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Wednesday, 29 May 2019 21:12

Car Insurance Laws Are Changing in Michigan

Written by Steven Gursten, JD Supra

Index

Meanwhile, for drivers who opt-out of No-Fault PIP medical benefits altogether, they will see 100% savings on the No-Fault PIP medical portion of their auto insurance bill. It is important to note that all of these savings are limited only to the No-Fault PIP portion of your auto insurance bill, not to your entire auto insurance bill. The PIP portion is estimated to be approximately 35% to 44% of your total auto insurance premium. Therefore it is reasonable to expect that for most drivers who currently find auto insurance to be unaffordable, this new No-Fault law will fail to make any meaningful difference.

 

Savings for auto insurance companies: There was always going to be a carve-out for the insurance companies. The new Michigan No-Fault law allows insurers to avoid reducing their premiums if they can demonstrate to the Insurance Commissioner that the new law’s mandatory rate reductions would violate their constitutional rights and/or leave them at risk of having too little “capital.” While these significant changes have now been made to our auto law, there is still no transparency on what insurance companies profit margins have been these many years. The adage to “measure twice, cut once” has been ignored by both the House and Senate Republicans and Democratic Gov. Whitmer.

 

Michigan catastrophic claims association: Under the new Michigan No-Fault law the MCCA would continue to be liable for catastrophic injury benefits payable under policies issued or renewed before July 2, 2020 and for policies after July 1, 2020 where drivers have opted to maintain unlimited No-Fault PIP medical benefits. Drivers who decide to cap their No-Fault benefits or opt-out altogether will still be required to pay annual MCCA assessments to cover deficits. Finally, the MCCA will pay refunds to drivers if the actuarial examination shows that MCCA assets exceed 120% of the MCCA’s liabilities. The refund will be the difference between excess and 120% of liabilities.

 

No-Fault medical-provider fee schedule: A No-Fault fee schedule based on the Medicare fee schedule would be created and it would govern charges from doctors, hospitals, clinics, rehabilitation facilities and any provider who cares for and treats car accident victims.


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