I dreamed last night that I was a hero for an entire hockey team.
I understand why my mind placed me on a hockey team. My wife and I had watched the movie, “Jack Frost” yesterday afternoon. The “hero” part, however, I do not understand.
In my dream several of my teammates had fallen for the “Minimum Auto Liability Insurance” advertisements. They had gotten the minimum insurance that their state requires them to have.
Back when I worked daily with car insurance people were only required to prove that they could pay $25,000 of medical bills if they hurt a human and $15,000 for property.
Since then the minimum in my state has been increased. In order to get your driver’s license in Texas, you must prove that you have the ability to pay for $30,000 of medical bills and $25,000 for any property that you damage.
CAR INSURANCE PROBLEM
In my dream I shared with my teammates the story of a girl who my wife used to work with. It was about this same time of year. She was driving her mini-van on a country road. She was cresting a hill when a car full of teenagers was coming towards her in her lane. Before she could react, they collided head-on.
My wife’s friend had to be air-lifted to the hospital. She survived the crash but her medical bills were over $100,000. Her $45,000 mini-van was totaled.
Texas law requires drivers to pay for any damage they cause. That teenager, or his parents, was responsible for her medical bills, lost income and cost of her car.
After I shared this with the team, I asked them 2 questions.
- “If the teenager only had state minimum liability insurance to pay $30,000 of her $100,000 medical bills, where did the other $70,000 come from?”
- “If the teenager only had state minimum liability insurance to pay $25,000 for the totaled mini-van, where did the other $20,000 come from?”
After I shared this story, every one of my teammates changed their auto insurance to maximum liability insurance. They realized that price is not the only consideration when buying insurance.
After that, I became their hero. I had not made a game-winning goal or incapacity the other team’s enforcer. In my dream I was a hero because I was able to save them from potential financial disaster.
In the spirit of transparency, I have to admit that I allowed my P & C insurance license to expire in 2005. My knowledge about car insurance is dated. Any advice that I give on the topic of car or home insurance today is purely as a consumer. My expertise in insurance lies in the discipline of Life & Health insurance only.
The lesson I learned back with my wife’s friend’s car accident is about to be repeated with health insurance.
Under Obamacare every American will be required to purchase one of 4 government approved “Essential Health Benefit” policies for health insurance starting in October of 2013. The minimum plan will be called the, “Bronze Plan.” It will only pay 60% of your medical bills after you have paid your $2500 annual deductible. The default plan that will be used as a template by the Department of Health and Human Services has a $5000 stop-loss. Once an insured as paid that much money towards his medical bills plus his deductible, the insurance company will pay all their medical bills for the rest of the year.
That means that you would need medical bills of $52,500 before the insurance company would pay all of your health care expenses.
As we approach the initial enrollment for mandatory “Essential Benefit Plans” I hope that my readers will remember the lesson from my dream. Just because something is required by law, you may not be able to afford to only get the least expensive plan. There are consequences for not having the appropriate insurance when you need it.
When you enroll in the mandated “Essential Benefit Plans” fight the urge to only get the cheapest plan available. Take the time to think things through. Your choice may save you some money today but be very costly tomorrow.