Friday’s Post 11/11/11-  If you read my post yesterday, I reviewed the proposed change to Michigan’s auto insurance PIP Laws.   Per Wednesday’s Blog Post; Michigan wants to limit the amount of Personal Injury Protection is offered per  at fault accident. These proposed changes to Michigan’s no-fault auto insurance law have drawn mixed reactions across the board with many Republicans supporting the changes while the majority of Democrats are strongly opposed to them. Michigan is the only state in the country that offers unlimited Personal Injury Protection (PIP) benefits for auto accident victims. These include a guarantee of lifetime medical care if the victim’s situation so requires.

The proposed changes to this law seek to place the upper limit for the amount of medical coverage that an accident victim can receive at $500,000, $1,000,000 or $5,000,000.  The Republicans argue that the new laws will give motorists a wider variety of choices to choose from as opposed to the current situation where there is only a single option available. They further point out that the new ceiling on PIP benefits will translate into lower premiums, which will make auto insurance in the state more affordable. They argue that many motorists find the current cost of auto insurance in the state too high, the reason for this being the unlimited PIP benefits that are offered in the state.

The Democrats, however, do not buy this line of thought and claim that the reduced cost of providing medical coverage for accident victims does not in any way guarantee lower premiums for motorists. Some Republicans, too, are opposed to the proposed changes. One of these is Phil Cavanaugh, who says that the lowered cost of insurance will only lead to improved margins for insurance companies with no benefits for motorists. He also adds that there is an increased risk of motorists opting for lower-cost coverage and in the process becoming underinsured.

The current laws allow a maximum of $500,000 for accident victims’ medical care to be covered by regular insurance policies. If the patient requires more medical care, the extra cost is covered by the Catastrophic Claims Association. There is no limit to the amount that this association can pay out for medical care. The Catastrophic Claims Association was formed in the 1970s and now handles medical coverage for more than 12,800 victims in the State of Michigan.

If the proposed changes are declared law, although patients who are already covered by the Catastrophic Claims Association will continue to receive medical care benefits, patients who receive home-based medical care will receive reduced medical care coverage. Additionally, the association will no longer provide coverage for new accident victims who exceed the maximum amount stipulated in their medical coverage.

-Mike

Michael E. Dortch
President &  Managing Agent
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