MIDLAND — The Mackinac Center for Public Policy hailed legislation introduced and moving through the Legislature today that reforms Michigan’s failed automobile insurance laws. The proposed reforms would stop forcing all drivers to purchase expensive coverage few will ever need, and instead empowers consumers to choose a level of coverage that best suits their pocketbooks and personal preferences.
“Michigan’s current auto insurance system is entirely unique when compared to other states, and so are the absurd prices drivers are forced to pay for coverage,” said Michael Van Beek, director of research at the Mackinac Center for Public Policy. “These reforms would modify Michigan’s system to make it similar to those in other states where insurance premiums are much more affordable. Drivers will finally be able to take control of their auto insurance costs.”
Michigan residents are currently forced to purchase the nation’s most expensive auto insurance policies, with premiums nearly twice the national average and significantly higher than any other state in the Midwest. These high costs contribute to a shortage in coverage — an estimated one in five drivers is uninsured, meaning they are driving illegally and will get nothing if injured in an auto accident. Reducing costs through these reforms will expand insurance coverage for more drivers.
The main features of the bills being debated in the Michigan Legislature are:
Allow drivers to choose the level of personal injury protection coverage they want, including opting out of this coverage altogether. Auto insurers would be required to provide at least three levels of PIP coverage: $250,000, $50,000, with a $200,000 rider for emergency room coverage, and the last option: no PIP coverage. This would only be available to drivers who are covered through their health insurer.
Fees charged by hospitals, doctors and medical clinics would be reimbursed based on the state’s workers’ compensation fee schedule. Currently, there are no specified limits on what medical providers can charge and they take full advantage of this loophole, charging prices that far exceed what they bill other insurers.
Establish an auto insurance fraud authority within the Michigan State Police to help prevent insurers, trial attorneys and medical providers alike from bilking the system.
Van Beek praised the bills for tackling the two factors that contribute the most to Michigan’s out-of-control insurance costs: forcing drivers to purchase unlimited PIP coverage and no fee schedule for medical providers.
“Michigan drivers do not need the state to choose for them what level of insurance coverage they need,” Van Beek added. “Everyone is unique and drivers can decide what’s best for their particular circumstances.”
The Mackinac Center for Public Policy is a nonprofit research and educational institute that advances the principles of free markets and limited government. Through our research and education programs, we challenge government overreach and advocate for a free-market approach to public policy that frees people to realize their potential and dreams.
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