Michigan auto insurance is required by all drivers and have to include both no-fault insurance, as well as unlimited personal injury protection in order to register their cars. The result is that car insurance rates in this state are among the highest in the nation.
This type of coverage may have been deemed “essential” when it became law almost four decades ago, but its now outlandish in comparison to other states. This is a fact that is clearly recognized by many, and change is afoot!
Michigan Gov Rick Snyder has proposed reform to the law that would cap benefits from the state at 1 million dollars. Under the law as it currently holds, insurers are reimbursed by the state for all costs over $500,000 from the Michigan Catastrophic Claims Association (MCCA), which is supported by an annual fee of $175 (soon to be $183) from drivers. The Governor’s proposed change would still leave Michigan with the nation’s most generous auto medical coverage.
The existing law makes unlimited medical treatments mandatory – and many insurers argue that is it high time for the “unlimited” part to go. Many are getting priced out of the market for coverage, as ask, is this coverage really beneficial with federal health care kicking in, and fraud adding a such a significant cost? Michigan now ranks third amongst states in terms of “questionable” claims submitted.
The Insurance Industry Institute reports that the average cost per no-fault claim in MI is more than twice that of the second most expensive state, New Jersey. The reason they say – lack of incentives. There are limited cost controls on the amount medical providers can charge for care when it comes car injuries, and according to the MCCA, the average hospital billings for the same procedures are much higher for patients getting no-fault coverage than those on Medicare or workers comp.
Michigan auto insurance reform would seem like a win-win all the way around, but as is the case with almost any type of change, there are those who oppose it. Much of the worry with implementing a new law revolves around care for the small number of people who need lifetime medical care exceeding the 1 million dollar proposed cap.
However, allowing residents to purchase additional coverage in case of catastrophic need would solve this, while backing up to a medical fee schedule could mean claimants would not be paying so much more than those who don’t have no-fault insurance for the same treatments and procedures.
