Car Insurance : 6 Free Or Low
Medicaid is a social-welfare program that provides comprehensive government-based health insurance to low-income people. Medicaid is free health...
Medicaid is a social-welfare program that provides comprehensive government-based health insurance to low-income people. Medicaid is free health insurance for those who qualify. In most cases, there are no monthly premiums, and there is no or minimal cost-sharing in the form of deductibles or copayments.
Medicaid works slightly differently in each state, but to be eligible, you must meet low-income guidelines, which vary depending on factors such as age, pregnancy, and whether you’re disabled. In many states, adults under the age of 65 will qualify for Medicaid if their household income is no more than 138% of the federal poverty level. Pregnant women and children can generally qualify for Medicaid with household incomes well above that level, but people age 65 and older generally need to have lower incomes as well as low asset levels in order to qualify for Medicaid.
However, some states have stricter eligibility criteria for adults under the age of 65. In those states, you must meet low-income guidelines and also be a member of a medically vulnerable group (people who are pregnant, parents/caretakers of a minor child, elderly, disabled, and children). In other words, there are some states (14 as of early 2021, although it will only be 12 as of mid-2021 ) where being low-income by itself will not make you eligible for Medicaid.
Medicaid may be available to immigrants who have been legally residing in the United States for five years or more if they meet eligibility requirements.
Medicaid isn’t usually available to undocumented immigrants, although there may be exceptions such as short-term limited Medicaid coverage in emergency situations, and emergency coverage for people who are pregnant. And again, Medicaid eligibility varies from state to state. California, for example, has chosen to extend Medicaid eligibility to undocumented children and young adults who otherwise meet the income criteria for eligibility.
Medicaid is paid for by federal and state taxes, and administered at the state level (which is why coverage and eligibility rules vary from one state to another). If you receive Medicaid, your friends, neighbors, and fellow citizens are paying for your health care with their tax dollars.
Although Medicaid is government health insurance, the vast majority of care provided to Medicaid recipients is provided by private businesses and healthcare providers. If you get Medicaid, you’ll likely be cared for at the same hospitals and by the same physicians as your neighbors with private health insurance.
And most states contract with private insurance companies to administer the coverage, which means your coverage ID card may display the name of a well-known private health insurer.
You can apply for Medicaid through your Affordable Care Act health insurance exchange or by contacting your state’s Medicaid program directly.
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Car insurance is necessary to protect you financially when behind the wheel. Whether you just have basic liability insurance or you have full auto coverage, it’s important to ensure that you’re getting the best deal possible. Wondering how to lower car insurance? Here are 15 strategies for saving on car insurance costs.
Key Takeaways
* One of the ways to lower car insurance is through a discount bulk rate for insuring several vehicles and drivers at once.
* Lower car insurance rates may also be available if you have other insurance policies with the same company.
* Maintaining a safe driving record is key to getting lower car insurance rates.
How Much Does Car Insurance Cost?
Car insurance costs are different for every driver, depending on the state they live in, their choice of insurance company and the type of coverage they have. But when trying to save money on car insurance, it helps to know what the typical driver pays.
On average, the typical person spent $1,190 on car insurance in 2018, based on the latest figures available from the National Association of Insurance Commissioners (NAIC). According to the NAIC data, car insurance premiums rose 30% between 2014 and 2018, despite the number of insured vehicles only rising by 7%.
Data from AAA put the average cost of car insurance for new vehicles in 2020 slightly higher, at $1,202 annually. The numbers are fairly close together, suggesting that as you budget for a new car purchase you may need to include $100 or so per month for auto insurance.
Note
While some things that affect car insurance rates–such as your driving history–are within your control others, costs may also be affected by things like state regulations and state accident rates.
How to Save on Car Insurance Costs
There are a number of strategies you may use to save on car insurance. Once you know how much is car insurance for you, you can put some or all of these tactics t work.
1. Take Advantage of Multi-Car Discounts
If you obtain a quote from an auto insurance company to insure a single vehicle, you might end up with a higher quote per vehicle than if you inquired about insuring several drivers or vehicles with that company. Insurance companies will offer what amounts to a bulk rate because they want your business. Under some circumstances they are willing to give you a deal if it means you’ll bring in more of it.
Ask your insurance agent to see if you qualify. Generally speaking, multiple drivers must live at the same residence and be related by blood or by marriage. Two unrelated people may also be able to obtain a discount; however, they usually must jointly own the vehicle.
If one of your drivers is a teen, you can expect to pay more to insure them. However, if your child’s grades are a B average or above or if they rank in the top 20% of the class, you may be able to get a good student discount on the coverage, which generally lasts until your child turns 25. These discounts can range from as little as 1% to as much as 39%, so be sure to show proof to your insurance agent that your teen is a good student.
Incidentally, some companies may also provide an auto insurance discount if you maintain other policies with the firm, such as homeowners insurance. Allstate, for example, offers a 10% car insurance discount and a 25% homeowners insurance discount when you bundle them together, so check to see if such discounts are available and applicable.
2. Pay Attention on the Road
In other words, be a safe driver. This should go without saying, but in today’s age of increasing in-car distractions, this bears mentioning as much as possible. The more mindful you are, the more accidents or moving violations you’ll be able to avoid—events that raise your insurance rates. Travelers offers safe driver discounts of between 10% and 23%, depending on your driving record.
For those unaware, points are typically assessed to a driver for moving violations, and more points can lead to higher insurance premiums (all else being equal).
3. Take a Defensive Driving Course
Sometimes insurance companies will provide a discount for those who complete an approved defensive driving course. Drivers may also be able to reduce the number of points they have on their licenses by taking a defensive driving, accident prevention, or other course.
Make sure to ask your agent/insurance company about this discount before you sign up for a class. After all, it’s important that the effort being expended and the cost of the course translate into a big enough insurance savings. It’s also important that the driver sign up for an accredited course. Every state has its own rules about accredited defensive driving courses, and GEICO allows you to check what they are by state on its website.
4. Shop Around for Better Car Insurance Rates
If your policy is about to renew and the annual premium has gone up markedly, consider shopping around and obtaining quotes from competing companies. Also, every year or two it probably makes sense to obtain quotes from other companies, just in case there is a lower rate out there.
