Michigan Motor vehicle owners who carry insurance can expected to be reimbursed for high rates.
The Michigan Catastrophic Claims Association (MCCA), a nonprofit that auto insurers pay into for personal injury protection (PIP) under the state’s auto no-fault system protecting Michigan’s drivers, has announced its board unanimously voted to support issuing refund checks to vehicle owners who carry insurance. The board indicated its goal “is to issue the largest possible refunds to consumers while maintaining sufficient funds to ensure high-quality care to those who have been catastrophically injured.” The announcement comes right after Michigan’s Govern Gretchen Whitmer requested that the MCCA use a $5 billion surplus to pay back drivers who have paid into the fund.
“Michiganders have paid into the catastrophic care fund for decades, and these funds from the $5 billion surplus belong in the pockets of Michigan policyholders,” Whitmer said.
Since 2020, Michigan drivers can still choose unlimited PIP coverage, but now they have an option to choose a lower level of coverage. In general, only drivers who choose unlimited PIP medical coverage pay the MCCA assessment.
The changes to Michigan law were first introduced in 2019 in an effort to lower Michigan’s auto insurance rates, which are among the highest in the nation. Until recently, many motor vehicle policy holders were paying double for collision insurance – handing over money both to their vehicle insurance provider as well as their health insurance provider.
According to the Michigan Department of Transportation, no-fault insurance, required by state law, requires every vehicle owner to “buy certain basic coverages in order to get license plates. It is against the law to drive…without no-fault insurance.” If someone is in an accident, “no-fault insurance pays for…medical expenses, wage loss benefits, replacement services, and the damage you do to other people’s property. It does not matter who caused the accident.” So, drivers have to at least have minimal insurance in order to be on the road.
“The prospect of pending refunds for Michigan’s drivers is the entire reason we fixed the state’s broken auto insurance system in 2019,” House Speaker Jason Wentworth, R-Farwell, said, adding he condoned “the governor’s support.”
However, some feel that the changes still leave Michigan residents undercompensated when accidents occur.
President Devin Hutchings of Michigan’s CPAN, a coalition of groups representing victims of motor vehicle accident, medical providers and other auto insurance policyholders, called Governor Whitmer’s statement “a slap in the face to the survivors and families who have been begging for relief.” The change in state law caused a 45% cut to reimbursement from insurance companies for health care services provided to auto accident survivors not covered by Medicare.
“The Governor’s announcement seems designed to distract our attention away from the real issue – the fact that survivors of catastrophic auto accidents are suffering under the new law, and that auto insurance companies are continuing to gouge consumers,” Hutchings said.
“We wrote this law to include an automatic refund next year, and I’m glad our reforms have produced large enough savings for the MCCA to act immediately and return that money to the people even sooner,” he continued.
It is unclear how the refunds will be processed and the changes to the law will be reinforced. Michigan driver’s can still opt into full PIP and MCCA coverage.