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7-day car insurance cheats No-Fault, enables uninsured crisis

Senate Ins. Committee Chair Joe Hune tees off on insurance ‘bureaucrat’ for review of car insurance plans sold by senator’s campaign donor, L.A. Insurance CEO

7-day car insurance

Despite the insurance industry’s spin on the idea, 7-day car insurance policies are not stepping stones leading people to becoming fully and legally insured drivers.

Judging by his reaction to the DIFS’s March 15, 2017, notice that the sale of weeklong policies would be prohibited starting April 15 (which has since been put on hold), you’d think Sen. Joe Hune (R-Hamburg Township) was personally affected by DIFS decision:

“I think it’s one bureaucrat out to get them [L.A. Insurance]. He’s got a bug up his ass about it,” Crain’s Detroit Business quoted Sen. Hune as saying in Chad Livengood’s April 11, 2017, story, “Senator defends L.A. Insurance’s 7-day auto policies.”

So maybe this is personal for the Senate Insurance Committee’s Chair?

After all, the insurance industry is a huge financial supporter of Sen. Hune’s: $93,000 in campaign donations since 2011.

So is L.A. Insurance CEO Anthony Yousif, who, according to the April 11, 2017, Crain’s story, “has been a reliable contributor to Hune’s campaign account in recent years, donating six checks totaling $5,150 since 2014, state records show.”

7-day car insurance policies enable No-Fault fraud and uninsured drivers

Getting rid of the 7-day car insurance policies is an excellent idea and not just because it reveals how Sen. Hune’s deep financial ties to the insurance industry trump the best interests of Michigan drivers and citizens.

Despite the insurance industry’s spin on the idea, 7-day car insurance policies are not stepping stones leading people to becoming fully and legally insured drivers.

Instead, these ultra-short-term policies are just a cheap way of cheating the system and, thus, adding to Michigan’s growing problem of “uninsured” drivers. Indeed, our own auto accident attorneys have found that the vast majority of the uninsured drivers who crash into our clients first purchased these short-term and one week insurance policies, and then let them lapse so they could keep driving uninsured.  The proliferation of these one week auto insurance policies has led some cities in Michigan, such as Detroit, to have now more than 50 percent of drivers on the road uninsured.

Eighty-four percent of the Michigan drivers who registered their vehicles using a 7-day car insurance policy “did not have insurance coverage” “90 days later,” according to Crain’s April 9, 2017, story, “Solution to 7-day auto insurance could be difficult.”

In written testimony before the House Insurance Committee in February 2017, the Michigan Secretary of State made the following “recommendations” to combat the contribution that 7-day policies are making to the “uninsured” driver problem:

  • “[R]equire Michigan No-Fault Liability coverage to be maintained for as long as the plate is valid.”
  • “No longer accept 7-day policies as valid insurance coverage.”
  • “Require an initial minimum of 90 day coverage.”

What’s wrong with 7-day car insurance policies?

In his March 31, 2017, story, “State may end sale of 7-day auto insurance plans,” Crain’s Detroit Business’s Chad Livengood reported that DIFS stopped Integon National Insurance’s sale of 7-day car insurance plans through L.A. Insurance for the following reasons:

  • “State insurance regulators said Integon’s seven-day coverage plan is ‘designed’ to skirt state law requiring continuous no-fault auto insurance coverage on state-registered vehicles. Rhonda Fossitt, senior deputy director of the state insurance department, wrote in the March 15 notice to Integon that seven-day policies ‘as a whole are designed to ensure that coverage will expire in just seven days, after which drivers are likely to experience periods of interrupted coverage without mandatory no-fault insurance.’”
  • “In the March 15 notice to Integon, the state insurance official said the seven-day plan violates multiple sections of Michigan’s auto insurance laws. ‘The seven-day policy term … cannot satisfy the 30-, 20- or 10-day minimum statutory periods applicable to every insurer termination/nonrenewal of an individual no-fault insurance policy, because the policy’s term ends and coverage terminates before any of these required notices can be effected,’ Fossitt wrote.”
This entry was tagged Tags: auto insurance, car insurance, Michigan No-Fault, No-Fault Insurance Blog
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