Senate approves auto insurance reforms

LANSING, Mich. — State Sen. Tonya Schuitmaker on Friday applauded Senate passage of several reforms to the state’s no-fault auto insurance system.

“Residents are tired of high premiums,” said Schuitmaker, R-Lawton. “Michigan drivers pay the highest premiums in the country, and that is a direct result of the current system. While some promote the program’s success, it is clear that something needs to be done to address the exorbitant costs.”

Michigan is one of 12 states that currently operate under a no-fault system of automobile insurance. Under the current system, a driver’s own insurance company covers all accident-related medical expenses and lost wages regardless of who caused the accident. Because of this, all motorists in the state are legally required to carry Personal Injury Protection (PIP) coverage, which pays for an individual’s medical expenses resulting from injuries sustained in an auto accident.

“The legislation approved by the Senate includes a $400,000 cap for personal injury protection for people who have never paid into Michigan’s no-fault system,” Schuitmaker said. “This would reduce costs and bring Michigan more in line with neighboring states. There is no reason for Michiganders to be covering unlimited PIP claims for out-of-state residents.”

There are, however, many reasons for Michigan’s high rates. Michigan’s unique uncapped benefits, fraud and increasing health care costs are just a few examples.

Senate Bill 1014 would address the rampant fraudulent activity within the system by creating the Michigan Automobile Insurance Fraud Authority within the attorney general’s office. The authority’s primary operation would be investigating insurance fraud, which according to the Insurance Institute of Michigan is estimated to be about $400 million per year.

The bill would also make changes to attendant care, setting limits on the amount that could be paid to family and household members to help protect against inflated costs. Coverage for the first 56 hours of attendant care provided in a week would be limited to a reasonable and customary amount, and coverage of care in excess of 56 hours would be limited to $15 an hour.

Included in the package is legislation that would allow Michigan residents age 65 or older the option to choose a capped auto-insurance policy. SB 787 would set the cap at $50,000 and personal insurance or Medicare would cover remaining medical expenses from an automobile accident after the $50,000 limit is reached. Seniors who opted for the limited coverage would see their catastrophic claims assessment drastically reduced.

Seniors would also have the option to remain in the current no-fault system.

“Michigan has the highest average annual premium in the nation at $2,394, while the national average is $1,318,” Schuitmaker said. “We need to work to close that gap and do better for hardworking Michigan taxpayers.”

SBs 787 and 1014 have been sent to the House of Representatives for further consideration.

###