Q. My car insurance company is charging more and my agent
said the State of Oregon made them do it. Car insurance is expensive. Why would
you make it cost even more?
A. We share your concern about the cost of car insurance.
Any changes in car insurance rates are subject to review by actuaries on our
staff. Sometimes, changes in the law that are intended to benefit consumers
can also affect the cost of insurance. The 2015 Legislature passed Senate Bill
411, which made changes in two required coverages: Personal Injury Protection
(PIP) and Uninsured Motorist (UM). Let's take Personal Injury Protection first.
PIP pays for medical expenses, lost income, and other benefits for you and
your passengers who get hurt in a car accident. It doesn't matter who is at
fault. Before this bill became law, medical expenses had to be incurred within
one year. Now, the time period is two years. For example, Jane was hurt in a
car accident and had to have physical therapy for 14 months. Under the prior
law, her car insurance company would have paid for 12 months and Jane would
have had to use other resources for the last two. Now, all 14 months may be
paid. There is also a dollar limit, but that was not changed, so the amount
available to be paid could be used up before the time limit runs out.
Uninsured Motorist coverage is a little more confusing for most people. If
you're hurt in a car accident and someone else is responsible but doesn't have
car insurance, then your insurance company steps in and pays what the responsible
party's insurance company would have paid. UM also applies if the responsible
party doesn't have enough insurance to cover all of your damages. When you buy
car insurance, you choose the limits for this coverage. Let's look at a couple
- Jane selected the minimum limits for UM coverage when she bought her
policy. The maximum payment is $25,000 for each person injured. She was involved
in an accident with Joe and it was determined that he was 100 percent responsible.
He does not have car insurance. Her accident was serious and she had hospital
bills, doctor bills, lost income, and months of discomfort. Her claim for
all damages could be $60,000. Since there is no insurance available from Joe,
Jane's company would pay $25,000.
- Now let's change the facts. Joe does have insurance, but he also chose
minimum limits of $25,000 per person for his liability coverage. His company
would pay the $25,000. Under the prior law, Jane's UM limits would not apply
because her limits were the same as Joe's. Now, Jane's limits will apply and
her insurance company may pay her up to an additional $25,000.
These changes may result in higher claim payments and insurance companies may
adjust their rates to cover the increased claim payments. The effect of these
changes should be relatively modest, so if you are seeing substantial increases,
we suggest asking for a detailed explanation. You may also want to consider
shopping for the best combination of coverage, rates, and service.
If you have questions or are having difficulties with your insurance company
or agent, our advocates are available at 1-888-877-4894 (toll-free).