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Michigan No-Fault Premiums — See where the money goes

May 16, 2017 by Steven M. Gursten

Collision coverage eats up 40-50% of the bill. Auto No-Fault PIP takes up only 5-6%. Where should No-Fault reform focus if lowering prices is truly the goal?

Collision coverage — not unlimited lifetime medical — is the real driver of Michigan’s high auto No-Fault insurance prices. But you would never know that from watching the news, listening to the insurance company’s lobbyists, or sadly from far too many politicians in the Michigan Legislature.

The above No-Fault premiums pie chart used recently by Grand Rapids’ WZZM (and taken directly from actual charges from a Progressive declaration page) drives home this point that the largest insurance costs for Michigan drivers are:

  • “Collision (Vehicle Repair)” at 42%
  • MCCA assessment at 18%
  • Liability at 16%
  • Comprehensive at 9%
  • Rental reimbursement at 5%
  • No-Fault PIP at 5%

Significantly, with collision coverage eating up more than 40% of people’s auto insurance bill, we know (and so should the politicians) where auto No-Fault insurance “reform” efforts must be focused if lowering No-Fault premiums is truly the goal.

Why we can’t blame unlimited lifetime medical care for the high price of auto No-Fault premiums in Michigan

Pro-No-Fault “reform” politicians and insurance industry lobbyists want consumers to blame the provision under Michigan’s auto law that allows for unlimited necessary medical care.

That way they can push through changes to the state’s No-Fault laws that the insurance companies want.

And there is no provision of the Michigan auto No-Fault law that the insurance companies would like to change more than the unlimited necessary medical benefits and protections for seriously injured motor vehicle accident victims. That’s why proposals such as House Bill 4488 would  boost the bottom lines for our “highly profitable” insurance companies.

But that’s not what’s driving Michigan’s high auto insurance prices.

Michigan Auto Law attorney Brandon Hewitt made precisely this point in WZZM’s May 3, 2017, story on Michigan auto No-Fault insurance.

He told WZZM that if consumer savings are truly the goal for politicians, then they’re making a huge mistake in targeting Michigan’s unlimited lifetime medical care as the main focus of No-Fault reform.

Most of the money that people spend car insurance goes to collision coverage, Brandon explained, not for unlimited No-Fault medical coverage.

To illustrate his point, he used his own auto insurance “Declarations Page,” which showed that out of a $720 “total premium” for one of his vehicles, only $45 — or approximately 6% — was going toward his No-Fault/PIP coverage.

On the other hand, $369 — or approximately 51% — of his bill was going to “Standard Collision,” coverage that would fix damage to his car if he was in an automobile accident.

What are the Top 5 most expensive coverages in your Michigan auto No-Fault insurance bill?

Tell us which of the following make the biggest dent in your wallet (check your own auto No-Fault declarations page if you’re not sure):

  • No-Fault/PIP (also known as “personal protection insurance” or “personal injury protection”)
  • Bodily injury and property damage (also known as “residual liability insurance”)
  • Property protection
  • MCCA assessment recoupment (Michigan Catastrophic Claims Association)
  • Limited property damage liability or “Mini Tort
  • Uninsured/Underinsured motorist
  • Collision insurance
  • Comprehensive

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