Remember, cheap doesn’t always mean good, and going with the lower-priced company isn’t always the wisest decision. That’s because the insurer’s creditworthiness should also be considered. After all, what good is a policy if the company doesn’t have the wherewithal to pay an insurance claim?
To run a check on a particular insurer, consider checking out a site that rates the financial strength of insurance companies. The financial strength of your insurance company is important, but what your contract covers is also important, so make sure you understand it. Insure.com’s site bases its insurance company ratings on data assembled by Standard and Poor’s.
In general, the fewer miles you drive your car per year, the lower your insurance rate is likely to be, so always ask about a company’s mileage thresholds.
5. Use Mass Transit
When you sign up for insurance, the company will generally start with a questionnaire. Among the questions it asks might be the number of miles you drive the insured automobile per year.
If you use your vehicle to commute three hours to work every day, you will generally pay more in insurance premiums than someone who only drives one mile a day. If possible, try to use mass transit to rack up fewer miles, keeping in mind that you will usually have to decrease your mileage significantly before incurring a discount. Ask your insurance company about the company’s different mileage thresholds, so your efforts won’t be wasted.
Also, check with your provider to see how many miles they have you currently driving, as most can give you an improved insurance quote.
6. Downsize Your Vehicle
Buying a huge SUV may sound exciting, but insuring a 5,000-pound, top-of-the-line vehicle can be more expensive than insuring a small (but safe) lower-cost commuter car. Some insurers will offer a discount if you buy a hybrid or an alternative fuel vehicle. Farmers, for example, offers a 5% discount.
You can feel good about protecting the environment and save money on insurance at the same time. Find out the exact rates to insure the different vehicles you’re considering before making a purchase.
7. Increase Your Deductibles
When selecting car insurance, you can typically choose a deductible, which is the amount of money you would have to pay before insurance picks up the tab in the event of an accident, theft, or other types of damage to the vehicle. Depending on the policy, deductibles typically range from $250 to $1,000. The catch is that, generally speaking, the lower the deductible, the higher the annual premium.
Conversely, the higher the deductible, the lower the premium. Ask your agent how your premium might be affected if you raised your deductible. It may make the annual premium better by several percentage points and put some money back in your pocket, or the savings may be minimal. If you are reluctant to file smaller claims to avoid the risk of pushing up your premium, raising the deductible may be a particularly sensible move.
8. Improve Your Credit Rating
A driver’s record is obviously a big factor in determining auto insurance costs. After all, it makes sense that a driver who has been in a lot of accidents could cost the insurance company a lot of money. However, folks are sometimes surprised to find that insurance companies may also consider credit ratings when determining insurance premiums.
Why is your credit rating considered? Michael Barry, senior vice president and head of media relations of the Insurance Information Institute, puts it this way:
> “Many insurers use credit-based insurance scores. It’s a contentious issue in certain statehouses…[but] insurers will say their studies show that if you’re responsible in your personal life, you’re less likely to file claims.”
Regardless of whether that’s true, be aware that your credit rating can be a factor in figuring insurance premiums, and do your utmost to keep it high.
Your credit card company or bank may offer free credit score access. You can check credit reports for free at AnnualCreditReport.com
9. Consider Location When Estimating Car Insurance Rates
It’s unlikely that you will move to a different state simply because it has lower car insurance rates. However, when planning a move, the potential change in your car insurance rate is something you will want to factor into your budget.
10. Review Your Coverage
Dropping certain types of coverage can be a slippery slope. After all, nobody can predict if or when an accident will occur. However, if you are driving an extremely old automobile that’s on its last legs, it may make sense (depending on the cost, your driving record, and other factors) to drop collision or comprehensivecoverage.
The reason for this is that were the vehicle to be involved in an accident, the insurance company would likely total the car. If the value of the car is only $1,000 and the collision coverage costs $500 per year, it may not make sense to buy it.
11. Get Discounts for Installing Anti-Theft Devices
Individuals have the potential to lower their annual premiums if they install anti-theft devices. GEICO, for example, offers a “potential savings” of 25% if you have an anti-theft system in your car.
Your insurance company should be able to tell you specifically which devices, when installed, can lower premiums. Car alarms and LoJacks are two types of devices you might want to inquire about.
If your primary motivation for installing an anti-theft device is to lower your insurance premium, consider whether the cost of adding the device will result in a significant enough savings to be worth the trouble and expense.
12. Speak to Your Agent
It’s important to note that there may be other cost savings to be had in addition to the ones described in this article. In fact, that’s why it often makes sense to ask if there are any special discounts the company offers, such as for military personnel or employees of a certain company. You never know what sort of discount pricing might be available for your circumstances.
13. Switch to Pay-as-You-Go Insurance
If you’re a safe, low-mileage driver, a usage-based insurance program (also known as black box insurance) may be available to you, such as Allstate’s Drivewise, Progressive’s Snapshot, or State Farm’s Drive Safe & Save. By signing up for these programs, you let your insurer track your driving through a telemetric device installed in your car in exchange for possible discounts based on how much you drive, when you drive, and how well you drive. If you drive fewer than 10,000 miles a year, you might be able to save money with this type of program.
14. Research Additional Discounts
Insurers provide a variety of discounts. Check for discounts such as these:
* Offers to let you pay the entire annual or six-month premium at once
* Agreements to receive e-bills and documentation
* Memberships in particular organizations or groups that offer discounts
Don’t be swayed by a long list of possible discounts. Compare both discount and regular prices from multiple insurers.
15. Ditch Coverage You May Not Need
You may not need all the bells and whistles in a policy, such as roadside assistance and car rental coverage. Go over your insurance policy line by line and ask about removing anything you don’t need.
Check with your credit card company to see if they offer roadside assistance benefits to cardholders, which might allow you to drop this feature from your auto insurance policy.
The Bottom Line
The price of auto insurance is likely to continue to rise in the future. However, there are many things you can do to reduce the sting. These 15 tips should get you driving in the right direction. Remember also to compare the best car insurance companies to find the one that fits your coverage needs and budget.
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15 Tips And Ideas For Cutting Car Insurance Costs
Car insurance is necessary to protect you financially when behind the wheel. Whether you just have basic liability insurance or you have full auto...
