Can Managed Care Cut Your Car Policy?

Consumers are getting used to the idea that by seeing doctors in managed-care networks, they can cut health-insurance costs. Now, health-maintenance and preferred-provider organizations may help them save on auto insurance, too.

Following the lead of health insurers, some property-casualty companies are lowering car premiums for drivers who select an HMO or PPO to provide medical care if they are injured in an accident. Progressive and GEICO are in the forefront, but State Farm, Allstate, and Prudential are right behind them.

TRAVELING. The arrangement is already prevalent in Colorado and Florida, where laws passed in 1991 allow insurers to designate doctor networks to treat auto injuries. Progressive is unveiling an auto PPO policy in Delaware and considers Minnesota, Utah, and Washington prime targets. GEICO is examining Connecticut, Georgia, California, Maryland, and Virginia.

Here's how it works in Florida: Progressive customers who agree to use the physician network save about 10% of their auto premium when they purchase a policy with a $250 personal injury deductible. To ensure compliance, Progressive waives the deductible if customers are injured and go to a network provider. It also reimburses 90% of their medical expenses rather than the 80% required by law. If you belong to an HMO or PPO through your health plan at work, you would still have to use the insurer's network to treat auto injuries in order to get the premium discount.

In an emergency, insurers waive the managed-care requirements until the patient is well enough to transfer to a network provider. State Farm says more than 35% of its 700,000 Colorado drivers have picked the managed-care plan. In July, it upped its premium discount there to 23%. If consumers use an out-of-network doctor or hospital in a non-emergency, a $1,000 deductible kicks in.

CRITICAL MASS. The downside is the same as in health insurance. HMOs and PPOs aren't likely to be offered in rural areas, because the provider network isn't there. Abd policyholders sacrifice freedom of choice in picking a doctor.

Even in states where managed care isn't yet used in auto coverage, consumers might get a break. New Jersey lets drivers use their employer health plan instead of the auto policy's coverage, shaving drivers' personal-injury premiums by about 5%.

So if you want to cut auto- insurance costs, ask about the medical side of your policy. It may offer a way to save without raising your deductible or skimping on your collision coverage.

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