How the Uninsured Raise Your Car Insurance Premium

There’s another reason to worry about the 47 million Americans that supposedly lack health insurance and the potential failure of Obamacare. The large number of uninsured people drives up your car insurance premiums.


When a person without health insurance gets injured in an auto accident, he or she often has no way of paying the medical bills. Such a person has a strong incentive to file a claim with an insurance company and to retain the services of a personal injury attorney. In many cases, filing a lawsuit is the only way the uninsured person can pay his or her medical bills.

The situation is made worse if the uninsured person gets disabled and cannot work or doesn’t have auto insurance. The person has two more strong incentives to hire a personal injury attorney and go after the other driver involved. Such a suit might be the only way the person can get enough money to buy another car to drive to work.

How Personal Injury Attorneys Drive Up Car Insurance Costs

That is why personal injury attorneys are always buying ads on daytime television. They know that injured people are lying around at home, unable to work and worrying about a stack of bills. Such people have a motivation to call the personal injury attorney.


This drives up auto insurance premiums for everybody, not just those that get into an accident. Insurance companies will have to pay more claims because more claims are filed. The expense of investigating, processing, and paying those claims will be passed onto everybody that has car insurance because that’s how insurance works.

Claims cost insurance companies money even when they don’t pay them. If a personal injury attorney gets involved, the insurance company has to hire attorneys to handle the matter. If the claim winds up in court, the costs can quickly escalate to hundreds of thousands of dollars.

The insurance company has to pay the attorneys whether it wins or loses. Even cases the insurer wins drive up premiums because the lawyers will have to get paid. The cost of all that litigation gets passed on to everybody that has a car insurance policy.

It’s worse in Some States

Statistics about the cost of insurance prove this argument. Louisiana and Michigan are the two states with the highest car insurance rates in the United States, and medical costs are the main reason why.

Louisiana is the state where it is easiest to win a personal injury claim. The state has a corrupt court system in which all lawsuits under $50,000 (which includes most injury claims) are decided by elected judges rather than lawyers. That gives attorneys a strong incentive to file such claims in Louisiana, which is why the average person in the state pays around $2,700 a year for car insurance. The average American pays around $1,500 a year for car insurance.

The system in Michigan might actually be worse because it gives people injured in a car accident something called lifetime injury protection. That means people injured in car wrecks in Michigan can get compensated for the rest of their lives. The system also obligates insurers to pay the first $500,000 in medical bills for an injured person; that gives hospitals and others a strong incentive to pad medical bills for injured people.

If that wasn’t bad enough, Michigan adds $175 a year to every car insurance premium to pay for something called the Michigan Catastrophic Claims Association. That’s a pool that covers accident-related medical expenses that exceed $500,000.

To make matters worse, you cannot contest accident claims in Michigan because it has no-fault auto insurance. That means every driver involved in an accident is equally responsible; irresponsible drivers and their insurance companies cannot be held responsible for their bad driving.

A Nationwide Problem

Okay, the situations in Michigan and Louisiana are an extreme example, but the lack of health insurance is a nationwide problem. Almost every American is paying too much for car insurance, partly because of the uninsured. That will not change until the health insurance system gets fixed.

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