Reform in store for auto insurance
This might sound like a good deal, but it’s also what makes Colorado’s automobile insurance rates some of the highest in the country, says Joy Keyser Pickar, director of government relations for State Farm Insurance.
“It’s the very broad benefits in dollar amount and type. And even though your own company pays your own medical bills, you still have a right to collect from the at-fault driver for pain and suffering,” Pickar says. “It’s a dual system.”
No-fault systems, furthermore, are easy to abuse.
“Typically speaking, a person’s pain and suffering award is usually a multiple of their medical bills,” Pickar says. “The higher the medical bills, the higher the pain and suffering – there’s almost a built in incentive to over treat, for those who are inclined to do it.”
Many states, such as Wyoming, have “tort” systems of automobile insurance. Under that system, the at-fault driver’s insurance pays both the medical bills and the pain and suffering.
There is move in the Colorado Legislature this year, however, to reform the law. The state’s no-fault law expires in July, and Gov. Bill Owens has said he will not sign a bill to extend no-fault. If the Legislature does not pass a bill to reform automobile insurance laws, the state will revert to a tort system lacking any mandated coverage, Pickar says.
“Either a major overhaul or tort would be better than what we have,” she says.
Bert Roy, of Eagle, says he wouldn’t drive without insurance, but no one has ever adequately explained why it’s so expensive in Colorado.
“I think the state’s trying to keep medical and auto insurance in line because Colorado’s known for being high,” Roy says. “And there’s never been an explanation of why it’s so high.”
Sen. Jack Taylor, R-Steamboat Springs, who hasn’t yet made up his mind on the issue, says automobile insurance reform isn’t so simple.
“It’s a real controversial issue and I’m not sure where it’s going to come down,” Taylor says. “Trial lawyers want to keep it the way it is – which probably gives them more business – but not only are auto insurance rates going up, health insurance rates are going up as well.”
But State Rep. Carl Miller, D-Leadville, who also represents Eagle County, says he’s a strong supporter of changing the law.
Miller says he supported a reform bill that passed the state House of Representatives last year, but later died in the Senate.
“I’m definitely in favor of auto insurance reform,” Miller says. “We have to find a way to lower premiums and give people the coverage they want and get rid of these mandates.”
But hospital officials in Colorado and other health care workers are worried dropping coverage from automobile insurance could drive up the cost of health insurance, Miller says.
Therefore, he adds, the best reform bill will be one that doesn’t transfer costs.
“Everybody agrees we can’t do any cost shifting,” Miller says. “I do think when the session’s over, we’ll find we have more options and less mandates – and hopefully, a reduction in the cost of auto insurance.”
State law mandates drivers carry at least $130,000 worth of coverage.
“The lawyers are testifying that we don’t need change, that things are working just right – I don’t agree with that,” Miller says.
Drivers deserve more leeway in deciding how much and what types of coverage they want to carry, Miller says.
“We’ve got so many mandates that you and I have to take, if we want them or not,” Miller says. “These should be the choices we make when we purchase insurance – we should have a cafeteria plan.”
Pickar says she agrees.
“You ought not to make people buy all that coverage,” she says. “As a consumer you don’t have very many options.”
Terri-Ann Giandomenico, an Avon resident who used to live in Philadelphia, says the cost of insurance is all relative. In Colorado, she pays about a fourth of what she had to pay for car insurance in the city, she says.
“Car insurance is important,” she says. “I talk to all sorts of people who say they’re going to get the cheapest available. I know people who have kids who buy a used car and get the least amount of insurance.”
Though it’s important, Roy says, insurance could stand to be a little cheaper.
“I think all insurance is high,” Roy says. “But we don’t have a choice.”
Some have compared the no-fault law to Communism –attractive on paper, but a failure in the real world.
Pickar again compared Colorado to Wyoming.
“In both states, auto insurance is footing the bill,” she says. “In Colorado, the whole purpose is –because your own company pays your medical bills – why go after the other guy?”
“The reality is,” she adds, “in many, many, many accidents the injured person’s medical bills are above $2,500. So not only is there a requirement for their company to pay, but they’re eligible to go after the other guy.”
The broad range of care auto insurance policies cover also drives up costs, she says.
“Health insurance policies pay for what’s medically necessary. Under automobile policies, you pay for what’s reasonable,” Pickar says.
What’s reasonable could include massage treatments and aromatherapy, she says.
“All those things might make me feel better and that’s good coverage –it’s awesome coverage. It’s just cost prohibitive,” Pickar says.
Michael Neff, an agent for American Family Insurance in Eagle-Vail, criticized the system for also covering accidents that occur near or around a car.
“You could go out and get drunk, climb on top of car and fall and break your neck,” Neff says. “But it’s not health insurance that will cover it, it’s auto insurance.
“It was a bad law in 1976,” he adds, “it’s a worse law today.”
Editor’s note: This is the fifth part of a five-part series examining issues affecting residents of the Vail Valley that are being considered in the 2003 Colorado Legislature this year.
Matt Zalaznick can be reached at 949-0555, ext. 606, or via e-mail at firstname.lastname@example.org.
With a pitched battle brewing in the state legislature over his signature “public option” health insurance bill (HB19-1004) from last session, state Rep. Dylan Roberts, D-Avon, is urging calm before the coming storm.