If you drive a car in Michigan, you’ve been paying the highest insurance rates in the country.  Everyone knows that.  In fact, fixing our state’s unsustainable “no-fault” car insurance system is the main reason I ran for office and has been the number one issue I’ve heard about from my constituents.  It has always been a bigger burden for the state’s border counties like Branch and Hillsdale, but according to a 2019 University of Michigan study, after forty years of ever-rising premiums, rates became “unaffordable” in 97 percent of Michigan’s ZIP codes.  It was no longer a city vs. rural, or a Democrat vs. Republican issue – the high cost of car insurance in Michigan has been hurting everyone from Marquette to Metro Detroit.

After a focused and determined effort to find a solution, including months of public hearings and testimony and input from every corner, the final product passed 94-15 in the House and 34-4 in the Senate.  It was signed by the Governor and became law on June 12^th.  What has changed, what has stayed the same, and when will it take effect?

To give businesses in the industry time to prepare for this new system, new rates become effective July 1, 2020, and as policies are renewed.  Your agent will be able to quote you rates as we get closer to that date.  You should also talk to your agent sooner if you have members of your family on your policy who are not living at home because their coverage may now be limited.

What’s new? Choice.  Just as you have choice for the amount of coverage you want for other types of insurance, you’ll have options for the amount of personal injury coverage (“PIP”) that comes with your automobile policy.  If you have Medicare, Medicaid, or other health insurance that covers you if you’re in an accident, you’ll no longer have to “pay double” for that benefit.  It will be important for you to talk to your insurance agent to determine the proper coverage for your situation.  As with any insurance, lower costs will come with higher risks.  But based on the level of coverage you choose, you will be guaranteed a rate rollback.

Less fraud and corruption.  Our “lifetime unlimited” benefits and other quirks in our current law have proven to be irresistible to people abusing the system and committing fraud.  An estimated 10 percent of all car accident claims nationwide contain some aspect of fraud. But in Michigan, that figure is thought to be twice as much.  That’s costing the rest of us hundreds of millions of dollars and it had to stop.  To put teeth into these reforms, we’ve put the Michigan State Police in charge of an anti-fraud task force.  That will help bring down costs.

Our plan reins 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 rates two or three times as high when the cause is a traffic accident. A glaring example: No-fault auto insurance paid an average of $3,278 for a lower back MRI in Detroit while Medicare paid $484 for that same MRI, according to a report published in 2013. We will stop that unfair practice by establishing a reasonable fee schedule.  The fee schedule will be phased in over two years beginning in July 2021.

What is staying the same?  Coverage for people currently in the “Catastrophic Claims” program.  The MCCA has reserves to care for those currently receiving lifetime benefits, and while it is possible some care guidelines may change in 2021, the new fee schedule should make those reserves go further.  The law provides more financial oversight of and transparency within the MCCA by requiring new annual reporting to the Legislature and establishing more frequent independent auditing by DIFS.

Listening to my constituents confirmed that reforming the high cost of auto insurance in Michigan should be our top priority.  I’m pleased that we were able to get this historic reform passed.  Saving drivers money and making it more affordable to live and work here will help keep our state’s economic comeback moving forward.  And that’s good for everyone.