MarketWatch has highlighted these products and services because we think readers will find them useful. This content is independent of the MarketWatch newsroom and we may receive a commission if you buy products through links in this article.
Just because you’re required to have auto insurance doesn’t mean you have to pay an arm and a leg to get it. There are many ways to find the cheapest car insurance available to you so you can protect your vehicle and your wallet at the same time.
Of course, you don’t want to go too cheap, because you could end up with a company that has poor customer service or can’t fulfill its claims obligations. We’ve researched dozens of the best car insurance providers to find companies that provide both reliable and affordable car insurance. Based on price, our top five picks for cheap auto insurance are USAA, Erie, Geico, Progressive and Root Auto.
Since prices are based on your driver profile, vehicle and location, the best way to shop is to compare auto insurance quotes from multiple providers. Click below to compare free car insurance quotes from leading companies.
In this article:
* 5 cheapest car insurance companies
* How to find the cheapest car insurance
* Factors that can raise or lower your auto insurance rates
* Average car insurance costs
* Find the cheapest auto insurance in your state
* Frequently asked questions
* Our methodology
Below are our top recommendations for car insurance based on cost. The following providers stand out from the competition as the best cheap auto insurance providers not only for the discounts they offer but also for their customer service and strong industry reputations.
Cheap Car Insurance Company Cost Rating Average Annual Cost* Best For… 1. USAA 9.5 $990 Military families 2. Erie Insurance 9.0 $1,183 Basic coverage 3. Geico 8.5 $1,356 Most drivers 4. Progressive 8.5 $1,346 High-risk drivers 5. State Farm 8.0 $1,312 Students *The average nationwide cost by company is based on our rate estimate analysis for a 35-year-old driver with a good credit rating and good driving record.
Best for military families: USAA
If you’re a military member, veteran or member of a military family, you might find the cheapest car insurance through USAA. If you meet the requirements, you should consider comparing quotes from this company when you’re shopping around.
USAA gives car insurance discounts for military installation, safe driving, good students, low mileage, multivehicle coverage and more. Here are a few other things we like about USAA:
* A++ AM Best financial strength rating, indicating that the insurer has a superior ability to pay customer claims
* High ratings from J.D. Power surveys, which indicate a smooth claims process, easy purchasing process and overall customer satisfaction
* ‘B’ Better Business Bureau (BBB) rating, indicating that USAA has sound business practices and works to solve customer complaints
* Options for accident forgiveness, guaranteed asset protection (GAP), car replacement assistance (CRA) and usage-based insurance
Best for basic coverage: Erie Insurance
Erie Insurance is available in 11 eastern states — Illinois, Indiana, Kentucky, Maryland, North Carolina, Ohio, Pennsylvania, Tennessee, Virginia, West Virginia and Wisconsin — as well as Washington, D.C. In addition to being one of the cheapest car insurance options, the company is known for customer service and consistently performs well in industry surveys. For example, Erie was ranked in the top three spots in the J.D. Power 2020 U.S. Auto Insurance Satisfaction StudySM for the mid-Atlantic, North Central and Southeast regions.
Erie Insurance is best for drivers with a good driving record and a good credit score. If you meet those requirements, auto insurance can be very affordable. Notable discounts include a new driver discount of 20% and a multi-policy discount of up to 25%. Here are a few more reasons we recommend Erie:
* A+ AM Best financial rating
* A+ BBB rating
* Options for accident forgiveness, nonstandard vehicle coverage and pet injury coverage
Best for most drivers: Geico
Because USAA has eligibility requirements and Erie Insurance is regional, most drivers should consider Geico when looking for the cheapest car insurance. The company is the second-largest car insurance provider in the U.S. and has been in business for over 80 years. Geico can be a great option whether you want to get full coverage, just the minimum or customize a plan.
Drivers in all 50 states can get cheap auto insurance from Geico, though drivers with accidents on their records may find better prices from other companies. Geico’s notable discounts include 25% savings for insuring multiple vehicles and a 15% student discount. Here are a few more things we like about Geico:
* A++ AM Best financial rating
* Highest ratings in three regions in the J.D. Power Satisfaction Study
* A+ BBB rating
* Options for mechanical breakdown insurance and usage-based insurance
* Highly rated mobile app
Best for high-risk drivers: Progressive
The nation’s third-largest auto insurance company, Progressive covers millions of vehicles a year and can be one of the most affordable choices for coverage. Not every company offers friendly prices for high-risk drivers, but Progressive does. Motorists without much experience or those with a DWI or DUI on record can generally find cheap car insurance compared with competitor plans.
Progressive has many discount opportunities, including a teen driver discount, a multicar discount that can save you up to 12% and a pay-in-full discount. Here are a few more things we like about the auto insurance provider:
* A+ AM Best financial rating
* A+ BBB rating
* Options for custom parts coverage, loan/lease payoff and usage-based insurance
Best for students: State Farm
State Farm is another great choice when looking for the cheapest car insurance. In particular, we’ve found State Farm to be one of the most affordable options for students. The company offers the largest student discount in the industry (up to 25%). Young drivers can also take advantage of State Farm’s Steer Clear® program to improve their driving skills and get further discounts.
Since its founding in 1922, State Farm has grown to become the largest insurance provider in the U.S. According to the National Association of Insurance Commissioners, State Farm wrote over $40 billion in premiums in 2020. At that level, State Farm can offer a wide variety of coverage options to satisfy most drivers. Here are a few more highlights of State Farm:
How to find the cheapest car insurance
Auto insurance quotes are based on your situation, your desired coverage level and the range of discounts a company provides. Some things are set in stone — you can’t erase an at-fault accident from your recent history, for example. That said, there are a few ways you can improve your chances of finding cheap auto insurance.
* Look for discounts: Common discounts from auto insurers include multivehicle, bundling, military, new driver, homeowners, good student and good driver discounts. Search for the company that gives the best discounts for you.
* Improve your driver profile: You can raise your credit score to get cheaper insurance in many states. Also, being a good driver over time will lower your rates.
