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Competing, starkly different bills face uphill battle to reduce car insurance premiums

Oct 19, 2017

A fight in Lansing over car insurance reform is once again pitting concerns over affordability against concerns about coverage for catastrophic car crashes.

At least one Democratic state representative from Detroit is supportive of a legislative plan that would get rid of the state requirement that all drivers purchase unlimited personal injury protection with their auto insurance.

House Bill 5013 aims to cut costs for Michigan drivers by changing the law to let them purchase cheaper insurance policies with less personal injury protection (PIP) coverage. The bill would allow an insured driver to purchase one of three PIP coverage levels, with unlimited coverage still an option for consumers. The bill expects reduced-PIP-coverage policies to save drivers between 20-50 percent on premium rates.

Democratic state representative Leslie Love of Detroit says she’s eager to do something to save insured drivers money. Similar legislative efforts spanning previous decades have all failed.

“People have a right to choose, and more importantly, it helps us save money,” Love said at a town hall meeting in her Detroit district Monday night. “We’ve got to do something for – particularly Detroiters – but the folks throughout the state of Michigan on auto insurance. I’m not happy coming home next year and saying we didn’t even push the ball one yard down the field.”

Republican Speaker of the House Tom Leonard and Democrat Detroit Mayor Mike Duggan are some of the most prominent supporters of the measure that’s gained some bipartisan support.

Right now Michigan is the only state that requires motorists to purchase unlimited medical benefits with their auto insurance in case of catastrophic car accidents.

A report released earlier this year by the National Association of Insurance Commissioners indicates Michigan drivers pay the third highest insurance premiums in the nation, according to data from 2014.

Though Leonard is trying to wrangle enough bipartisan to support the bill, which also requires insurers to charge lower premiums to reflect expected savings if the measure becomes law, there might already be enough dissent in the house for the bill to fail if it’s put up for a vote.

“We’ll have to see, that’s the legislative process,” Love said. “And then there’s another group of bills out there [and] we’ll try to move those through [the legislature].”

Love is also a cosponsor of another bill aiming to reform auto insurance; one that would prohibit insurers from using “certain discriminatory factors” to determine premium rates, including zip code and gender. That bill also has bipartisan support, largely from Democratic state representatives from Detroit.

“I want to see us get the [premium] rate reduced, whichever one of the bills [succeeds],” Love said. “Right now, House Bill 5013 had the movement to get that done. … The zip codes and other factors, I’m always going to ask for that. For 25 years legislators have asked for that and we’ve gotten no movement.”

Critics of House Bill 5013 from each party have different qualms with the plan, with some democrats worried about reduced benefits for insured drivers. If the bill manages to pass the House it would be a tougher fight in the Senate. Republican Senate Majority leader Arlan Meekhof staunchly opposes the measure.