LANSING, Mich. — Legislation seeking to reduce Michigan’s highest-in-the-nation auto insurance rates was approved by the state Senate on Tuesday.
“I introduced Senate Bill 1 in January because this has been an unsolved problem for too long,” said Sen. Aric Nesbitt, R-Lawton. “Since then, we have held hours of committee meetings and heard testimony from all parties who are involved in the current system. I think we have a good idea of where changes need to be made and how we can start providing some much-deserved relief to motorists.”
Under the current no-fault system, Michigan drivers pay the most expensive auto insurance rates in the country — up to 83% higher than the national average. There are a number of items that contribute to these grossly exorbitant rates — most notably the personal injury protection (PIP) insurance that Michigan motorists are required to purchase.
Currently, all motorists in the state are legally required to carry unlimited, one-size-fits-all PIP coverage, which pays for uncapped medical expenses resulting from injuries sustained in an auto accident. All auto insurance companies must also pay an assessment to the Michigan Catastrophic Claims Association (MCCA) to cover medical costs for claims that surpass $555,000, which is ultimately passed on to drivers.
“The system is failing Michigan families,” Nesbitt said. “People are simply being priced out of being able to drive. No one should be forced to decide between auto insurance and groceries or being able to fill their car up to get to work. The system is simply out of control and needs to be reeled in.”
Senate Bill 1 would give drivers flexibility when choosing their coverage. The bill would give policyholders the choice to select coverage that best meets their needs and budget. The legislation also aims to provide greater transparency and equity in health provider billing practices; crack down on unnecessary medical treatments; reduce the system’s susceptibility to lawsuits, fraud and conflicts of interest; and cut down on the number of uninsured drivers through more affordable rates.
“My wife and I are expecting our first child any time now. Because of that, we may choose to elect more stringent coverage, which we will be happy to pay for,” Nesbitt said. “But maybe you don’t have any children, maybe you drive an older car instead of a brand new one, maybe you have health insurance through your job, or are a senior citizen with Medicare coverage — all of these things should be applicable to the amount of coverage you choose. You have choices when purchasing any other insurance policy. The simple fact is you should have more choice when selecting your auto insurance coverage as well.”
SB 1 was approved by the Senate with bipartisan support and will now move to the House of Representatives for further consideration.