* Try usage- or habit-based programs: You can get a usage-based discount if you drive less than average, since you’re less likely to get into an accident. And if you’re a good driver, you can enroll in a habit-tracking program like Progressive’s SnapshotⓇ or use Root Auto to save money.
* Shop around: One basic technique to find the cheapest car insurance is to shop around. You can compare quotes every time your policy is up for renewal to make sure you’re getting a good rate, too.
Factors that can raise or lower your auto insurance rates
Insurance companies look at many different things when deciding what you should pay for a policy. Here are the main factors:
Factor How It Affects Your Car Insurance Premium Age Generally, people have fewer accidents as they age and gain driving experience (up to a point). Teen drivers pay the most, followed by drivers under 25. Marital status Married people tend to have fewer accidents, so they pay less for car insurance. Car make and model Cars that cost more to repair also cost more to insure. This applies to collision and comprehensive insurance, which cover your own car. Safety equipment like seat belts and airbags can affect the price as well. Annual mileage People who commute long distances and put many miles on their cars pay higher insurance prices. Driving record A clean driving record can reward you with discounts, while a poor one will make your insurance premiums rise. Having a DUI will make your rates jump up, and you’ll be deemed “high risk.” While a single accident in your driving history raises rates, having multiple at-fault accidents lands you in the high-risk category too. Minor traffic violations increase rates but to a lesser degree. Credit history Most states allow car insurance companies to consider your credit history when determining prices. Poor credit will make your rates go up, and vice versa. ZIP Code Urban areas have higher rates of theft, accidents and vandalism, so drivers in cities pay the highest rates. Parking in a garage can sometimes lower your rate. State requirements States range from requiring almost nothing to requiring many types of insurance. You’ll pay more for coverage as more types are required. Desired coverage Car insurance rates rise as you add more types of coverage or choose higher coverage limits. Drivers only looking for the minimum coverage, like basic liability coverage, will generally have the cheapest car insurance rates. Deductible A high deductible will lower the overall cost of the policy, and vice versa. Average car insurance costs
According to our cost estimate data, the average 35-year-old driver with good credit and good driving history pays about $1,712 a year for car insurance in 2021. However, some states have cheaper car insurance than others. Below are the top five states with the most expensive and cheapest car insurance.
Most Expensive Car Insurance States Average Cost of Car Insurance Cheapest Car Insurance States Average Cost of Car Insurance Michigan $4,430 Ohio $939 New York $4,048 Wisconsin $970 Louisiana $3,867 Maine $1,013 Florida $2,927 Vermont $1,029 Nevada $2,354 Indiana $1,106 Find the cheapest auto insurance in your state
To recap, here are our top choices for cheap car insurance:
1. USAA: Best for military families
2. Erie Insurance: Best for basic coverage
3. Geico: Best for most drivers
4. Progressive: Best for high-risk drivers
5. Root Auto: Best mobile experience
Since prices depend on so many factors, cheap insurance looks different for each driver. However, there are always cheaper and more expensive coverage options out there, and the easiest way to find the best rates is to compare multiple insurance quotes online. It may take some research, but in the end, you can likely save money on your next car insurance policy.
Frequently asked questions
Who offers the cheapest auto insurance?
USAA, Erie Insurance, Geico, Progressive and Root Auto offer some of the cheapest auto insurance on the market. There are many discount opportunities you can look into to find affordable auto insurance coverage, and some companies offer usage-based insurance policies.
What’s the cheapest type of car insurance?
The cheapest type of car insurance depends on what’s required in your state. Many states only require liability insurance, so you can get by with a simple liability policy. Other states require medical coverage and uninsured/underinsured motorist coverage, so the cheapest auto insurance policy for you will have to at least include those types of coverage.
You can generally save money by going without collision and comprehensive coverage, which aren’t required in any state. However, if you get into an accident and don’t have collision coverage, you’ll have to pay for damage to your own car out of pocket.
Who has the cheapest car insurance in Arizona?
USAA and Geico are among the cheapest car insurance providers in Arizona. The state requires a standard amount of bodily injury and property damage liability insurance, and these companies offer affordable rates for those requirements.
How can I get super cheap car insurance?
Compare at least three options to find the cheapest car insurance available to you. Ideally, shop around at least a couple of weeks before you need to change your plan. Also, try out usage-based options if you are a good driver and don’t put many miles on your vehicle.
What is the cheapest online car insurance?
Based on our cost estimate analysis, USAA offers the cheapest car insurance online for military members and their families, Geico is cheapest for the average driver and State Farm offers the cheapest car insurance for students.
Our methodology
Because consumers rely on us to provide objective and accurate information, we created a comprehensive rating system to formulate our rankings of the best car insurance companies. We collected data on dozens of auto insurance providers to grade the companies on a wide range of ranking factors. The end result was an overall rating for each provider, with the insurers that scored the most points topping the list.
For this article, we selected companies with high overall ratings and cost ratings. The cost ratings were informed by auto insurance rate estimates generated by Quadrant Information Services and discount opportunities.
5 Cheapest Car Insurance Companies
MarketWatch has highlighted these products and services because we think readers will find them useful. This content is independent of the MarketWatch...
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| What Does It Mean To Be Underinsured? |
What Does It Mean To Be Underinsured? - You’ve heard of uninsured motorists, who are drivers who don’t have any vehicle insurance at all. But what about underinsured motorists? Are you one of the thousands who are underinsured, or don’t carry enough insurance?
Causing an accident as an underinsured motorist or being hit by an underinsured motorist can lead to an expensive situation. Here, we’ll consider the definition and examples of being underinsured.
Definition and Examples of Being Underinsured
The definition of “underinsured” may depend on the circumstances of a collision. Often, this term refers to your policy not being able to fully pay for the damages claimed because of your low maximum limits. In other words,your policy comes up short.
You may not think you’re at risk of underinsurance because you’ve followed state law by signing up for a policy that meets the state’s minimum insurance requirements. This is understandable, but state minimums can vary widely, and may not take into account the worst-case scenario.
For example, state minimums for car insurance can range from $25,000 per person/$50,000 per accident in Connecticut to $50,000 per person/$100,000 per accident in Maine.12
Importan : If you’re in a state with a minimum of $25,000 and the person you hit has hospital bills and other claims that add up to $50,000, you may be an underinsured motorist.
