THINK IT WAS POSSIBLE TO HAVE THAT KIND OF A DIFFERENCE!

    Now, you should keep in mind that both of these extremes are probably unlikely... However, it is VERY possible for there to be a substantial difference in what one person might pay vs. another person for this coverage - Which is why it is that much more important for people to consider the following:

    IT MIGHT BE COVERAGE YOU NEED, IT MIGHT NOT...

    IT MIGHT BE WORTH THE PREMIUM, IT MIGHT NOT...

    JUST DON'T ASSUME ANYTHING.

    Follow Peter's advice:

    "Read your next auto insurance packet closely and discuss medical payments with your agent, if you have one. Don't pay again for coverage you might already have, or don't want."

  • January 16, 2009

    10:31 p.m.

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    mayordoug writes:

    I am one of those greedy ambulance providers in a very small town in Colorado. We do not get significant funding from the county. We have to be prepared with multiple people and ambulances 24/7. That is an incredibly expensive proposition, but, as you decry your bill, you would also howl if an ambulance was really slow to respond due to no staff available. When Colorado went to the tort system, my company lost, instantly, almost 40% of the revenue we counted on to operate. You think the economy is bad now? Ambulances and trauma centers and everyone else in the emergency medical system got clobbered when tort took effect. Medicare covers?? Not hardly. Consumers do not realize Medicare does not pay the bill, they force the provider to accept the pittance they provide and must eat the difference. Just write it off.

    There may have been abuses of the old no-fault system, but our Republican Governor and legislature at the time sided with the insurance lobby and threw the baby out with the bathwater. What has happened since is a shameful, willfull ignorance of the financial destruction of a trauma system that was and is still in need of improvement.

    You get nothing free, sir. It is unfortunate that you dislike having to pay a bit more for your insurance, but you do not realize how much you would wish you had it if you were injured. The $5000 amount will not pay very far into the healthcare system. You will still have massive personal bills to pay! Maybe you should consider that you need far more than the $5000 coverage you get for the little you actually pay for more coverage!

    Listen to the tort attorney's ads on TV. They make a point that they are needed because of the unfair insurance companies! If you don't have coverage and they don't pay, then you sue them? Maybe it would have been better to have the medical coverae at a level that took care of the bills. Your insurance will cry about that, but then they will sue the other person to recover the payments that were made. You do not have to worry about that from your hospital bed.

    Put on you big person underwear and realize life isn't free. There are many needs in society today, and this insurance issue is only a drop in the bucket. Talk to you insurance agent. Also talk to the emergency medical providers in your community and find out how much it will cost you if you do not have the coverage.

  • January 19, 2009

    11:02 a.m.

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    jsequeira writes:

    I too am an insurance agent (not for the green lizard) and completely understand people's frustration with what seems to be the endless increases in premiums.

    I have always been an advocate for medical payments especially when the insured does not have any other medical coverage. Medical payment coverage is also important if you ever take people other than your immediate family in your car as you don't know who has health insurance and who doesn't.

    Additionally, when you talk to people in the medical field who have to waiting until a person is done treating to receive payment you will understand that it is not reasonable to expect small businesses (doctors & ambulance companies) to wait to receive payment. They have business expenses to pay.

    Ask your agent if this coverage is for you and remember if you don't sign the form and get it back to your insurance company they have not choice but to add the coverage.