Extreme No Fault benefits caps and minimal savings will equal trouble for Detroiters, according to the “Detroit Insurance Company Feasibility Study”
Duggan’s D-Insurance plan is terrible. The plan will not keep people from leaving Detroit, which Duggan has said is the plan’s stated aim. It makes things worse.
Mayor Duggan says people are fleeing Detroit, in part, because of high auto insurance prices. I agree.
I also believe something needs to be done to lower prices for people in Detroit.
But not this. Yesterday, I wrote about eight reasons why D-Insurance is terrible.
This means that even if D-Insurance could generate Duggan’s anticipated “$1,000 savings for many Detroiters,” they’d still be paying $2,400 for car insurance. That is still $700 more than the “surrounding communities.”
And what will Detroiters be giving up under D-Insurance? Nearly everything.
Based on [optimistic?] figures contained in the “D-Insurance: City of Detroit Insurance Company Feasibility Study” (June 8, 2015), the “average annual policy premium for PIP, BI-PD, and collision and comprehensive coverage in downtown Detroit was $2,249.70,” which was “double the average annual premium in western Oakland County,” $1,124.85.
Even if the D-Insurance plan could generate the “overall estimated” 25.8% in “premium savings for a full coverage policy” that’s predicted in the perhaps optimistically written feasibility study, Detroiters end up still be paying $1,669.28 – which is $544 more than drivers are paying in western Oakland County – where Oakland County residents retain full legal protections and medical care with unlimited No Fault protections. (Pages 4, 8, and 11 of the feasibility study)
But it gets worse.
Not only are people in Detroit still going to be paying more for auto insurance than people in other cities and neighboring suburbs under Mayor Duggan’s D-Insurance plan, but they’re going to be paying more at the same time they’re losing out on everything that makes Michigan’s No Fault system so incredibly valuable.
Here’s what people are losing under D-Insurance:
- Unlimited, lifetime No Fault protections, to be replaced with a $25,000 total cap on all No Fault benefits for non-critical medical care (which includes medical services and treatment, surgeries, procedures, MRI, diagnostic testing, injections, physical and/or occupational therapy, rehabilitation, home- and/or vehicle-modifications and attendant care), wage loss AND replacement services.
- Taxpayers will foot the bill. And, under the D-Insurance Plan, when an injured auto accident victim in Detroit reaches the $25,000 cap, he or she will have to turn to his or her health insurer or Medicaid/Medicare for coverage, pay out-of-pocket from the family savings and/or forgo completely the medical treatment that is necessary for his or her care, recovery and rehabilitation.
- No choice of doctor. People don’t understand how dangerous this part of the plan is. Under the D-Insurance Plan, an auto accident victim may be prohibited from seeing his or her own doctor of choice and, instead, be forced to see one of the doctors in the “limited provider network” managed care plan. As an auto accident attorney, I know firsthand that many of these doctors are extremely conservative insurance IME doctors. You can read about how dangerous these so-called independent medical examiners are here and here.
- Insurers also get to “play doctor” with Detroit auto accident victims by requiring “preauthorization” for any medical-related “products, treatment, services, accommodations, or rehabilitative or occupational therapy or training” – even from “an in-network provider” – based on what the auto insurance company determines is a “medical necessity.” Think about what a high and daunting hurdle this can be for people who are in pain, not able to return to work, and who desperately need to get expensive diagnostic testing or who need a referral to a medical specialist.
- Paying out of pocket. Without ‘preauthorization,’ an auto accident victim must pay out of his or her own pocket. Detroit already has a massive number of its population living at or below the poverty level, which effectively bars any further medical treatment if no pre-approval has been given, no matter how desperately they may need help.
- Accident victims could be financially responsible for medical bills. Under the D-Insurance Plan, if an auto insurer requires “preauthorization” before an auto accident victim/insured receives medical treatment and/or care, but the crash victim fails “to obtain written preauthorization,” then that “renders a claim for payment [for the victim’s treatment or care] void,” which means the victim will become financially liable for the bill.
What’s the solution? Not D-Insurance!
If Mayor Duggan’s goal is to lower auto insurance prices for Detroiters, keep them in the Motor City and, simultaneously preserve the important benefits and protections guaranteed by the No Fault law, then, unfortunately, the D-Insurance plan has got it all wrong.
The press release announcing the results of the feasibility study stated that “the predominant cause (and the “primary cause”) of the higher premiums charged to (and “paid by”) Detroiters” was the “higher rate of (No Fault) medical claims filed and the higher cost of these claims …”
With that being the case, the D-Insurance plan should focus on solutions that most directly and efficiently address the problem.
Next Monday, I will provide my own solution for solving the problem of uninsured drivers in Detroit and how to meaningfully lower auto insurance prices for Detroiters, while keeping critical No Fault protections intact.