Even if you took out more than the state’s minimum—for example, $50,000—but the injured person’s lost wages, physical therapy, and other bills add up to $75,000, you could be underinsured by $25,000.
How Being Underinsured Works
If you’re underinsured, you may be putting yourself at risk every time you slide behind the wheel. If you’re in an accident and you cause damage beyond your policy limits, the other individual could sue you in court for the difference between your policy’s payout and the actual costs, and this could even lead to bankruptcy.
If the other driver has uninsured/underinsured motorist coverage, their insurance company may pay the difference between your policy’s payout and the actual costs. However, it probably isn’t wise to rely on the other driver covering your risk.
How Underinsured Motorist Insurance Works
If you’re a driver in an accident with an underinsured motorist, hopefully your policy contains uninsured/underinsured motorist protection, also known as “UI” or “UIM.” The coverage helps make up the difference between the driver’s policy limits and the damages to your vehicle or your body. Depending on your type of coverage, underinsured motorist coverage may cover:
- Medical bills
- Lost wages
- Pain and suffering
- Car repairs
- Funeral services
NOTE : Fourteen states require uninsured and underinsured coverage, other states require insurers to offer it, and some states require neither.
Some states, including Nebraska and Minnesota, require underinsured/uninsured motorist coverage for bodily injury, but not for property damage. If an underinsured motorist wipes out your tulip garden and garage, you likely won’t be able to claim those damages. On the other hand, Vermont and Virginia require coverage for property damage by an underinsured motorist.
Before your insurance pays your claim under underinsured motorist coverage, you likely will need to pay your deductible or the amount you agreed in advance to pay if in an accident. There also may be strict time limits regarding how soon you need to file an underinsured motorist claim with your insurance company—for example, it may need to be filed within 30 days. After you provide your medical or property documentation, your insurance company reviews the claim and settles with you.4
In some states, you may be able to employ a “stacking” strategy for an underinsured claim. With this approach, you can combine maximum limits for multiple insured vehicles or policies. So, you can “stack” two $25,000 underinsured motorist policies for a limit of $50,000.
Alternatives to Being Underinsured
To avoid being underinsured, speak with an agent or review the state limits. You’ll want to have enough coverage to pay any claims that result from an auto accident you cause.
If you have significant wealth to protect, you also might consider an umbrella policy. An umbrella policy effectively increases your limits beyond the maximum available from your insurance company. Depending on your insurer, you may be able to add uninsured/underinsured motorist coverage to your umbrella policy, thereby increasing the limits of your coverage.
If you want to protect yourself from an underinsured driver’s damages, you can take out uninsured/underinsured motorist coverage. Typically, these are sold in addition to your policy, if you live in a state where it isn’t legally required.
Key Takeaways
- Underinsured motorists don’t carry enough auto insurance to cover the gap between the damages they caused and the maximum their insurance policy reimburses.
- To reduce the chances of being an underinsured driver, consider carrying more than your state’s minimum.
- If you’re a driver with an uninsured/underinsured motorist policy, your insurance company may cover the difference between the actual costs and the at-fault driver’s policy payout.
- Underinsured coverage may include bodily injury only, or bodily injury and property damage.
Frequently Asked Questions (FAQs)
How long does it take to resolve an underinsured motorist claim?
Some underinsured motorist claims may take longer to evaluate and settle than other claims. These delays may come from waiting to determine the final costs associated with the length and severity of medical treatments and property repairs. There also may be settlement disagreements between insurance companies, or between you and your insurance company that could be settled in court or through arbitration.
How many Americans are considered underinsured?
There aren’t any hard statistics on how many Americans are underinsured, but 12.6% of motorists were uninsured in 2019, according to a 2021 study released by the Insurance Research Council.5
Is there other insurance that could pay for my accident medical bills?
That depends on your state of residence, circumstance, and insurer. Your medical bills could be paid by your health insurance company. If you signed up for medical payments coverage or personal injury protection (PIP) coverage, your auto insurance company might also use these types of coverages. PIP is similar to medical payments auto insurance, but also may cover lost wages or other non-medical costs.
What is the difference between uninsured and underinsured?
Uninsured motorists don’t have any type of auto insurance. They may have allowed their policy to lapse, didn’t pay on time, or never took out insurance. Underinsured motorists may have insurance—ust not enough to cover the damage they’ve caused.
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What Does It Mean To Be Underinsured?
What Does It Mean To Be Underinsured?What Does It Mean To Be Underinsured? - You’ve heard of uninsured motorists, who are drivers who don’t have...
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| Health Insurance Cancellation Laws |
Health Insurance Cancellation Laws - Individual health insurance policies are typically guaranteed renewable after a 12-month contract period between you and your insurance carrier. However, your insurance provider may choose either to continue or cancel the health coverage when the policy expires. If coverage continues, your insurer may alter your plan by increasing cost-sharing (like copays and deductibles), charging higher premiums, or reducing the covered benefits.
But what happens when your insurer won’t continue providing coverage? Due to frivolous cancellations in the past, current law prohibits your health insurance provider from dropping you without notice. The written notice the insurer will send should give you time to find new coverage or appeal the decision.
Learn more about when your insurer can cancel your health policy, your rights when the policy is canceled, filing an appeal, and your insurance options after cancellation.
Key Takeaways
- An insurance company has a right to cancel your health coverage if you fail to fulfill your obligations per the policy guidelines.
- Your insurance provider must serve you with a written notice before it can drop your health coverage.
- An insurance company can’t drop your health coverage if you made an honest mistake in your insurance application.
- Your state may run a consumer assistance program that helps you file an appeal or request a review of your health insurance provider’s termination decision.
When Your Health Insurance Company Can Cancel Your Policy
Insurance companies are businesses dealing with risks, and being able to assess risks and avoid losses is part of how they operate. Their insurance policies are usually contractual agreements bound by certain rules, so they could terminate your coverage if you veer from the conditions set forth in your policy.
Luckily, current law also limits what an insurer can include as reasons for canceling your health insurance policy. For instance, an insurer typically isn’t allowed to cancel a policy midway through its term and before its expiration or renewal date.1 Your health insurance company can legally terminate your policy on these grounds:
- You fail to pay premiums by the due date.
