MI Rejects Bid to Lower Highest Car Insurance Rate in the Nation

By: Bridget Clerkin November 9, 2017
Michigan's no-fault insurance policies—which ensure any driver or passenger involved in a car wreck will have lifetime medical benefits stemming from any injuries suffered—will stay in place, along with their nation-highest premiums.
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Michigan legislators have moved to preserve protections for some of the state’s sickest residents—but at a cost.

Earlier this month, members of the state’s House of Representatives rejected a bill to overhaul a piece of Michigan’s car insurance policy, long thought to be responsible for keeping the Great Lakes State atop the list of the country’s costliest auto insurance rates.

Called the Fair and Affordable No-Fault Reform Package, the bundle of legislation was designed to help lower insurance costs in the state by eliminating the requirement that all Michigan drivers obtain unlimited personal injury protection (PIP) plans, an expensive type of no-fault coverage. The measure was defeated in the House, in a vote of 45-63.

To advocates, the bills represented the chance to lower car insurance rates in the state by as much as 40%—and by at least 20% for most motorists. Detroit Mayor Mike Duggan had called the perennially high rates a “civil rights issue,” and argued that the legislation would offer greater choice for drivers by giving them the option to select from several less-costly PIP policies.

But his fellow Democrats in the House of Representatives disagreed, voting largely along party lines to down a measure they said would never amount to real relief for Michigan motorists due to provisions allowing insurance companies to opt out of some cost-saving aspects of the plan.

The bill’s rejection also keeps in place Michigan’s Catastrophic Claims Association, a joint fund meant to provide lifetime medical benefits to MI residents who are devastatingly injured in car accidents. The venture is subsidized by motorists’ PIP payments and was set to be dismantled if the package of bills passed, which would have led those already suffering from difficult injuries to instead create a patchwork of coverage from a number of different health and auto insurance plans.

With those changes rejected, and no other reform plans in the works, Michigan motorists will need to maintain their pricey policies—and just hope they never end up getting what they pay for.

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