Why has the State of Michigan refused to really fix no-fault auto insurance? This situation has got to be the greatest frustration this side of a lack of ADA access for the 10’s of thousands of people who suffered catastrophic injuries in Michigan since the passage of Senate Bill 1 or “SB 1.” This bill had one major purpose, get rid of the requirement that Michigan’s Auto Insurance Companies provide unlimited Personal Injury Protection (PIP) benefits. It used to be that if you were hurt in a crash – your insurance company was required to take care of your needs via PIP benefits. Not anymore.
Before you go any further, put this down and grab your last insurance “Declaration” Page. There is a breakdown for how the different charges are based. Understand it all? Of course you don’t… and that is sometimes what the people “in charge” bank on.
The problem: leading up to 2019, Michigan was said to have some of the highest rates in the nation for auto insurance. It cost you more in the Great Lakes State to insure your car than anywhere — and in the City of Detroit? “Forgetaboutit” in the Motor City if you wanted to find reasonable auto insurance rates. The industry – as in the people making big bucks by taking your premiums – blamed a few things. The biggest target for blame was the fact that insurance companies had to provide unlimited personal injury protection benefits (PIP). The PIP benefits help pay for all the things you need, such as medical bills and attendant care, if you suffer a catastrophic injury (or a serious injury) in a car accident.
If you think that you will never need those things or that kind of care: think again. Car accidents happen and they happen when you do not expect them. Having a person who can care for you when you are recovering in a wheelchair, wearing a neck or a back brace or what have you is irreplaceable. What if no one will do the job because reimbursement rates are so poor? Right – the reforms of 2019 cut those rates and now very few people will do the job because the pay is just not a living wage. In addition, the reform of 2019 cut attendant care to a maximum of 52 hours per week – that’s the maximum attendant care that insurance is required to pay to the individual (or family member) that is taking care of you. What if you suffer a catastrophic injury and need 24/7 attendant care. Well, you are out of luck.
The reimbursement rate cuts were supposed to improve the health of something that very few people know about: the Michigan Assigned Claims Program. The MACP fills the gap and makes sure that injured people have benefits when there is no other health insurance to cover their care. However, the most MACP will pay for those benefits is $250,000. That’s right, after you reach $250,000 in medical bills, attendant care or replacement services, those benefits come to an end. Sometimes, the care is both life-preserving and expensive. The MACP is run by an association that is mainly insurance executives. Just 3 years ago, there was a big windfall in the fund, as reported by Crain’s Detroit Business.[1]
Then guess what happened? Remember in 2021 when Governor Whitmer touted the rebate checks that we all received because that fund was so financially fat? Thanks to the stock market and the claims, the MACP gap-filler fund is now running about a 2.7-billion dollar deficit. 2.7 billion, with a “b.”[2]
Look at your insurance bill again – there is a line item for this fund. That line item will get larger and larger because the fund has to be restored to good health somehow and you can be sure that it will come on the backs of ratepayers.
The University of Michigan not only has a football team that many people love, but it has a really cool project called the “Poverty Solutions” team. It collects information about auto insurance because auto insurance is a regressive tax according to some – it hits hardest on the people who can least afford it. The Poverty Solutions team has collected data and coverage on our auto insurance system and they report that, while rates dropped about 18% in the first year of the reform – they have increased from year to year to year.[3] Just wait until that group of executives goes to the state regulators and asks for approval to jack up your share of the MACP gap-filler fund: the fat cats get fatter and your pocketbook gets starved. Your contribution to the Catastrophic Claims Fund is reflected on your insurance bill – you better believe it that it will go up and your “rate cut” from 2019 will vanish faster than your car gets from zero to sixty.
[1] https://www.crainsdetroit.com/crains-forum-auto-insurance-reform/why-michigan-car-insurance-still-so-expensive-after-reforms
[2] ibid
[3] https://poverty.umich.edu/?s=Auto+Insurance
The information contained in this web site is neither legal advice nor is it intended to be legal advice. The information contained in this web site is general information designed to give the reader a basic understanding of some legal concepts about what we do in these areas.
3452 East Lake Lansing Road
East Lansing, MI 48823-1511
