Michigan’s Highest in the Nation Auto Insurance Rates Could Finally Be Reduced

It might be a little too soon to hold your breath, but there’s movement afoot in Lansing to resolve the seemingly unconscionable cost of auto insurance in Michigan.

Legislation seeking to reduce Michigan’s highest-in-the-nation auto insurance rates was approved by the state Senate today. State Senator Kim LaSata says the comprehensive plan would lower auto insurance rates in the state and more.

Commenting on today’s vote, LaSata, who hails from Bainbridge Township in Berrien County, says, “My constituents, along with all Michigan drivers, pay the highest auto insurance premiums in the nation, by far.”She is a member of the Senate Insurance and Banking Committee, and says, “Auto insurance is a burden on all of our budgets, and while these costs strain many, some forgo auto insurance entirely, compounding the problem.”

The Senate-approved plan will help lower auto insurance rates in Michigan by providing drivers more choice in coverage, getting tough on fraud and lawsuit abuse, and reducing inflated medical costs.

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It would provide drivers with the ability to choose a personal injury protection (PIP) coverage plan that best meets their needs and budgets and depending on the choices they make, it could save modest amounts or as much as 90-percent. Also, residents would be able to use their health insurance, Medicaid, or Medicare to cover excess medical costs, which would help put an end to drivers being charged twice for auto insurance medical coverage.

To help stamp out fraud and abuse, the Senate plan includes the creation of an anti-fraud authority to be operated by the Michigan State Police to help combat the problem statewide. State insurance officials have indicated that fraud contributes to the rising costs of auto insurance rates, and that instances of fraud are on the rise.

Other measures in the plan include:

  • Changes to the Michigan Catastrophic Claims Association (MCCA) per vehicle assessment to reduce the annual fee by more than 80-percent;
  • Lowering out-of-control medical costs in the auto insurance system that are passed on to drivers; and
  • Reducing conflicts of interest to combat fraud.

LaSata says, “Auto insurance is an increasingly burdensome, expensive problem we all share, and the reforms in this plan will help all of us save money. I consistently hear from my constituents throughout Southwest Michigan about what they would do with their savings if auto insurance rates were lowered. I am excited to help provide them with a plan that will do just that.”

LaSata contends, “This is a reasonable and well thought out plan that, through months of public hearings and committee work, has been developed to change the auto insurance system for the better,” and concludes, “This is a definite win for the residents of Southwest Michigan. Furthermore, it is a plan that will help all Michigan drivers save more of their hard-earned money.”

Senate Bill 1 now advances to the House of Representatives for consideration.

Lawton State Senator Aric Nesbitt was the first to introduce the bill, saying, “I introduced Senate Bill 1 in January because this has been an unsolved problem for too long,” and adds, “Since then, we have held hours of committee meetings and heard testimony from all parties who are involved in the current system. I think we have a good idea of where changes need to be made and how we can start providing some much-deserved relief to motorists.”

Under the current no-fault system, Michigan drivers pay the most expensive auto insurance rates in the country — up to 83-percent higher than the national average. There are a number of items that contribute to these grossly exorbitant rates — most notably the personal injury protection (PIP) insurance that Michigan motorists are required to purchase.

Currently, all motorists in the state are legally required to carry unlimited, one-size-fits-all PIP coverage, which pays for uncapped medical expenses resulting from injuries sustained in an auto accident. All auto insurance companies must also pay an assessment to the Michigan Catastrophic Claims Association (MCCA) to cover medical costs for claims that surpass $555,000, which is ultimately passed on to drivers.

Nesbitt argues, “The system is failing Michigan families,” and notes, “People are simply being priced out of being able to drive. No one should be forced to decide between auto insurance and groceries or being able to fill their car up to get to work. The system is simply out of control and needs to be reeled in.”

Senate Bill 1 would give policyholders the choice to select coverage that best meets their needs and budget. The legislation also aims to provide greater transparency and equity in health provider billing practices; crack down on unnecessary medical treatments; reduce the system’s susceptibility to lawsuits, fraud and conflicts of interest; and cut down on the number of uninsured drivers through more affordable rates.

Nesbitt tells us, “My wife and I are expecting our first child any time now. Because of that, we may choose to elect more stringent coverage, which we will be happy to pay for, but maybe you don’t have any children, maybe you drive an older car instead of a brand new one, maybe you have health insurance through your job, or are a senior citizen with Medicare coverage — all of these things should be applicable to the amount of coverage you choose. You have choices when purchasing any other insurance policy. The simple fact is you should have more choice when selecting your auto insurance coverage as well.”

Stay tuned.