Here’s a practical solution to get more people in cities like Detroit insured – and lower MCCA assessment fees for all drivers
The numbers of uninsured drivers behind the wheel has become a crisis. In some cities like Detroit and Flint, the number of uninsured drivers has been estimated at over 50%. This wreaks havoc on thousands of lives, from people injured in automobile accidents who lose everything, to increased Medicaid taxes for medical care for the uninsured, to increasing the MCCA assessment for those who pay for insurance. The economic costs are staggering.
I have an idea that should dramatically increase the numbers of insured drivers on Michigan roads.
Amnesty sounds like a dirty word today. But giving uninsured Michigan drivers a one-time “amnesty” from financial penalties is exactly what we need to do to help them afford auto insurance.
With a staggering nearly 1.6 million estimated uninsured drivers on Michigan roadways, the better question is whether the rest of can afford not to make it easier for those without No Fault insurance to become insured.
Uninsured drivers cause enormous crash-related liability and medical costs that must be borne by all of us.
And driving without the auto insurance coverage required by Michigan’s No Fault Law, uninsured drivers deprive the Michigan Catastrophic Claims Association (MCCA) of additional funding, perhaps by up to 1.6 million additional drivers in additional funding. The MCCA assessment is used for paying No Fault medical benefits of catastrophically injured Michigan auto accident victims. Adding 1.6 million drivers to this would steeply reduce the assessment cost for the rest of us. By converting Michigan’s 1.6 million “uninsured” drivers to insured drivers, that could potentially add as much as $297,600,000 per year in assessment income to the MCCA. (Through June 30, 2015, the MCCA’s annual per-vehicle assessment is $186.)
There are two significant, financial hurdles or “penalties” facing uninsured Michigan drivers who want to become “insured” drivers:
- First, a person could be forced to pay “in full” for auto insurance if, during the previous two years, he or she had his or her auto insurance “canceled because of nonpayment of premium …” Notably, failure to pay “in full” could result in the person being completely denied coverage on “ineligibility” grounds. (See MCL 500.2103(1)(f); 500.2118(1) and (2))
- Second, a person could be forced to pay increased auto insurance premiums or a reinstatement fee if he or she did not have auto insurance on his or her car “during the 6-month period immediately preceding” an application for coverage. (MCL 500.2118(1) and (2)(d))
A one-time amnesty would remove those barriers – albeit temporarily – and thus, make it possible for Michigan’s 1.6 million uninsured drivers to join the ranks of the insured. Think about the enormous and positive impact that would have for cities like Detroit.
Uninsured drivers in Michigan
In a recent study, the consumer website WalletHub estimated that 21% of Michigan motorists are uninsured drivers.
Considering there are approximately 8 million registered motor vehicles in Michigan (according to data from the Insurance Institute of Michigan), that means approximately 1,680,000 of those vehicles are being driven by uninsured drivers.
To learn more about Michigan’s “uninsured” driver rate, take a look at my blog post, “Driving in MI is a game of Russian Roulette, with a 1 in 5 chance the car that hits you has no insurance.”