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No Fault reform is based on the faulty premise that no fault medical benefit costs are driving auto insurance rates

Comparing Michigan to other No Fault states proves that the cost of No Fault medical benefits is not to blame for the auto insurance prices that Michigan insurers choose to charge.

With its guarantee of necessary and reasonably priced lifetime No Fault medical benefits, Michigan auto insurance at $1,073 is cheaper by at least $100 per year than auto insurance in other No Fault states where the No Fault medical benefits are drastically lower due to benefit caps.

According to data from the IIM (which was also used in one of Gov. Snyder’s exhibits at the press conference), Michigan’s average annual auto insurance premium is $1,073.

In New York, where No Fault medical benefits are capped at $50,000, auto insurance costs $1,207. Similarly, in the District of Columbia and in New Jersey, where No Fault medical benefits are capped at $25,000 and $15,000, respectively, the prices of auto insurance are $1,277 and $1,276, respectively.

Sources: Insurance Institute of Michigan’s chart, “Auto Rates — Premium Comparison by State,” 1/13 update, which is based on data from the National Association of Insurance Commissioners; No Fault Chart from Gov. Rick Snyder’s April 18, 2013, No Fault reform press release

Further proof that Michigan No Fault medical benefits are not driving Michigan auto insurance is found in the auto insurance industry’s claims about increasing No Fault medical claim costs.

If, as the IIM claims, the average cost of a No Fault “medical claim” has increased 224% over the past 12 years and if No Fault medical benefit costs were actually driving auto insurance rates, then rates should have increased proportionately over the same period.

But that’s not what has happened.

To the contrary, as discussed above, Michigan auto insurance rates are lower than in previous years.

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