Michigan Auto Insurance Bill Would Give Motorists Choice in Med Coverage

A bill being considered by the Michigan legislature would let motorists save up to 16 percent on their auto insurance by choosing less medical coverage.

Michigan is the only state to require unlimited personal injury protection benefits, which policyholders pay for through a $123 annual fee per vehicle.

Senate Bill 1278, introduced last week in the state Senate, would let motorists choose medical coverage worth between $50,000 and $400,000, or continue paying for unlimited coverage through the Michigan Catastrophic Claims Association, a fund that helps supports seriously injured accident victims.

Sen. Alan Sanborn, who’s sponsoring the bill, said motorists shouldn’t be forced to buy “Cadillac” health coverage.

“We’re giving people choice,” said Sanborn, R-Richmond, who was joined at a Detroit news conference by House Insurance Chairman Virgil Smith, D-Detroit, and various insurance, business, community and law enforcement groups. They noted that 95 percent of all medical claims stemming from auto accidents are for less than $50,000.

The legislation will face obstacles, however. Critics say the real reason for high rates is insurance companies making record profits. The bill is opposed by a group of health providers, trial lawyers, labor unions and consumer advocates known as the Coalition Protecting Auto No-Fault.

“We feel this is a bad choice for the public,” said Michael Dabbs, spokesman for the group.

Dabbs said Michigan residents would end up footing the bill when motorists with too little medical coverage are hurt in serious accidents. Only the insurance industry would benefit as costs are shifted to patients’ families, health care insurers and taxpayers, he said.

Insurance officials responded that those accidents account for a tiny percentage of all claims. They also said injured motorists in other states whose health care costs exceed PIP benefits get covered by their personal insurance, Medicare or Medicaid.

“If you already have health insurance, there’s no reason to pay twice,” Smith said.

Critics questioned whether a 15 percent break on insurance premiums would really help Detroiters when their rates are so high. The other side, a new group called Drivers for Savings, said the legislation would be a good first step in changing the auto no-fault system.

The Republican-led Senate plans to hold hearings on the bill soon.

Residents in Detroit have complained about that many are paying more than $4,000 a year just to insure one vehicle. About 55 percent of people in Detroit drive without insurance, violating the law, far more than the 17 percent statewide who drive without insurance.

Rates in the rest of Michigan are generally far less than in Detroit, but insurers say the Detroit rates are justified based on the claims they get from the city’s residents. They add that customers in the rest of the state would have to pay more if Detroit customers didn’t bear the costs of insuring a vehicle in the city.

Smith and Rep. Joe Hune, R-Hamburg, supported legislation in the Democratic-led House last year that would have pushed down premiums by setting fees that medical providers could charge auto insurers and letting motorists choose different levels of medical coverage. But the bills didn’t get enough support in committee to make it to the full House.