Although we don’t sell health insurance, we do get some questions regarding the recent sweeping health insurance changes and how they might affect the coverage in your home. So let’s find out, does Obamacare affect renters insurance?
I know it may surprise you, but according to actuaries and risk managers the answer tends to be yes!
The property-casualty insurance industry is likely to become the target of significant additional cost-shifting by hospitals, physicians, and other medical providers responding to the cost-containment provisions of [Obamacare].
-“The Affordable Care Act And Property-Casualty Insurance“, Insurance Research Council
Asking if Obamacare affect renters insurance is not asking for a direct, intentional relationship.
Of course, the ACA is entirely silent in regards to renters, property, and casualty insurance. Despite this, the law of unintended consequences comes into play here. Follow our reasoning, and I think you’ll agree that there is a direct, causal impact on renters insurance.
To make it easier, we’ll assume that the ACA works as intended and everyone has health insurance. While the reality of how many people have insurance may have a further upward impact on premium, the numbers strongly suggest that Obamacare does in fact impact renters insurance.
Health insurance in its current form, has only been around for a few decades. There was a time when if you negligently caused bodily injury to someone, their medical treatment would be paid for by your liability coverage. Keeping that in mind, you’ll find that when the majority of people have health insurance, the costs rise dramatically. In some cases, this is to pay for the people who don’t have health insurance. In other cases, it’s because things can be billed in certain ways to make them more profitable.
Since costs are rising, health insurance companies are more eager than ever to find ways to shift that cost burden.
Until recent years, subrogation against an individual without liability coverage, at the option of a health insurance company, was fairly rare. Subrogation is simply the process an insurance company goes through when attempting to recover the money they paid out from the responsible party. Now that subrogation by health insurance carriers is seen as a more common and effective cost control measure, more people are being sued by the paying health insurance carrier for causing bodily injury. That has the potential to drive up prices for liability coverage on renters insurance, which has traditionally been the less expensive part of the coverage. On a national average basis, it could cost between twenty to fifty dollars a year to go from $300,000 of liability to $500,000 of liability coverage on your renters insurance. That being said, that cost is bound to go up now that more health insurance carriers are trying to be made whole by a negligent party’s renters insurance carrier. So does Obamacare affect renters insurance? It’s certainly likely to on the liability side.
Medical payments to others is a common coverage on renters insurance policy.
It’s a no fault coverage, which means that regardless of contributory negligence, payment can be made to a party injured on your property. In the days before health insurance was widely carried, claims under this coverage were common. It’s generally a small coverage, between $1,000 and $5,000, and it covers basic medical expenses for small incidents much faster than liability might. Medical payments to others is also likely to fall victim to excessive subrogation attempts by health insurance carriers. It’s worth considering that even without being successful, it costs a great deal of money to defend against subrogation lawsuits. Even if the claim has no merit it can still involve thousands of billable hours from the insurance company’s lawyers. As a direct result of the ACA, as subrogation attempts increase you will likely see an increase in the cost of this coverage as well.
Does Obamacare affect renters insurance? If you mean from a regulatory compliance standpoint than very minimally.
However, if you mean does Obamacare affect renters insurance premiums? You can be sure the answer is yes. Time and future actuaries will tell you how much of an impact you can have, although it’s likely to be a large one. On the other hand, nationwide renters insurance on average costs between fifteen to twenty dollars a month. A 10% increase in premiums over the previous year would raise the average cost to somewhere between $16.50 and $22.00 a month. This is not a significant burden to most people, but the level of burden isn’t the point. The point is that Obamacare will have a direct, measurable impact on renters insurance premiums.
Want to find out more about how Obamacare affects renters insurance? Stay tuned here for more in our series of insurance answers, and feel free to call Effective Coverage at (800)892-4308 with all your renters insurance questions. Don’t forget that you can get a free, instant renters insurance quote above, as well in about three minutes!