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Auto Insurance Reform Proposed

Sep 29, 2017

This week, Speaker Tom Leonard (R-DeWitt Twp.) Detroit Mayor Mike Duggan, and Representative Lana Theis (R-Brighton) announced their plan to reform Michigan’s auto insurance system.  Michigan drivers pay the nation’s highest auto insurance premiums, averaging $2,400/year, nearly twice the national average.  Insurance rates are especially high in urban areas, including metro Detroit, Grand Rapids, Lansing, and Flint.  Detroit’s average annual premium tops $3,000/year, the highest of any city in America.

The bipartisan plan would end Michigan’s requirement that all drivers pay for unlimited lifetime health insurance through their auto insurers, no matter whether they already have health care coverage.  Drivers who wish to keep unlimited health care specifically through an auto insurance company may continue to do so.  Additionally, the proposal is said to root out fraud and abuse and reduce the rapidly growing number of lawsuits statewide.  According to the proponents of the plan, it provides drivers options for lower rates and greater choice based on what they can afford. 

Specifics of the proposal, include:

  • Personal Injury Protection – Drivers would be able to choose options of $250,000 or $500,000, on a per person, per accident basis
  • Insurers would be required by law to roll back rates for people who selected the $250,000 coverage level
  • Future rate increases would be regulated by the State of Michigan for five years
  • Auto insurers would be subject to a fee schedule for health services, just like health insurers
  • Senior drivers who have lifetime care coverage would be able to opt out of Personal Injury Protection since they’re already insured through employee retirement plans, Medicare, etc.
  • Lawyers would be prevented from filing liens against health care providers until an insurer has denied a coverage claim, preventing some lawsuits from being filed
  • Anti-fraud measures would crack down on those who abuse the system with unnecessary or excessive medical services
  • Any excess funding in the Michigan Catastrophic Claims Association that actuaries say isn’t necessary to cover medical care would be returned to drivers who paid into it

The legislation has been referred to the House Insurance Committee, where it is expected to receive its first hearing as early as next week.

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