LANSING, Mich. — State Sen. Ken Horn applauded Thursday’s Senate passage of numerous reforms to the state’s current no-fault auto insurance system.
“This is something I have been working on since first being elected to the state Legislature,” said Horn, R-Frankenmuth. “Reforming auto insurance consistently remains at the forefront of issues important to residents of my district, and understandably so. I am looking forward to continuing this conversation because people throughout the state are fed up with unreasonable insurance rates.”
Michigan is one of 12 states that currently operate under a no-fault system of automobile insurance. Under the current system, a driver’s own insurance company covers all accident-related medical expenses and lost wages regardless of who caused the accident. Because of this, all motorists in the state are legally required to carry Personal Injury Protection (PIP) coverage, which pays for an individual’s medical expenses resulting from injuries sustained in an auto accident.
“Michigan is one of the most expensive states in the nation to purchase auto insurance,” Horn said. “Because of our insurance requirements, we’ve turned our auto insurers into providers of the most expensive health insurance in the state. It’s an odd position for them to be in.”
There are many reasons for rising costs, including Michigan’s unique uncapped benefits, fraud and the skyrocketing cost of health care service.
Senate Bill 1014 would address the rampant fraudulent activity within the system by creating the Michigan Automobile Insurance Fraud Authority within the attorney general’s office. The authority’s primary operation would be investigating insurance fraud, which according to the Insurance Institute of Michigan is estimated to be about $400 million per year.
The bill would also make changes to attendant care, setting limits on the amount that could be paid to family and household members to help protect against inflated costs. Coverage for the first 56 hours of attendant care provided in a week would be limited to a reasonable and customary amount, and coverage of care in excess of 56 hours would be limited to $15 an hour.
Included in the package is legislation that would allow Michigan residents age 65 or older the option to choose a capped auto-insurance policy. SB 787 would set the cap at $50,000 and personal insurance or Medicare would cover remaining medical expenses from an automobile accident after the $50,000 limit is reached. Seniors who opted for the limited coverage would see their catastrophic claims assessment drastically reduced.
Seniors would also have the option to remain in the current no-fault system.
“I would love to see a more comprehensive approach to reforming Michigan’s auto insurance laws that allow more choices for all Michiganders, but the reality is the Legislature hasn’t been able to get that passed in the decades that reforms have been attempted,” Horn said. “These bills put us in a better position to make reforms than previous versions have. I look forward to the upcoming conversations with my colleagues on how we can lower rates for all Michigan motorists.”
SBs 787 and 1014 have been sent to the House of Representatives for further consideration.