On Tuesday, September 26, Speaker of the House Tom Leonard and Detroit Mayor Mike Duggan unveiled a plan to help lower residents’ auto insurance rates.
According to Secretary of State Ruth Johnson, the rising cost of Michigan’s no-fault car insurance has forced some people to drive without auto coverage altogether.
“In Michigan, we did a study to find out through the secretary of state’s office how many people don’t have insurance. And what we found is, it didn’t matter where you were in the state – it was pervasive,” Johnson said during the Republican Leadership Conference on Mackinac Island.
The new auto insurance plan is expected to offer driver’s several different tiers of coverage from complete coverage to coverage that only covers the bare minimum liability requirements.
The costliest coverage would include unlimited benefits for people who are involved in severe accidents that caused critical injuries. Meanwhile, the least expensive and most basic auto insurance package is expected to lower premiums by more than 30 percent.
Additionally, the plan is expected to set the fees that health care providers could charge for related services for people who have been involved in car crashes. Michigan drivers will also be able to opt out of applying for lifetime benefits, according to House Insurance Committee Chairwoman Lana Theis.
"[Currently] you have no choice; you have to pay for lifetime benefits. But I think you should be able to make that choice for yourself,” said Theis.
Detroit legislators held town hall meetings Monday, September 25, to discuss possible solutions for rising car insurance rates within the state. Auto insurance premiums in Detroit have been reported as the highest in the nation and have cost drivers more than $5,000 per year.
In a statement made during the town hall meeting, Theis added that the cost of breaking your arm in a car accident is two to three times more expensive than the cost of breaking your arm by falling off your bike. This is due to a lack in set fees that heath care providers are allowed to charge.
Leonard and Duggan’s auto no-fault insurance reform package is intended to persuade the state’s insurance commissioner to stop rate increases that would exceed the cost-of-living index during a five-year period.
"We've got a mechanism in there for the insurance commissioner to prevent rates that are going up faster than are justified," Duggan told Crain’s Detroit Business newspaper. "It's not in anybody's interest to have the rates come down 20 percent in the first year and then go up 15 percent in the next year."
Drivers who purchase basic personal liability and property damage coverage for vehicles of less value that do not require collision coverage, have higher chances of saving even more money, according to Duggan.
"For drivers who buy only the basic, which is a third of Detroiters, it will actually be a 50 percent reduction in their premium because their whole premium basically is the PIP and the MCCA," Duggan continued.