auto insurance

Michigan legislators are considering changing insurance benefits for people badly injured in auto accidents.  The sponsors of the legislation say it will lower the price of auto insurance.  Some analysts say it will mean people who are severely hurt won’t get the care they need and argue in the end won’t save much money at all.

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Michigan legislators are looking at changing the state’s mandatory auto no-fault insurance.  But some of the legislators say the information they need from insurance companies to make an informed decision has not been available to them.  Regulators say legislators and the public wouldn’t be able to understand the information even if it were made available.

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A proposal to drastically alter the state’s auto no-fault insurance law could come up for a vote as soon as this week in the state House. The House proposal includes a $50,000 appropriation that protects the measure from a voter-led ballot initiative to overturn the law via a referendum.

Democratic state Senator Bert Johnson says using referendum-proof language to shield controversial measures from being overturned by voters is a dangerous political game.

“We think that that limits voter protection as well. People should always be able to come and petition their government for what they believed the right thing is. And that’s the foundation of democracy in America, that’s what we’re built on," Johnson says.

If the proposed changes to the no-fault insurance law are approved as currently written, it would be the fourth time this year the Republican-led Legislature passed referendum-proof bills that were not part of the state budget.

Update 3:35 p.m.

A state House committee has approved major changes to Michigan’s no-fault auto insurance.

The legislation would cap medical fees and restrict the kind of care people who are badly hurt in car accidents could get.

As it is now, if someone is catastrophically injured in a car accident, no-fault Personal Injury Protection pays for all necessary medical and rehabilitation expenses.

It’s unlimited, lifetime benefits if necessary.

This new bill would limit medical fees, and it would give motorists the choice to purchase $500,000, $1 million, or $5 million worth of coverage.

After that, you’re on your own.

Flickr

Hundreds of people showed up at the Capitol this week to speak for or against a proposal that would dramatically alter Michigan’s no-fault auto insurance law.

The overwhelming majority of the people were in favor of keeping the state’s lifetime medical coverage for injured people.

If the law is passed, and people don’t like it, the Michigan Constitution allows voters to challenge it with a referendum, but the Republican sponsors have found a way around that.

At the end of the 42-page bill that would require drivers to choose the level of auto insurance coverage they want, and end guaranteed lifetime medical coverage, there is an appropriation of $50,000.

The stated purpose of the $50,000 appropriation is to help implement the change in law.

Republican state Representative Pete Lund said the money is needed for a report and study on the effects of the law.

The framers of the Michigan Constitution wrote that any law that appropriates money is referendum proof, and they did that to ensure that the full faith and credit of the state is not jeopardized.

Michigan Supreme Court

The Michigan Supreme Court has agreed to hear two cases on whether people who use a family vehicle without permission are covered by no-fault benefits if they are injured in a crash.

In one case, Ryan DeYoung was excluded from his wife’s insurance policy.

In September of 2008, he got drunk, took his wife’s car without permission and crashed the vehicle.

The hospital and recovery center billed the insurance company, which denied the claim.

The insurance company is challenging an appeals court ruling that says DeYoung was covered under “joyriding” clause that typically covers teen-aged drivers who take their parents’ vehicles without permission.

In a separate case, an insurer is challenging a ruling that Craig Smith Junior was covered for injuries he sustained when he crashed his father’s SUV into a tree while driving drunk.

Smith did not have a valid license, and had been told not to drive the vehicle. The insurance company tried to deny coverage because Smith broke the law when he took the wheel of his parent’s car.

A fight is brewing at the state Capitol over whether Michigan’s no-fault auto insurance law should be changed.

Backers of the legislation want drivers to be able to opt out of coverage that provides unlimited lifetime benefits for the most severely injured accident victims.

Pete Kuhnmuench, with the Insurance Institute of Michigan, says the option would save people money:

"We think putting more money back in the pockets of the consumers we think now is the right time to do that, given our economics," says Kuhnmuench.

A study commissioned by the measure’s opponents says most drivers would choose to underinsure themselves to save money.

The study says that would cost the state hundreds of millions of dollars.

user H.L.I.T. / Flickr

We received a lot of reaction from people about our story on the potential consequences of eliminating the mandatory personal injury protection (PIP) part of Michigan's no-fault auto insurance.

This seemingly bureaucratic story about potential changes to Michigan's insurance laws has a lot of devastating human stories behind it.

Robbie Howell / Flickr

The Michigan legislature is considering bills to end the state’s mandatory no-fault auto insurance.  Its supporters say it will give consumers more choices and help reduce cost of auto insurance.  Opponents say it’s a misguided effort that will have very little effect on insurance rates and could mean people who suffer injuries won’t get the help they need to fully recover. 

Kristin Howard was driving, taking an interstate to work on a summer day in 2006 when her life was changed forever.

bettyx1138 / flickr

A Detroit lawmaker thinks he has the answer to that city’s high rate of uninsured drivers.

State Senator Virgil Smith wants to create a pilot program that would allow Detroit drivers to sign up for bare-bones insurance policies with reduced rates. The idea is to cover medical costs up to $50,000 a person, or $100,000 an accident. Right now, the state’s no-fault law requires unlimited personal injury coverage. Smith says that’s hampered efforts to reduce urban insurance rates.

Steve Carmody / Michigan Radio

In one study, Michigan had the highest auto insurance rates in the nation. In another, Michigan ranked 11th in the nation.

That's according to a piece from Dawson Bell at the Detroit Free Press. Bell writes both studies cited "the state's unique mandate for unlimited coverage for personal injuries as a primary cause for high rates."

From the article:

Michigan auto insurance rates led the country -- $2,541 a year for a hypothetical 40-year-old man with a clean driving record -- in an annual survey released last week by the consumer insurance information site insure.com.

The Michigan rate jumped more than 21% from the same survey a year earlier, overtaking Louisiana, which topped the list last year.

Vermont, at $995 a year, was the cheapest place to buy auto insurance, the survey found.

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