How does Drug Testing Affect Insurance Claims

Alcohol and drug testing is not currently required by any laws to issue an insurance policy. However, this type of testing may be performed when there is an automobile accident. Some insurance companies may be allowed to deny paying benefits if a drug test showed alcohol or drug use. Alcohol and drug testing is also being used by employers when hiring new employees which can have an effect on insurance costs

Ohio Law

The state of Ohio has an insurance law that permits a health insurance company to deny a claim for medical costs if an injury was the direct result of drug or alcohol use. As a result there were fears at hospitals of not being reimbursed the cost of the drug and alcohol tests. This led to hospitals not routinely testing for the presence of drugs and alcohol unless a test was needed for the proper treatment of a patient.

Negative Effects

Hospitals that do not routinely test for the presence of drugs and alcohol when patients end up in the emergency room can have negative effects. Individuals who are not screened can prevent them from receiving a citation or ticket and prevent them from getting proper treatment. This can lead to increased insurance costs for residents who pay premiums ever year for automobile insurance. Individuals who are under the influence of alcohol are the leading cause for most automobile accidents.

Employer Drug Testing

Employers that test their employees for the presence of drugs can see significant savings on their insurance premiums. This is because insurance companies tend to charge less when a business is actively trying to reduce accidents and claims. Insurance companies that provide businesses with a workers’ compensation policy often have discounts that can be applied. One such discount that is available is for a drug-free workplace.

Reducing Claims

When drug testing is implemented at a business the amount of claims and injuries on the job tend to decrease. Another benefit is that the amount of claims that are paid out by insurance companies tend to decrease as well. When an insurance companies claim payments decrease they can pass the cost savings to their policyholders. Companies that have less accidents may also opt to self-insure instead of paying for an insurance policy.


Employers that have drug testing procedures setup for employee will see various long-term benefits from their efforts. One type of benefit is the cost that employers pay for health insurance and workers’ compensation policies. Some states may also have laws that prevent benefits from being paid to an employee who test positive for drugs after an accident has occurred.