House approves historic reforms after decades of gridlock

The Michigan House today approved a landmark plan to fix the state’s much-maligned car insurance system and reduce rates for all Michigan drivers, state Rep. Diana Farrington announced.

Farrington, of Utica, voted in favor of the plan to offer drivers personal injury coverage options, rein in medical costs and fight fraud – features designed to end Michigan’s long-standing tenure as the state with the costliest car insurance rates in the nation.

“There’s no magic wand that will eliminate our state’s no-fault auto insurance conundrum in one fell swoop. It’s going to take time and thoughtful solutions to rework a system that has failed Michigan drivers and taken too much of their hard-earned money for years,” Farrington said after the vote. “This is a good start, and moving this proposal through the House after a tremendous amount of work shows the 100th Michigan Legislature is committed to bringing people the rate relief they’ve asked for.”

Michigan’s costs are high largely because it’s the only state mandating unlimited lifetime health care coverage through car insurance. The plan allows those currently using the coverage to keep it, and those who want it in the future to continue buying it – while providing more affordable options.

The plan:

• Guarantees lower rates on the personal injury protection portion of policies. It would result in a 10-percent reduction within the PIP portion of bills for those buying unlimited coverage, a 30-percent drop for drivers choosing $500,000 in coverage, a 60-percent reduction for those purchasing $250,000 in coverage, and an 80-percent drop at the $50,000 coverage level.

• Allows seniors with retiree health coverage such as Medicare, and those with health insurance policies that cover car accident-related injuries, to opt out of PIP coverage;

• Establishes fee schedules to end the practice of charging far more to treat car accident victims than other patients;

• Cracks down on fraud and abuse by creating a fraud task force;

• Provides more financial oversight of and transparency within the Michigan Catastrophic Claims Association;

• Sets reasonable limits on compensation for attendant care contracts; and

• Helps the state ensure insurance companies charge fair rates, while addressing attorney fee settlements and significantly reducing litigation.

The sweeping legislation now advances to the Senate for consideration.