When I first started representing the interests of the western Upper Peninsula at the state Capitol in January, the top complaint I got from residents was about our high car insurance rates. I listened to everyone’s concerns and vowed to fix the broken system that results in our highest-in-the-nation rates – and that goal was achieved May 30 when our historic bipartisan reform plan was signed into law.
Now, I’m happily fielding questions from people who want details on the new law.
Drivers are eager to know what is changing and when they will finally see rate relief reflected in their bills. I recently hosted a tele-town hall meeting on the topic with Rep. Jason Wentworth, who chaired the House’s Select Committee on Reducing Car Insurance Rates, and more than 4,500 residents joined in to listen and ask questions. I will provide answers to some of the most common questions here.
Until now, Michigan was the only state in which drivers were forced to pay for unlimited personal injury protection coverage through their car insurance – even though 99 percent of all accidents result in less than $555,000 of medical bills. This was the biggest factor contributing to our expensive car insurance rates.
Starting in July 2020, the new law will finally give Michigan drivers the freedom to choose a coverage level based on their own needs. Many drivers will be able to opt out of personal injury protection altogether. This includes seniors with retiree health coverage such as Medicare and those with health insurance policies that cover car accident-related injuries. Others will be able to continue with unlimited coverage or choose limits of $250,000 or $500,000. A $50,000 option will be available for drivers on Medicaid.
The new law guarantees savings for drivers in the personal injury protection portion of policies as follows:
- 100 percent for drivers choosing to opt out of personal injury protection coverage
- 45 percent for drivers choosing the $50,000 coverage level
- 35 percent for drivers choosing the $250,000 coverage level
- 20 percent for drivers choosing the $500,000 coverage level
- 10 percent for drivers choosing to continue receiving unlimited coverage
The new law also establishes a reasonable fee schedule to rein in out-of-control medical charges for auto accident injuries. A broken ankle should cost roughly the same to treat whether it was suffered in a car accident, falling off a roof or in a soccer game. Yet the current system allows billing for many medical procedures at much higher rates when the cause is a traffic accident.
With the new fee schedule, Hospitals will no longer be allowed to charge car accident victims three or four times more for procedures, which means drivers who choose lower personal injury protection coverage levels will see their medical benefits stretch even farther.
Zip codes, education levels, credit scores and other non-driving factors will no longer be used to determine rates. However, drivers living in areas within the state having lower claims can continue to benefit with lower premiums than higher claim areas.
Reforming car insurance is something that has eluded the Legislature for nearly 40 years, and I’m incredibly proud to play a role in finally getting these historic reforms across the finish line.
Please feel free to reach out to my office with any questions at (517) 373-0850 or GregMarkkanen@house.mi.gov.
— State Rep. Greg Markkanen of Hancock is serving his first term in the Michigan House representing residents of Baraga, Gogebic, Houghton, Iron, Keweenaw and Ontonagon counties, as well as Powell and Ishpeming townships in Marquette County.