How auto insurance companies take advantage of a law that punishes uninsured drivers
Auto insurance company bean counters knew something back in 1995, and they’ve been laughing all the way to the bank ever since, saving hundreds of millions of dollars that was shifted to the rest of us – as taxpayers – to be stuck with.
The insurance companies knew that Detroit has the lowest median income in the nation, yet at the same time, the price of our auto insurance is very expensive. Although the insurance companies have lobbyists who like to blame this on No-Fault, and who ask us to overlook that Michigan’s auto insurance companies enjoy the highest profitability margins in the nation, the truth is that our expensive auto insurance is because of other factors that have nothing to do with No-Fault, such as the conservative majority of the Michigan Supreme Court’s ruling allowing credit scoring for cities like Detroit.
Insurance companies knew that auto insurance is completely unaffordable for many people in cities like Detroit, and they knew that tens of thousands of Detroiters then and now are driving uninsured. So they created legislation that would allow them to exploit this situation, and then they acted.
They saw an opportunity in 1995 with a Republican Legislature, a Republican Supreme Court, and a Republican Governor in John Engler. And they pushed the Legislature in 1995 to pass the most draconian, harshest law in the nation. This law punishes uninsured drivers so severely that they lose their 7th Amendment right to a jury trial under the Constitution and their right to sue against at at-fault driver for life-altering, catastrophic injuries — even if they were completely blameless in the crash that paralyzed them or caused these injuries.
Yes, many people feel unsympathetic about this, until they really understand the scale of what this means. Not only do these people lose everything, but the costs of all this are now transferred on the rest of us, through Medicaid paying the bills, instead of on the person who caused the injuries.
The drunk drivers and reckless drivers who cause all of this devastation get total immunity. In fact, if the drunk driver has auto insurance, then his insurance company can actually also sue the completely innocent and now catastrophically injured driver that the drunk hit to recoup their costs – even when the drunk causes the crash!
And the insurance companies who would have to pay these claims get to laugh all the way to the bank.
- This blog post was written by attorneys Steven Gursten and Brandon Hewitt.