After years of fighting and numerous failed attempts to pass meaningful auto insurance reform of any kind, Michigan has finally revised its auto no-fault system, under legislation signed into law by Gov. Gretchen Whitmer last week.
Senate Bill 1 received support from both sides of the political aisle and proposes to lower rates for Michigan drivers, protect insurance coverage options and strengthen consumer protections. It does so by demanding lower rates for eight years, guarantee drivers’ choice to pick Personal Injury Protection (PIP) options, rather than be restricted to the straight-up, one-size fits all No-Fault Insurance. Companies are subsequently banned from using non-driving factors to set rates, too — a major concession to Detroit, which has faced the highest auto insurance rates in the country. Further, the law demands fee schedules be set for hospitals and providers, to avoid overcharging for auto-related injuries.
“By signing this legislation, we are providing relief to millions of drivers across the state and guaranteeing a better auto insurance system for everyone,” Whitmer said. “This historic deal shows that, when we put party aside, we can find common ground on our state’s toughest issues to provide realistic and affordable coverage options for drivers across Michigan.”
Before this change, PIP was one of the notorious sticking points. Regardless of whether buyers had sufficient private insurance, they were required to buy their auto insurance at the set rate — something opponents had argued discriminated against seniors and other eligible parties, essentially making them pay twice for the same coverage. The new law gives them a complete cop-out for that coverage, while also offering varying levels of coverage to those interested: 10 percent PIP reduction for unlimited coverage, 20 percent for $500,000 coverage, 35 percent for $250,000 coverage and 45 percent for the $50,000 coverage of Medicaid eligible recipients.
State Sens. Jeremy Moss (D-Southfield) and Winnie Brinks (D-Grand Rapids) have criticized the legislation, arguing that loopholes will make the law problematic and harm the quality of life.
“A bill that will let you choose worse medical coverage under the guise of ‘rate relief’ that may never come,” Moss said. “Sadly, no one gets to choose if they get into a car accident, needing essential care. We should instead be working to keep our coverage and make it more affordable.”
Notably, insurance companies are only banned from using certain, specific credentials to set rates. They cannot use credit scores or ZIP codes, for example, but opponents fear they could still use things like credit reports or questionable territory data to determine such rates instead.