- You voluntarily or mutually agree to end the coverage.
- You intentionally falsify information or provide incomplete information that’s crucial to the coverage on your insurance application.
- You commit fraud in obtaining insurance benefits.
- You’re no longer eligible for coverage through termination from employment or death.
While an insurance company may terminate your policy for nonpayment of premiums, you may qualify for premium payment relief or a grace period during which you can settle any premiums due. The grace period for health insurance policies is as follows:1
- At least seven days for weekly premium policies.
- At least 10 days for monthly premium policies.
- At least 31 days for all other policies.
Your Rights When Your Policy Is Canceled
When your insurance policy first comes into force, an insurer may cancel it within the first 60 days without giving a reason for the cancellation. After 60 days, an insurer must provide a written policy termination notice before the policy’s expiration date. The termination notice must clearly provide the grounds for dropping your insurance.1
In the past, an insurance company could drop your insurance, void your policy, or ask you to refund the money they’ve spent on your medical bills if it found a problem with your insurance application. Fortunately, current laws now prohibit insurance companies from canceling your health coverage for making an honest mistake or leaving out information that has minimal ramifications for your health.
Importan : When your insurance company says no to your health coverage, that doesn’t have to be the final word. You can start by appealing to the insurance company. If your coverage isn’t reinstated, you can take your appeal to an independent review organization.
An insurance company must inform you why it ended your coverage and how you can dispute the decision.
Filing an Appeal
You can appeal your insurer’s cancellation decision in these two ways.
Internal Appeal
When you challenge your insurer’s decision through an internal appeal, you’re simply asking the insurance company to revisit the decision and do a full and fair review. If the appeal is urgent, your insurer must expedite the process. If your insurance company still upholds its decision, you can proceed to the second option.
External Review
If an internal appeal fails, the law allows you to seek independent third-party intervention to review the insurance company’s decision. With an external review, the insurance company is stripped of its power to overturn the external reviewer’s decision.2
NOTE : You must request an external review within four months after the date you receive a policy termination notice from your insurer.3
In all states, insurance companies must have and adhere to an external review process that conforms with federal consumer protection standards. This way, you’ll be protected by the guidelines of the process. If your state’s external review process doesn’t meet the consumer protection standards threshold, the U.S. Department of Health and Human Services (HHS) will oversee the review process in your state.
You won’t incur any charges if your insurer used the HHS-administered external review process. However, you’ll be charged if your insurance company contracts with an independent review organization, but this won’t exceed $25 per review.3
Health Insurance Options After Cancellation
As mentioned, your insurer must provide notice and give clear reasons for canceling your policy. The notice period is at least 30 days and should help you appeal or seek alternative coverage.4 If an insurer rejects your appeal, you have the right to purchase any other health plan you qualify for. Here are your health insurance options if your current coverage is canceled.
Buy Another Plan From Your Insurer
You can still apply for another health insurance plan through your current insurer as long as you’re eligible. The insurance company shouldn’t lock you out of purchasing—either directly or through an agent—any of its other plans for which you qualify. Inquire with the insurance company which plans may be available to you.
Apply for a Marketplace Plan
You can seek health coverage through the Marketplace or any insurer that sells insurance through the Marketplace. If you lost coverage for non-payment of premiums, you could qualify for income-based financial assistance on premiums and out-of-pocket costs. You may also be eligible for low-cost or free coverage through Medicaid or CHIP (Children’s Health Insurance Program). Marketplace plans also come with their own rights and protections.
Buy a Plan From Another Insurer
You can purchase health insurance from another insurance company outside the Marketplace. Contact multiple companies to see what plans are available in your state and to compare prices. Most of the plans you buy outside the Marketplace will also include rights and protections.
Enroll in any Other Coverage Available to You
If you can’t secure coverage through and outside the Marketplace, you may sign up for any other coverage your situation qualifies you for. For instance, you could enroll in an employer-sponsored group health plan, Medicare, TRICARE, or Department of Veterans Affairs (VA) health care, among other types.
Frequently Asked Questions (FAQs)
Do current health insurance cancellation laws protect all plans?
Cancellation laws prohibiting insurers from terminating your coverage because of an oversight on your insurance application protect all Marketplace plans, including grandfathered plans. For other appeals, you’ll need to identify whether you have an individual, group, or government-sponsored plan because the protection laws may differ.
How and when will I be notified if my health insurance policy is being canceled?
If your health insurance company is terminating your policy, it must provide at least 30 days’ notice before the policy expiration date.
What should I do after I get a cancellation notice on my health insurance policy?
After you receive a cancellation notice, read through it to understand why coverage was terminated. If the cancellation was unfair, seek to understand the appeals process and timeline. You can start your appeal within the policy cancellation notice period.
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Health Insurance Cancellation Laws
Health Insurance Cancellation LawsHealth Insurance Cancellation Laws - Individual health insurance policies are typically guaranteed...
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| How Long Can You Stay on Your Parent’s Health Insurance? |
How Long Can You Stay on Your Parent’s Health Insurance? - Current federal law enables you to remain on a parent’s policy up to age 26, and some state laws allow you to keep the coverage even longer.
When it’s time to get your own coverage, it’s important to know how to get a policy and understand the type of plan that will best fit your needs. Some plans offer more affordable premiums, while others pay more health care costs. But what’s most important is that you continue health insurance coverage, even if you’re young and healthy.
Key Takeaways
- Unmarried and married children can stay on their parent’s insurance until they turn 26.
- Some states extend the deadline indefinitely for disabled dependents.
- Once you’re off your parent’s insurance, you have several options for health care coverage.
When You Will Lose Health Insurance Through Your Parents
Currently, the Affordable Care Act (ACA) mandates that children are covered by a parent’s health insurance plan until the child turns 26,1 if the parent’s health plan offers coverage for dependents. The rule applies to unmarried and married children and all types of health plans, including employer-sponsored coverage, according to the Department of Labor.
