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Michigan Auto Insurance Bill Faces Increased Scrutiny

— October 20, 2017

Michigan Auto Insurance Bill Faces Increased Scrutiny

It looks like the majority Republicans lack the support needed to pass legislation reducing Michigan’s auto insurance premiums by allowing drivers to opt out of unlimited medical coverage, and Democrats are now left searching for an alternative insurance bill.

House Speaker Tom Leonard is relying on Detroit Mayor Mike Duggan, a leading proponent of the plan, to get Democrats to agree that the insurance bill needs to be pushed along.  Leonard claimed he would need ten to fifteen of the chamber’s 45 Democrats to help move it forward.

Michigan is currently the only state to require drivers to carry unlimited lifetime coverage for medical expenses resulting from accidents. The plan sees to reduce personal injury protection fees for vehicle owners opting for $250,000 by 40 percent over five years.  Drivers 62 or older who have Medicare health insurance would have an opportunity to opt out entirely, saving an estimated 35 percent.

Michigan Auto Insurance Bill Faces Increased Scrutiny
Image Courtesy of State Farm

Rep. Sherry Day- Dagnogo, a Detroit Democrat who opposes the insurance bill said she’s concerned that the reduced rates wouldn’t be permanent – insurance companies would find ways to get around the requirements to lower drivers’ rates.  She also believes that drivers selecting less injury coverage who are seriously injured from automobile accidents will be left in a “vulnerable state.”

Those who oppose the measure are also worried about the amount of coverage for wage garnishment when drivers select the $250,000 personal injury plan.  This includes $225,000 for hospital care and only $25,000 for “other care” including income loss.  Those who support it, however, have said that the remainder of needed funds would be picked up by the individual’s private or government health insurance plan.

Another representative opposing the plan, Rep. Tim Greimel of Auburn Hills, believes the measure will only shift costs to Medicaid.  He also believes insurers will immediately increase the prices after the proposed five-year period without sufficient regulation, so any cost savings prior to that point would no longer matter.

The House GOP caucus met this week and discussed all pros and cons in a two-hour closed-door meeting.  Another meeting is expected in the coming week.

“I’m not taking that off the table,” Leonard said. “This is an issue that many folks have campaigned on. This is an issue that many folks are passionate on. But most importantly, this is an issue that I believe is one of, if not the biggest, one facing the citizens of this state. Ultimately, I think each legislator … within this chamber needs to let the residents that they represent know where they stand.”

“We’re mandating that people purchase something that they may or may not need,” Republican Rep. Lana Theis of Brighton said. “Why wouldn’t we offer them a choice? They get a choice in every other area of their life.” She continued, “Your residents are being required, like I was when I had no money, to purchase insurance or break the law.  I’m giving them an option that they don’t currently have.”

Rep. Leslie Love, a Detroit Democrat, agrees that drivers “need a break” and should be able to purchase less personal injury insurance.  She said the bill is a “good beginning,” but is hesitant to get her hopes up about it just yet.  “What I’m hoping…doesn’t happen is what’s happened over the last 20 years — that they collide and then nothing happens” Love said.


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