No-fault laws are not the only source of high auto insurance premiums, even in Michigan, said Michael Barry, a spokesman for the Insurance Information Institute, a nonprofit communications group supported by the insurance industry.
States with high premiums are often subject to other risks like natural disasters or congested roads, which up the chances that people will have a wreck.
“This drives the frequency and severity of automobile accidents,” he said of traffic congestion. “Just a lot of cars on the road, driving a lot of miles. Just a lot of people going to and from work.”
Josh Hovey, a spokesman for Michigan’s Coalition Protecting Auto No-Fault, a group of consumer organizations, patient advocates, health care providers and rehab facilities that wants to preserve the state’s no-fault law and lifetime benefit, points to other expenses, such as property and other liability coverage, that are driving insurance premiums.
Only a third of a driver’s premium goes to the no-fault coverage requirement, he said, and that amount of coverage is essential to guaranteeing people with major injuries can get the medical care and long-term rehabilitation they need.
“We have patients who have been paralyzed, who have received significant brain injury, and through the rehab that’s been provided, they’re able to in some cases recover to go back to some type of employment,” he said.
The proposal before the House would preserve Michigan’s lifetime medical benefit, but Hovey said it wouldn’t do enough to lower premium costs and would ultimately restrict the care that crash victims could receive at the hospital and at home.
Hovey’s group argues that the savings promised by proponents of the legislation would only amount to a few dollars each month. The proposal could also cost Michigan hospitals as much as $1.2 billion, Hovey said; and would significantly limit how much compensation family members receive when they have to abandon jobs to care for a disabled loved one.
But Conarton says the state needs to set limits, similar to those established for workers’ compensation cases, on how much insurance companies have to pay when someone is injured in an accident. Right now, she said, hospitals or doctors can charge as much as they want to treat someone for car crash injuries.
“If you break your arm in a work accident, there’s a fee schedule so your MRI would cost this much and it’s noted what that would be,” she said. “In the no-fault system, you break your arm in a car accident, there’s no fee schedule and auto insurers are required to pay the charges.”
We would like to thank The Pew Charitable Trusts for reprint permission.