Auto Insurance Investigation

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It's been nearly a year since Colorado's car insurance laws changed. But are you really saving money? In this 11 News Investigation, Jeff Marcu looks at your real insurance savings and where else your money may be going.

You may have noticed your car insurance rates drop in the last year. That’s after Colorado switched from the no-fault system to the tort program. Lawmakers say there's a definite reason for that switch, but some people are not too happy about it.

Doug Dean is Colorado's Insurance Commissioner and former Speaker of the Colorado House. He says the old insurance system was outdated and desperately needed change. "The no-fault system was broken. Auto insurance premiums had risen 20% in the last half of 2002," says Dean.

Dean says since the new tort system has been in place, car insurance rates have dropped an average of 15% to 27%---depending on your type of coverage. But with the lower rates, you're also losing most if not all of the medical coverage that would pay your bills if you were injured. And if you add the medical coverage equivalent to what was once required by the state, your rates could spike as much as 30% to 50%.

That’s an option most people are not taking, according to local agents. And it seems to be causing some problems when people get in accidents and they're at the hospital. “From the hospital's perspective, it's increased our costs," says Cindi DeBoer of Memorial Hospital in Colorado Springs.

And those costs could eventually be passed on to you through increased health care costs at the hospital. "It takes longer for claims to get through the system. We have to bill the auto carrier and then the health insurance carrier before we can get paid, and it's resulted in lower reimbursement to Memorial," says DeBoer. Memorial Hospital is predicting an additional loss of $2.6 million this year, according to DeBoer. That is as a direct result of the new tort insurance system.

Health insurance companies also say they're feeling the pinch, in the form of higher medical payouts. And that means higher premiums for customers. So far, that averages to a 1.12% increase. "From a more global perspective, I really don't see any advantages of what's happened. I think it's just shifted costs from one end to the other," says Greg Russell of Anthem Blue Cross/Blue Shield.

But that’s a point Colorado Insurance Commissioner Doug Dean strongly disputes. "It's simply untrue if anyone says there's going to be a cost shift and no one is going to save money. That's untrue."

Many tell us, time is the true factor in determining the financial impact for consumers. By the way, Colorado is the 38th state to adopt the tort system. Insurance experts recommend you meet with your agent periodically to reassess your coverage needs.