The law also allows you to remain on a parent’s plan if you:
- Go to college or drop out of school
- Adopt or have a child
- Move out of your parents’ house
- Are not claimed as a dependent on your parents’ tax returns
- Refuse an offer of employer-sponsored health insurance
TIP : If your parents have coverage from the health insurance marketplace, you can remain on the policy until December 31 of the year you turn 26, or the oldest age allowed by your state’s insurance code.2
Some States Extend the Age Limit
Some states follow the ACA’s age-26 rule, but others have laws that allow you to remain on a parent’s health insurance policy longer—but only under certain conditions. Although the following states offer exceptions, health care laws are subject to repeal or revision.3
Dependent Age Limit Exceptions
Florida Up to age 30 for unmarried dependents with no children and who live with their parents up to age 30
Georgia No age limit for disabled dependents incapable of self-sustaining employment
Idaho No age limit for disabled dependents
Illinois Up to age 30 for dependents who are veterans
Indiana No age limit for disabled dependents incapable of self-sustaining employment
Iowa No age limit for disabled dependents and full-time students
Massachusetts No age limit for disabled dependents incapable of self-sustaining employment
Minnesota No age limit for disabled dependents
Missouri No age limit for disabled dependents incapable of self-sustaining employment
Nevada No age limit for disabled dependents incapable of self-sustaining employment
New Jersey Through age 31 for unmarried dependents who have no dependents
New York Through age 29 for unmarried dependents who are residents of New York
No age limit for unmarried, disabled dependents incapable of self-sustaining employment
Ohio No age limit for disabled dependents incapable of self-sustaining employment
Oregon No age limit for disabled children and elderly parents
Pennsylvania Up to age 30 for those without dependents and are residents of Pennsylvania, or full-time students without dependents
Up to the length of deployment for full-time students who are National Guard or reservists who leave school due to deployment
Rhode Island No age limit for disabled dependents
South Carolina No age limit for disabled dependents incapable of self-sustaining employment
South Dakota Through age 29 for full-time students
No age limit for disabled dependents incapable of self-support
Wisconsin No age limit for full-time students
No age limit for full-time students who are National Guard or reservists called into active duty
No age limit for dependents called for federal active duty
Health Insurance Options for Young People
If you have aged out and need to find new health insurance, you have a few options.
Employer-Sponsored Health Insurance
Some employers offer group health insurance plans for their employees. With a group plan, the employer chooses the plan and often pays a portion of your premium. Some group plans may limit the doctors and hospitals from which you can seek services, and you may not be able to keep the same coverage when you go to work for another employer.
In 2020, employer-sponsored coverage cost an average of $7,470 for single coverage and $21,342 for family coverage. Typically, workers pay an average of 17% of the cost for single coverage and 27% for family coverage, according to the Kaiser Family Foundation.4
The Health Insurance Marketplace
The marketplace provides health insurance tailored for people who don’t get health insurance through an employer. Many marketplace participants receive subsidies that lower their premiums. You can research and buy marketplace coverage at HealthCare.gov or through your state’s marketplace. Marketplaces allow you to apply during “open enrollment” periods that typically run from Nov. 1 to Dec. 15.5
Some insurance companies offer short-term health insurance plans that provide basic health coverage but do not comply with ACA rules. These relatively affordable plans can be a stop-gap if you aren’t eligible for marketplace plans. Beware: Short-term plans can deny coverage for preexisting conditions.
COBRA
The Consolidated Omnibus Budget Reconciliation Act (COBRA) allows workers who have employer-based health insurance to continue their benefits. COBRA coverage is only available following certain qualifying events such as job loss, reduction in work hours, death of the policyholder, or divorce from the policyholder. The ACA also dictates that COBRA coverage extends to dependent children, up to their 26th birthday.6 Although COBRA can help bridge the gap if you lose your coverage, it often requires you to pay the entire premium out of pocket.
Medicaid
Federal and state governments work together to provide Medicaid, which is health insurance available to low-income adults, elderly adults, people with disabilities, children, and pregnant women. States administer Medicaid according to federal guidelines. Eligibility for Medicaid is based on your modified adjusted gross income. To qualify, you must hold U.S. citizenship or have a qualifying non-citizen status such as permanent residency. Typically, you must be a resident in the state in which you apply for Medicaid.
School-Sponsored Health Insurance
Many colleges and universities offer health insurance policies to their students. Some school-based plans offer coverage for less than $2,000 per year, with copayments ranging from $30 for an office visit to $150 for an emergency room visit. Check with your school to find out what its plan covers.7
How Do You Choose the Right Coverage?
Before shopping for your first health insurance policy, it’s important to know the types of plans available, the level of coverage you can expect, and associated costs.
Types of Plans
The most common types of health insurance plans include:
Exclusive provider organizations (EPO): With an EPO, the plan will only cover costs if you seek the services of doctors, hospitals, and services within the defined network, except when you need emergency care.
Health maintenance organizations (HMO): HMOs contract with doctors, sometimes within a specific service area, to provide care and preventivehealth services. This type of plan only covers the cost of services provided by in-network caregivers, except in emergencies.
Point of service (POS): With a POS, you pay less for physician and hospital care when you seek services with a network. To receive specialist care, you must obtain a referral from your primary care physician.
Preferred provider organization (PPO): PPOs offer reduced-cost services when you seek care from doctors and hospitals within a network. This plan doesn’t require you to obtain a referral for specialist care.
Costs
Health insurance coverage requires you to pay a monthly premium. But you’ll also have to pay other costs when you need care.
Deductible: The deductible is the amount of money you must pay out of pocket before the policy starts covering costs.
Copayments: Fixed payments for certain services (primary care visit, specialist visit, urgent care, etc.) you make before or after you meet your deductible, depending on the plan. For example, a plan may require you to pay a $20 copayment each time you visit your doctor.
Out-of-pocket max: A health insurance plan may cap the amount of money you must pay for health care services each year. In 2021, marketplace plans cap out-of-pocket costs at $8,550 for single coverage and $17,100 for family coverage.8
Do Young People Really Need Health Insurance?
If you’re healthy, you might not think you need health insurance until you’re older. But consider this: Treatment for a broken leg can cost up to $7,500, and a hospital stay can cost $10,000 per day, according to the U.S. Centers for Medicare and Medicaid Services.9 If you don’t have health insurance, you’ll have to shoulder the entire cost of medical expenses if you sustain an injury or become ill.
