Landmark no-fault overhaul to save drivers hundreds of dollars per year
After decades of gridlock in Lansing, car insurance reform supported by Rep. Beau LaFave of Iron Mountain was signed into state law today, guaranteeing significantly lower costs for all drivers in Michigan.
LaFave – who helped lead a special committee tasked with lowering car insurance rates in Michigan – joined his colleagues in the Legislature last week to approve the bipartisan solution. The reforms give drivers more choice on personal injury protection (PIP) coverage, combat fraudulent claims and stop price gouging on medical services for car accident victims. Michigan motorists, depending on the PIP coverage level they choose, could save hundreds of dollars or more each year.
“For decades, the people of Michigan have demanded their state government leaders fix the broken no-fault system responsible for the most expensive car insurance rates in the nation,” said LaFave, who serves on the House Select Committee on Reducing Car Insurance Rates. “After many years of political gridlock and infighting, drivers from Detroit to the Upper Peninsula are finally being delivered a much-deserved solution that will plummet their sky-high premiums.”
Michigan has had the most expensive car insurance in the nation mainly because it was the only state mandating unlimited lifetime health care coverage through car insurance, with no corresponding cap on what medical providers may charge accident victims. The new law will provide more affordable options for motorists while allowing those who currently use the unlimited coverage to keep it, and those who want it in the future to continue buying it.
Beginning in July 2020, many drivers will be able to opt out of personal injury protection altogether, including 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 PIP limits of $250,000 or $500,000. A $50,000 option will be available for drivers on Medicaid.
Other reforms include:
- A fee schedule to rein in runaway costs that result from medical care providers charging far more to treat car accident victims than other patients.
- An anti-fraud unit will help crack down on those abusing the system, which should help further lower car insurance rates.
- Non-driving factors such as ZIP codes, home ownership and educational level can’t be used to determine rates.