Michiganrecently passed a car insurance law that makes coverage more affordable. The new law helps people save money by letting them customize their policies. State officials and insurance companies believe the law has been a major success. But there are a few critics who say that the law is lacking in certain areas.
Michigan's new auto insurance law
Michiganpassed a no-fault system for car insurance. Under this system, drivers are required to file a claim with their insurance provider if they’re injured in an accident.
All drivers also had to purchase an unlimited
personal injury protection(PIP) plan. This would pay for all medical expenses related to a car accident for the policy holder's entire lifetime. Michigan was the only state that had this system in place. Since every driver had to purchase PIP, Michigan has had the highest insurance rates in the country.
Last July, the state decided to reform the insurance law in order to make it more affordable. Under the new law, drivers can choose to keep their unlimited coverage or opt for a less expensive amount.
Petoskey News-Review, drivers can now choose to get either $500,000 or $250,000 in coverage. If you have Medicaid, you can choose to get the $50,000 coverage option. If you have Medicare Parts A & B, you can opt out of PIP altogether.
What are critics saying about the new Michigan law?
Insurance agents and regulatory officials have said that many drivers in Michigan are paying less for car insurance, but some argued that this is not the case in big urban areas. Critics say that the rates in Detroit were not reduced as dramatically as promised in the reform package.
Wayne Miller, a plaintiff attorney in Detroit, said that he heard agents telling policyholders to avoid $500,000 and $250,000 coverages because the savings were too small.
Miller also believes that there’ll be issues with another change that took effect in July which requires medical-care providers to cut some of their prices by 45%. Some care providers are concerned that this price cut would mean they’ll have to close. This may result in a lack of specialized services for auto accident patients.
The perspective of insurance agents and state officials
Jason Goodale, a State Farm agent, said that most policyholders saved money and stayed with unlimited medical coverage. Even people keeping unlimited coverage were saving hundreds of dollars a year. Consumers saw lower rates, and agents said they had a lot more conversations with consumers about policy choices.
In the past, many drivers in Michigan chose
not to purchase car insurancebecause it was too expensive. Anita Fox, the director of the state department of insurance and financial services, believes there’s been a positive change in Detroit.
"Because of high rates, Detroit had a lot of uninsured drivers which drove up the rates for everyone," Fox said to News-Review. "We have seen industry reports that 50,000 people are not insured because they have more affordable options and we have heard from Detroiters who have saved a significant amount of money."
Fox added that, according to multiple sources, Michigan no longer has the highest insurance rates in the country.
If you’re looking for lower insurance rates,
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