Nearly 20% of households have delinquent medical debt and about 9% of households have at one time filed bankruptcy due to health care expenses, according to a 2019 survey conducted by the Kaiser Family Foundation and the Los Angeles Times.10
Also, consider the potential for future health problems. Currently, federal law doesn’t allow ACA-compliant insurance plans to deny coverage for a preexisting condition such as diabetes or heart disease.
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How Long Can You Stay on Your Parent’s Health Insurance?
How Long Can You Stay on Your Parent’s Health Insurance?How Long Can You Stay on Your Parent’s Health Insurance? - Current federal law enables you...
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| What Is a Preferred Provider Organization (PPO)? |
What Is a Preferred Provider Organization (PPO)? - A preferred provider organization (PPO) is a health plan where an insurance company contracts with hospitals, doctors, and clinics to create a network of participating providers. These providers have agreed to provide medical care to the plan’s subscribers at a negotiated rate. You will pay less if you use doctors, hospitals, and care providers who are in the plan’s network.
Learn more about what a PPO is, how it works, the benefits and drawbacks, and how it compares to other health plans.
PPO Definition and Examples
A PPO is an arrangement between an insurance carrier and a network of preferred providers agreeing to provide health care services at a negotiated price. Encouraging plan subscribers to use in-network providers and facilities creates a higher volume of patients, which allows for discounted rates.1 You can use hospitals, doctors, and providers outside of the network for an extra cost.
Acronym: PPO
For example, insurer Aetna offers a PPO plan that provides lower rates for doctors who are in-network, and allows you to see a doctor without a referral.2
How a PPO Works
A PPO is offered by private insurance carriers that have a network of doctors, hospitals, clinics, and other health care providers who offer medical care at discounted, negotiated fees. You’ll pay less if you use in-network (“preferred”) providers, but you have the freedom to seek health care from any doctor, hospital, or other health care provider.
NOTE : A PPO lets you schedule an appointment with any primary care doctor or specialist without a referral, and you won’t need to have a primary care physician coordinating your care.
If the doctors and facilities you use are in your PPO’s network, you will have access to discounted rates on services the plan provider has negotiated for you. Medical care from an out-of-network provider will come at a higher cost since the provider isn’t part of the pre-negotiated discount. For example, a plan might cover 80% of the cost of using a preferred provider but only cover 70% for an out-of-network provider. These percentages vary by plan and are outlined in your summary of benefits.
PPO plans typically include the following charges:
- Premium: This is the fee your PPO plan charges each month to maintain your coverage.
- Deductible: This is a specific annual dollar amount you must pay for covered medical services before your plan starts paying out benefits. If you enroll another family member, you’ll pay two medical deductibles: yours and another for your family members. Typically, your deductible doesn’t apply to preventive services.
- Copay: A flat fee you pay upfront each time you see a network provider or get certain medical services. Doctor visits, hospital stays, prescription drugs, and emergency room visits often have varying copays.
- Coinsurance: Most PPO plans will charge you a coinsurance rather than a copay, which is a percentage of the cost of covered medical services that you pay after meeting the deductible.
- Total out-of-pocket maximum: This is the most you’ll pay in a year for covered services, which includes copays, deductibles, and coinsurance. If your out-of-pocket expenses hit this yearly maximum, your plan will pay 100% of the allowable costs for the remaining plan year.
The cost of using an out-of-network provider will depend on your PPO plan’s allowed amount or the standard rate for the service. If the provider charges you more than the allowed pricing your PPO has set, then you have to pay the difference.
Pros and Cons of a PPO
Pros
Lower costs for in-network providers
No primary care doctor needed
No referrals
Cons
More expensive
More responsibility
Pros Explained
- Lower costs for in-network providers: A PPO network comprises doctors and facilities that have negotiated lower rates on the services they provide.
- No primary care doctor needed: PPO plans don’t make you choose a primary care physician.
- No referrals: In most cases, you don't need a referral to visit any doctor, specialist, or hospital. You also don’t have to consult with a primary care physician before getting a referral.
Cons Explained
- More expensive: PPO plans are associated with higher out-of-pocket costs, including a higher monthly premium, copay, and a mandatory deductible before you can receive benefits.
- More responsibilities: You’ll have to monitor in-network versus out-of-network providers to control costs.
PPO vs. HMO vs. EPO vs. POS
There are four basic provider networks available to customers: PPO, HMO, EPO, and POS. Each one differs in its own way.
PPO HMO EPO POS
Premiums High Low compared to PPO Low compared to PPO Low compared to PPO
Out-of-network coverage Yes No No Yes
Referrals required No Yes Yes, for some plans Yes
Deductible Low for some plans Low High Low
PPO
A PPO health plan provides discounted medical care through a network of providers. You can also see specialists and out-of-network providers without referrals.
Health Maintenance Organization (HMO)
An HMO plan limits coverage to care and services from providers who contract with the HMO. Out-of-network care isn’t usually covered except for emergency care, and out-of-area urgent care and out-of-area dialysis for Medicare-related HMOs. You may need to work or reside in the plan’s service area to qualify for coverage. You must designate a primary care physician who coordinates all your care.
Exclusive Provider Organization (EPO)
An EPO plan only covers services and care from hospitals, doctors, or specialists who are in the plan’s network, with an exception for emergency or urgent care visits. Generally, you don’t need a primary care physician or referral to visit a specialist.
Point of Service (POS)
A POS plan is technically a combination of a PPO and HMO. It requires you to have a referral from your primary care physician to see a specialist. Coverage for out-of-network providers is also available, but with a higher copay.4
Key Takeaways
- A PPO plan has a group of preferred or in-network providers who provide medical care at a negotiated lower rate.
- You can visit out-of-network doctors and specialists without referrals, but at a higher cost.
- PPO plans tend to have higher premiums and are often tied to a deductible you must pay before you start receiving benefits.
- You or your doctor may require a preapproval from your PPO before some medical procedures, treatments, or services are performed.
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What Is a Preferred Provider Organization (PPO)?
What Is a Preferred Provider Organization (PPO)?What Is a Preferred Provider Organization (PPO)? - A preferred provider organization (PPO) is a...
