When it comes to car insurance claims, people often think about repairing a vehicle after an accident, but your liability insurance covers medical expenses for others who are injured in a car accident. From emergency room visits to physical therapy visits, the costs associated with healthcare after an increase in car accidents will increase, and insurance companies adjust fees accordingly.
As wages, medication, medical devices and supply costs increase, price insurers must also pay for personal injury protection, medical costs and physical injuries claims. The true cost of Bankrate’s auto insurance has been found to have increased by more than 30% since 2023.
Medical expenses are increasing
Inflation from product shortages and delays in shipping from fallout and pandemics have had a major impact on the costs of many healthcare-related products and services. According to the U.S. Bureau of Labor Statistics, two main components of healthcare are medical services and medical products. From January 2019 to January 2025, the Consumer Price Index (CPI) showed that the costs of health services increased by 18% and 10% respectively.
However, these numbers don’t tell the entire story. Some items that fall within both major medical components do not necessarily affect car insurance fees, such as the costs of private health insurance and nursing home care. These costs increased by 26% when they breached the costs of hospital services, taking into account services such as emergency room visits and emergency care centers.
Continuous staffing shortages increase medical costs
The costs of the insurance industry often lag behind the factors, and the healthcare industry is still dealing with fallout from the pandemic and related challenges. Guy Fraker, an insurance consultant specializing in financial forecast modeling, said factors that contribute to rising healthcare costs include “continuous and relentless technological advancements, and the high-demand shortage of personnel in foreign-made medicines, particularly specialized nursing.” The pandemic has amplified labor shortages in both the healthcare and automotive technology industries, which are still affecting the current sector.
About 100,000 registered nurses (RNS) According to the National Council’s nursing report, he left the healthcare professional within two years of the pandemic due to burnout, stress and retirement. Health Resources and Services Management predicts that by 2027 there will be a shortage of more than 300,000 RNs and 146,000 licensed nurse practitioners nationwide. a A shortage of doctors It is also expected to have an estimated deficit of 124,000 doctors by 2027, and to exceed 187,000 by 2037.
If the hospital cannot hire sufficient permanent staff, they will become contracted for the work. According to a report by the American Hospital Association (AHA), New Jersey Hospital paid an additional $670 million in 2021 for contract labor. This was three times the previous year. These high costs are reflected in hospital bills, which means higher bill payments and ultimately higher car insurance fees.
How does healthcare costs affect car insurance?
Medical expenses for those injured in a car accident are held responsible for physical injuries. According to CCC Intelligent Solutions (CCC), average physical injury claim payments Increased by 35% Average $27.6k per injury from the third quarter 2023 to the first quarter 2025. The states with the largest increase are as follows:
- Arizona: 13.5%
- Virginia: 10.6%
- California: 8.7%
- Washington: 5.7%
Depending on your state, personal injury protection (PIP) or medical expenses compensation (MedPay) may also be part of your choice or legal policy. These coverage types pay you and your passengers medical expenses regardless of negligence. Nationally, average PIP claim payments increased 4% between the third quarter 2023 and the first quarter 2025.
CCC data shows that first-party invoice lines severity (dollar amount per service) increased by 7-8% in all states from Q4 2023 to Q4 2024, regardless of whether PIP is required. Significant increases are particularly seen in radiology, surgery, and evaluation and management procedures. The states that show the highest jump in severity for an individual line item are as follows:
- Massachusetts: 24.2%
- New Jersey: 18.2%
- Ohio: 17.5%
- Washington: 14.1%
- Kentucky: 13.4%
- North Carolina: 12.6%
- Michigan: 11.7%
In states with no disabilities, such as New York and Florida, drivers must carry PIP coverage to pay injuries to themselves and passengers in an accident, regardless of negligence. When you run out of PIP coverage limits, your personal health insurance (if any) will begin, covering the remaining expenses.
Specializing in medical malpractice and risk management, Weaver mentions some of the other aspects that increase the costs of health and car insurance that are not seen by consumers, including third-party litigation.
While auto and health insurance companies work together to coordinate claims, Third Party Litigation And abuse of the legal system can muddy waters. “Non-disabled countries have experienced a significantly lower litigation rate involving claimants who sues other party insurance companies for a crash,” Fraker says. “However, even in non-disabled states, between 47 and 62% of accident victims seek legal representation before filing a claim with the insurance company.”
Abuse of the legal system does not occur in a vacuum. From lawyers to doctors to hedge fund managers, bad actors can benefit from using a system set up to facilitate application claims for policyholders. A doctor or lawyer seeking to increase profits through litigation funds can send victims of an accident to multiple healthcare providers within a loosely formed network, particularly for neck, back and soft tissue injuries. These treatments are billed based on fee schedules set by the provider, but often accept far lower payments as final settlements. The difference between what is charged and what is paid is called a “phantom bill,” and according to Fraker, “it has become a profitable business model for investors.”
Does healthcare costs blame my high fees?
Increased medical costs directly affect car insurance rates, but this is just one of several factors responsible for rising car insurance rates.
While physical injuries and PIP payments are billed higher, there are conflicts and comprehensive claims. Five times more frequently. This means that changes in costs associated with vehicle parts and repairs can have a greater impact on car insurance fees.
But looking at President Trump’s new stuff, this could change Customs Plans will affect car insurance.
Not only is medical devices likely to become more expensive in the near future, but so is drug therapy. “The vast majority of medicines with chronic physical and mental health conditions are imported from China,” says Fraker.
Conclusion
As consumers, much of the increased costs of healthcare in America exceeds our control. “If healthcare is regulated as it should be, costs will be significantly reduced,” Weaver says. “People in a position to regulate insurance companies have no experience in knowing about their business from a non-sales perspective.”
However, there are steps that drivers can take to get their car insurance. If you choose a high-cost health care plan to save money with your health insurance, contact your agent to help you cover your injuries in the event of a car accident. MedPay and PIP in most states have deducted low or zero car insurance. This can be easier to manage when you pay in case of loss. Additionally, PIP or MedPay billing payments can help you deal with deductible health insurance if your injury exceeds your car insurance coverage. However, please note that PIP or MedPay claims may increase your automatic fee.
