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Duggan’s $25K No Fault PIP Choice Cap won’t cover medical, wages

September 28, 2017 by Steven M. Gursten

How can Duggan, Leonard’s No Fault Driver’s Choice Plan work with a $25,000 cap that fails to even cover the average No Fault medical claim or one year of wage loss benefits?

Medical claim

The $25,000 No Fault PIP cap in Detroit Mayor Mike Duggan’s “Driver’s Choice” car insurance reform plan won’t adequately cover a car crash victim’s medical expenses or lost wages.

As I pointed out in my blog post yesterday, “Duggan, Leonard No Fault PIP Cap is $25K — not the $250K they promise”:

“$25,000 wouldn’t cover the average No Fault PIP medical claim in Michigan, nor would it cover two of a victim’s 3 years of No Fault wage loss benefits if he or she makes $30,000 per year or more.”

That’s the harsh reality of the No Fault auto insurance plan that Duggan and House Speaker Tom Leonard (R-DeWitt) are trying to sell to the public.

Their sales pitch is for a $250,000 No Fault cap to cover “medical care in the event of serious injury during auto collisions.”

But that’s deliberately misleading.

What people would be buying is a No Fault cap of only $25,000 (after an auto accident victim leaves a hospital’s ER). The remaining $225,000 is just for the big hospitals and is limited to acute emergency room care.

That leaves only $25,000. That’s all that’s left to cover not just all reasonably necessary medical care and treatment that an auto accident victim needs, but also his or her wage loss, replacement services, attendant care, and even survivor’s loss benefits, too.

Is $25,000 enough to cover the average medical claim under No Fault  for car crash injury victims?

Not even close.

Assuming the $25,000 is used just for medical care and treatment after a car accident — which, of course, it wouldn’t be because it would have to be stretched to cover wage loss, replacement services, attendant care, and survivor’s loss, too — it wouldn’t even come close to covering the average No Fault medical claim in Michigan, let alone in Detroit, for people injured in car accidents.

And Mayor Duggan already knows this.

According to his dinsurance.com website, the “average cost” for No Fault “medical care” benefits is $38,693 for Michigan and $59,000 for Detroit.

Additionally, DrivingMichigan.org shows that the “average Personal Injury Protection (PIP) claim” for “health care” was $50,063 in 2015.

Consider also that when, back in 2011, a $50,000 cap on No Fault medical care was proposed, the Detroit Free Press called it “irresponsible and unrealistic.”

Is $25,000 enough to cover wage loss benefits under No Fault car insurance?

Not even close.

For many Michigan drivers, the $25,000 No Fault cap won’t begin to compensate them for the wages they’re losing because they’re too disabled to work.

Under Michigan’s No Fault Law, a car crash injury victim can collect wage loss benefits equaling 85% of the victim’s pre-accident income for up to three years from the date of the auto accident.

Suppose a car crash victim’s pre-accident income was $30,000 — just slightly higher than Michigan’s “per capita income” of $26,607, according to the U.S. Census Bureau’s Quick Facts.

That means his annual wage loss benefits amount would be $25,500, i.e., 85% of $30,000 (assuming his accident-related injuries disabled him from working for the full, 3-year statutory period).

How would he fare under the Duggan-Leonard No Fault cap?

Well, about as bad as you’d imagine.

For the first year, he’d receive nearly all of the wage loss benefits he’s entitled to (assuming he had no medical expenses or other No Fault benefits to pay for).

But, for the next two years, he and his family would get nothing.

Few people and families could ever survive such a crippling financial blow. No Michigan families currently making the average per capita income of $26,607 could survive for 2 more years without wage loss protections.

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