Public Acts 21 & 22: Michigan’s New Auto Insurance Law
On June 11, 2019, Michigan approved sweeping changes to its no-fault insurance law. There’s a lot of misinformation out there. Here are five key takeaways you need to know.
Michiganders will lose access to the health care they need.
For years, Michigan’s no-fault system has offered unparalleled health care for accident victims. Now, most motorists will be woefully underinsured and won’t be able to afford needed rehabilitation or therapy. In addition, the new law’s arbitrary fee schedule will require care providers and rehabilitation centers to slash the rates they charge insurance companies by nearly half, likely forcing most to close their doors.
You won’t save much money on your premium – in fact, you may end up paying more.
Yes, the new law requires limited reductions on the Personal Injury Protection (PIP) portion of your bill. But those reductions are minor and only temporary—they sunset in 2028. Plus, the law calls for a dramatic increase in the amount of liability coverage you must buy. Even the insurance industry has admitted that your overall premiums may increase!
The consumer protections you’ve heard about are a mirage.
Despite some big talk, don’t expect Michigan state government to stand up for consumers. The law does not change the fact that the Director of Insurance and Financial Services has no meaningful power to hold auto insurers accountable when they set unreasonable rates. Insurers are still allowed to set their own rates without first getting approval from the Director. This law was written to protect the auto insurance industry – plain and simple.
It’s a hidden tax increase.
The nonpartisan House Fiscal Agency has estimated that the new law will increase Michigan’s Medicaid cost by $72 million, as more accident victims are forced to declare bankruptcy and end up on Medicaid. That’s a cost shift from auto insurance companies to Michigan taxpayers. Plus, health insurance copays will likely rise as well, as the cost of care is shifted from auto to health insurance.
Discrimination will continue.
There are many loopholes that will allow auto insurers to continue to discriminate against good drivers based on information that has nothing to do with their driving history and can significantly affect the cost of their policy. For example, insurance companies can still use credit information to set premiums. And although the law eliminates rating based on zip codes, insurers can use other “territorial” tools to discriminate such as city, subdivision, or even census tract.