Can you imagine if car insurance worked like health insurance? I’m not talking about the mandate that drivers carry auto liability insurance, or health insurance. I’m talking about how the insurance actually functions (or not) when people need it!
We were recently in an auto accident and just went through the claim process with our auto insurance company. We weren’t hurt (only a bit shook up), but everything is very fresh in my mind. They said we were at fault (only partially). We had a $500 deductible. We had to be towed, and we needed a rental.
So the insurance company arranged for a tow truck. And they sent a car rental service to pick us up at the accident site. They negotiated the car rental charge down to $29 a day (instead of $59 a day), so our rental reimbursement coverage was enough to cover the rental car. They took good care of us, which we appreciated because we were not able to think very clearly at the time.
Our car was inspected and assessed. They said it was totaled. But if it could have been repaired, we would have been free to go to any auto body shop we liked.
In the end, the insurance company sent us a very fair check for the value of our car, minus the $500 deductible. Goodbye, old car. (The new car is way better.) Bottom line, our insurance worked! We had a pretty bad accident, but we didn’t have to pay anything except for the $500 deductible. And we could manage that.
I started thinking what our experience might have been if our health insurance company had handled our claim instead of our auto insurance company. Let’s visit an alternate reality – in the Twilight Zone!
In the Twilight Zone, there are different kinds of car insurance policies – Bronze, Silver, Gold and Platinum. Because it’s all I can afford, I buy a “Bronze” car insurance policy. It has a $5,000 deductible – not my choice. The other kinds of policies have lower deductibles and co-pays, but I can’t afford them.
I accidentally back up into a wall. My car is badly damaged. The rear lights are broken and the car can’t be driven. I call my insurance company and submit a claim.
I learn that my “bronze” policy only pays 60% of the cost of the repairs, as long as I go to one of the auto body shops that my insurance company works with. I am responsible for the other 40%.
But if I go to an auto body shop that isn’t in-network – maybe to one that specializes in my make of car – I will be responsible for 100% of the costs.
I decide to go “in-network” because that will cost less. I check my insurance company’s list of in-network auto body shops and call the nearest one.
Unfortunately, that body shop doesn’t work with my insurance company. The list is incorrect! I call around some other places and finally find one that takes my car insurance. I ask them about getting my car towed and about how to get a rental car.
They advise me that I have to pay 100% of all costs up to my $5,000 deductible. Plus there’s a co-pay of $50 for towing. And there’s a co-pay of $25 per day for the rental car. Of course, the co-pays don’t count toward my deductible. Of course they don’t.
But don’t worry, my co-pays, coinsurance and deductibles all count toward my “Maximum Out of Pocket!” And my maximum out of pocket is only $6,600!
Oh, but wait! The painter at the in-network auto body shop is out of network, so surprise! I have to pay 100% of the cost of having my car painted.
Got it? If auto insurance worked like health insurance, once I’ve paid my premium, plus $6,600 in deductibles, co-pays and coinsurance, plus any out of network charges, my insurance will pay 100% of the costs!
What a deal!
Learn more:
http://auto.howstuffworks.com/buying-selling/car-insurance1.htm
http://obamacarefacts.com/health-insurance/how-does-health-insurance-work/
