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Your car insurance is really six separate policies—some are required, others optional—carefully weigh your risks when buying protection for you and your family.
Carole Walker, RMIIA

2008 Colorado Governor’s Study

An auto insurance study by the Governor was released in February 2008. It examines the effects of Colorado's five year-old change from a no-fault auto insurance system, which mandated extra medical coverage, to a tort system that is used in 37 other states. The tort system mandates liability coverage to pay for medical bills and car repairs for accident victims, but drivers can now choose to purchase additional medical coverage for themselves based on their health insurance and personal financial needs.

The study analyzes the impact of the change on auto insurance, health insurance, hospitals, first responders, Medicaid and consumers. Representatives of the auto insurance industry and trauma care community provided input.

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Key auto insurance findings:

  • Average car insurance premiums have decreased 35 percent since the state moved to a tort auto insurance system.

  • Consumers are paying an average $322 less per car, per year for auto insurance in December 2007 than they were prior to July 2003.

  • With a $322 annual premium savings and an estimated 3.2 million insured cars, Colorado drivers spent $1 billion on auto insurance in 2007 than in 2002.

  • Colorado's national ranking for cost of auto insurance fell from 9th highest in 2002 to 21st in 2005.

  • 99 percent of companies offer varying levels of medical payments coverage and 31 percent of Colorado policyholders choose to buy it. The most common level purchased is $5,000.

Key health insurance findings:

  • Health insurance rates increased an estimated 1.6 percent due to the switch to a tort system.

  • While no-fault auto insurance paid for most medical expenses of auto injury victims, victims now use voluntarily purchased medical payments coverage or health insurance to pay for treatment when they cause an accident. Health insurers often pay for victim's initial treatment, but are reimbursed by at-fault drivers' auto insurance settlements. The study notes who actually pays portions of a hospital bill is more complex than what can be represented based on a single code for payment source at the time of discharge. Therefore there are difficulties in calculating the amount of care that is not actually reimbursed.

Key trauma care findings:

  • Auto injuries account for only 1 percent of hospital admissions. In 2002, Colorado acute care hospitals admitted 5,915 people because of motor vehicle accidents, while in 2006, only 4,583 were admitted.

  • Hospital reimbursements for auto injury inpatients were down $85 million after the switch to tort, but part of the decline was due to the fact that under the no-fault system auto insurers paid full billed charges to hospitals for treatment. Now, while hospitals still get paid in most cases they are paid at the lower rate they have negotiated with health insurers, as well as the federal and state governments for Medicare and Medicaid.

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