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What’s so bad about capping No Fault PIP benefits?

April 9, 2014 by Steven M. Gursten

Plenty! No guarantee of savings for consumers; financial ruin for injured; higher health insurance; taxpayer burden; more lawsuits

pip benefit cuts

It’s a fair question.  What’s so bad about capping No Fault PIP?  And as an insurance lawyer, it’s a question I hear often.

A recent question on Michigan Auto Law’s Facebook page reminded me that I’ve never answered this question on this blog.  Essentially, the question was what’s so wrong about capping No Fault PIP and medical benefits at $10,000 or $50,000 in this state.

If capping No Fault medical and other PIP benefits came anywhere close to dramatically lowering the price of auto insurance in Michigan – or did any of the other things that the insurance industry sponsored, Republican proponents of No Fault “reform” were promising – at least it would be a fair debate. But it doesn’t and it won’t.

The only winners are the insurance industry, who now get to lock in already very large profits.

What No Fault “reform” proposals will do, however, is have drastic, harsh and life-altering consequences for seriously injured auto accident victims and their families in this state.  And for auto insurance consumers, not only would there be no real savings, but they would likely be unpleasantly surprised to see the prices continue to rise.

Here’s what is likely to happen if No Fault medical benefits are capped in Michigan:

  • No guarantee of savings for consumers.
  • The dollar amount of such a cap on No Fault medical benefits would be woefully inadequate to cover the medical claims costs of any serious injury caused by an automobile accident.
  • For catastrophically injured auto accident victims and their families, they would certainly face financial ruin and bankruptcy.
  • Increased health insurance costs for all of us, as the medical care is shifted from insurance companies to the rest of us.
  • Increased Medicaid and Medicare burdens for taxpayers.
  • More lawsuits (and the “incomplete, inequitable, inefficient and slow” manner in which lawsuits fail to adequately provide for the needs of the catastrophically injured).

As I’ve made abundantly clear here on Michigan Auto Law’s blog and in radio and newspaper interviews that I’ve given on the subject, I’m 100% opposed to all of the current plans for so-called No Fault insurance “reform.” They do not reform No Fault, and they do not result in any meaningful savings for consumers.  They result in a new tax and after two years, there will more likely be a spike in the price of auto insurance.

My opposition extends to House Speaker Jase Bolger’s and the House Republicans’ plan, Sen. John Pappageorge’s Senate Bill 818 and to Rep. Pete Lund’s House Bill 4612, which Gov. Rick Snyder backed last year. You can read about the three plans and compare them, in my recent blog post, “How do 3 different No Fault insurance reform plans compare?”

Stay tuned for part two of this blog post tomorrow.

Related information:

Top 6 reasons to say ‘NO’ to House Speaker’s new No Fault ‘reform’ plan

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