Reality defies auto insurance industry ‘myth’ that No-Fault is a cause of high auto premiums
If No-Fault auto insurance systems were truly the cause of skyrocketing auto premiums, as the auto insurance industry’s “spin doctors” and propaganda machine would have the public believe, then auto insurance prices in Michigan and other states should be the very highest in the country.
But they’re not.
Despite being a No-Fault state where the No-Fault system provides “the best auto insurance coverage in the country,” “the best no-fault medical benefits of any state” and “the nation’s most extensive auto insurance benefits at affordable rates …,” Michigan’s auto insurance rates are lower than 20 percent of the country.
And, of the 10 states with higher rates, only three are No-Fault states like Michigan.
Michigan does not have the highest auto insurance rates
Pete Kuhnmuench, executive director of the Insurance Institute of Michigan, recently drove home the point about Michigan’s far-from-the-highest auto insurance rates in an interview with MLive’s David Muller.
Muller wrote that Kuhnmuench explained that Michigan “still is not the highest in the country for auto premiums.”
“‘[W]e’re 11th in the country,’” Kuhnmuench stated.
That is consistent with the figures compiled by the Insurance Institute of Michigan, which is based on data from the National Association of Insurance Commissioners. According to the IIM/NAIC, the 11 states with the highest auto insurance premiums are (in descending order):
- District of Columbia
- New Jersey
- New York
- Rhode Island
Where are the other No-Fault insurance states?
What Kuhnmuench may have neglected to tell MLive was what Michigan did and did not have in common with the 10 states with the most expensive auto insurance.
And, given the blame heaped on Michigan’s No-Fault system for the price of Michigan auto insurance and the way in which No-Fault systems across the country are demonized by auto insurance industry trade organizations, the oversight was significant.
According to information from the Insurance Information Institute, only three of the 10 states with the most expensive auto insurance are No Fault states like Michigan.
The remaining seven are non-No-Fault states which rely on tort-liability systems and lawsuits to provide medical benefits, wage loss reimbursement and pain and suffering compensation for injured auto accident victims.
So much for the argument that No-Fault systems like Michigan’s are the “boogey men” causing everyone to pay high prices for auto insurance.
Defenders of Michigan No-Fault insurance
For nearly 40 years, Michigan’s No-Fault Law has guaranteed that seriously injured auto accident victims will receive lifetime medical benefits for necessary medical care, and to pay for the expenses associated with the products, services and accommodations “reasonably necessary” for the victim’s automobile-accident-related care, recovery and rehabilitation.
Probably one of the strongest cases for the value of No-Fault’s unlimited medical benefits guarantee is the one made by the insurance industry itself.
Indeed, insurance industry leaders such as the Insurance Institute of Michigan, its executive director, Pete Kuhnmuench, the American Insurance Association and the Insurance Journal have for years praised Michigan’s nearly 40-year-old No Fault system and especially its guarantee of unlimited, lifetime medical benefits:
- “‘Michigan [No Fault] policyholders have the Cadillac of auto insurance policies.’” (Insurance Institute of Michigan, “National Study Shows Average Auto Insurance Premiums in Michigan Falling,” December 21, 2010, Press Release, quoting IIM Executive Director Pete Kuhnmuench)
- Michigan’s No Fault Law guarantees Michigan drivers “the best auto insurance coverage in the country.” (Insurance Institute of Michigan, “Michigan Average Auto Insurance Premiums Drop,” December 2, 2009, Press Release, quoting IIM Executive Director Pete Kuhnmuench)
- Michigan No Fault policyholders “‘are getting a bang for their buck when it comes to protecting themselves in the case of a traffic crash.’” (Insurance Institute of Michigan, “Michigan Average Auto Insurance Premiums Drop,” December 2, 2009, Press Release, quoting IIM Executive Director Pete Kuhnmuench)
- “Michigan is generally recognized as having the most efficient and effective auto insurance law in the United States. … Auto insurance prices in Michigan are reasonable — especially considering the high level of benefits provided to consumers. …” (Insurance Institute of Michigan, 2010 IIM Fact Book, Page 19-20)
- Michigan’s No Fault Law guarantees Michigan drivers “the best no-fault medical benefits of any state.” (Insurance Institute of Michigan, “Auto … Insurance Rates Decrease in 2007,” February 7, 2008, press release)
- “Michigan’s no-fault law [which] requires insurance companies to provide unlimited, lifetime medical benefits to those injured in auto accidents … is generally recognized as … the most efficient and effective auto insurance law in the United States.” (Insurance Institute of Michigan, “No Fault: An overview of Michigan’s unique auto insurance law,” brochure)
- “The no-fault concept has worked well.” (Insurance Institute of Michigan, “No Fault: An overview of Michigan’s unique auto insurance law,” brochure)
- “The cost of Michigan’s [No Fault] auto insurance system is reasonable — considering that Michigan has the highest level of auto insurance medical benefits in the country.” (Insurance Institute of Michigan, IIM web site, www.iiminfo.org, Consumers — Auto Insurance)
- Michigan’s No Fault system “is cost effectively providing the nation’s most extensive auto insurance benefits at affordable rates …” (American Insurance Association, News Release, February 4, 2009)
- “Given that Michigan’s no-fault injury benefits package is unlimited, the average price paid by driver in the state is extremely reasonable. Michigan is the only state in which no-fault medical benefits have no dollar limit.” (Insurance Journal, “Michigan Debate Over Proposed Auto Insurance Changes Heats Up,” quoting statement from Property Casualty Insurers Association of America (PCI), December 2, 2009)
– Steve Gursten is an experienced insurance lawyer at Michigan Auto Law, Michigan’s largest law firm specializing in serious automobile accidents. Steve wrote the book, Guide to Michigan No-Fault Law.
Michigan Auto Law is the largest law firm exclusively handling car accident, truck accident and motorcycle accident cases throughout the entire state. We have offices in Farmington Hills, Detroit, Ann Arbor, Grand Rapids and Sterling Heights. Call (800) 777-0028 to speak with one of our lawyers.