by Scott McClallen
Starting July 1, car insurance rates will jump in Michigan.
The Michigan Catastrophic Claims Association raised annual per-vehicle assessments on all auto insurance policies.
In 2021, the association announced a $400-per-car rebate totaling $3 billion. The fund provides medical expenses for those severely injured in car crashes. The assessment charged per vehicle from July 1 to June 30, 2024, will be $122 for unlimited personal injury protection coverage, up from $86 – a 42% increase.
The $122 assessment consists of $74 to pay for anticipated new claims and an additional $48 to address “deficit recoupment” for about a $3.7 billion deficit as of June 30, 2022. Meanwhile, those choosing lower levels of personal injury protection will pay a $48 assessment fee.
The association had a $5 billion surplus in 2021. Coupled with stock market losses, $3 billion in rebates, and a $3.7 billion loss from a 2022 court case, the fund has a deficit.
A 2022 Michigan Court of Appeals decision in Andary v. USAA Casualty Insurance Co. ruled that the family attendant care hourly limits and certain provisions of the medical fee schedule created from the 2019 reform can’t be applied to losses occurring before June 11, 2019, at an estimated cost of $3.7 billion.
An appeal is pending.
In 2021, Gov. Gretchen Whitmer called on the association to issue refund checks to consumers from its projected $5 billion surplus the MCCA then voted unanimously to issue. The surplus and refunds are possible, in part, thanks to the historic bipartisan auto insurance reform signed into law in 2019.
The Insurance Alliance of Michigan says the reforms allow consumers more options at a lower cost. The company cited member data from April 2023 saying over 23% of drivers – nearly 2 million people – chose a level of medical coverage less than unlimited.
“Michigan drivers continue to choose the coverage that best suits them and their budgets and are receiving access to the care they need,” said Erin McDonough in a statement. She’s director of the alliance. “The reforms also provide a commonsense medical fee schedule, rein in rampant overcharging and crack down on fraud. To ensure motorists who select coverage other than unlimited truly get their money’s worth, these reforms need to be preserved.”
Before the 2019 auto no-fault reforms, all Michigan drivers had to purchase unlimited, lifetime medical benefits with their auto insurance. Now, they can choose a level of protection that fits their needs.
The number of Michigan drivers choosing $250,000 in personal injury protection coverage or completely opting out has grown over that period. The other levels of coverage have remained fairly consistent since the last survey.
Michigan is the only state that still offers an unlimited personal injury protection benefit. The next highest mandatory minimum is in New York at $50,000 in benefits.
Alliance data shows in April, 64.5% of motorists chose unlimited personal injury protection coverage, down from 67.5% in April 2022. Insurers representing nearly 90% of the auto insurance market in Michigan responded to this survey.
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Scott McClallen is a staff writer covering Michigan and Minnesota for The Center Square. A graduate of Hillsdale College, his work has appeared on Forbes.com and FEE.org. Previously, he worked as a financial analyst at Pepsi.
Photo “Woman Driving Car” by Jenny Ueberberg.
