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New Michigan No-Fault Auto Insurance Bill: What Does It Mean?

May 7, 2019 by Steven M. Gursten

New Michigan No-Fault Auto Insurance Bill: Senate Bill 1

The whole point behind Michigan No-Fault auto insurance reform is to provide meaningful rate relief to drivers who pay too much. The point of real reform is to make auto No-Fault more affordable. 

On this most basic, simple, and straight-forward point, the Senate Republicans’ new Michigan No-Fault auto insurance bill is an epic fail.

In the version of Senate Bill 1 that was passed by the Senate on a 24 to 14 vote this morning, there is no guaranteed savings and no mandated rate reductions for No-Fault auto insurance. It’s just more of the same “trust us” we’ve heard from the insurance industry time and again. The problem with that is just like the tort reform that was passed in 1995 and that is still in effect today and even with a draconian law from 2004-2010 that slashed the number of auto accident lawsuits, rates have never gone down. Insurance companies get what they want, but they just keep raising rates. 

Lucy keeps pulling the football away from Charlie Brown. 

The next step for Senate Bill 1 will be in the Michigan State House of Representatives.  If it is passed by the House and signed by Governor Whitmer, Senate Bill 1 will become law – creating sweeping changes to Michigan’s 45 year-old auto No-Fault insurance system.

As with all of the other No-Fault reform bills from the past several years, the new Michigan No-Fault auto insurance bill – the Senate-passed version of Senate Bill 1 – focuses on only taking benefits and protections away from car crash victims. It does nothing to force the insurance companies to reduce premiums.

IMPORTANT: The legislation discussed in this blog post is still pending in the Michigan Legislature. The law has not changed, nor will it change unless and until this legislation has been passed by both the Michigan House of Representatives and the Michigan Senate and signed by the governor. There is no need at this time to update or otherwise make changes to your current Michigan No-Fault auto insurance policy.

Attorney Steven Gursten’s take on the new Michigan No-Fault auto insurance bill

In an interview with WXYZ Detroit, attorney Steve Gursten pointed out a glaring and significant omission in the new bill:

“Once again, [the insurance companies are] saying, ‘If you do these things and take away all of these things from people, then we will reduce our rates.’ But there’s no guarantee in the bill.”

To see Steve on WXYZ, check out the video below.

Below are the main points of Senate Bill 1 as passed by the Senate

  • No-Fault PIP Choice: Drivers could choose from unlimited coverage (if it is offered by their auto insurer) or they could cap their coverage levels at $250,000 (for medical and wage loss, etc.) or $50,000 (which includes a sub-cap of $200,000 that applies only to “medically necessary treatment rendered at an acute care unit or trauma center of a hospital immediately after the accidental bodily injury and until the patient is stable”).
  • Suing for excess medical and wage loss: Car crash victims who opted for one of the limits on No-Fault benefits can sue for any medical expenses and/or wage loss that exceed their chosen No-Fault benefits cap.
  • Opt-out: Drivers who have health insurance that covers injuries and care caused by a car accident could opt out of all No-Fault coverage. This opt-out feature within the new Michigan No-Fault auto insurance bill  would also apply to drivers who have Medicaid or Medicare coverage.
  • Michigan Catastrophic Claims Association (MCCA): The MCCA would no longer be liable for catastrophic injury claims based on policies issued or renewed after a certain date. However, it would continue to be liable for benefits due under policies issued or renewed before six months after this bill’s effective date. Drivers would continue to pay the annual MCCA assessment to the extent the MCCA continues to run at a deficit and liabilities exceed assets. If assets ever exceed 120% of liabilities, the MCCA will have to pay rebates.
  • No-Fault medical-provider fee schedule: A No-Fault fee schedule based on the Workers’ Compensation fee schedule would be created and it would govern charges from doctors, hospitals, clinics, rehabilitation facilities and any provider who cares for and treats car accident victims.
  • Attendant care: The new Michigan No-Fault auto insurance bill states that car accident victims are entitled to no more than 56 hours per week of paid No-Fault in-home, family-provided attendant care benefits.
  • Automobile Insurance Fraud Task Force: A car insurance fraud task force would be created which would be charged with investigating and pursuing prosecution – criminal or civil – of people who commit auto insurance fraud. According to the new Michigan No-Fault auto insurance bill, the Task Force will submit an annual report to the Legislature detailing “automobile insurance fraud by medical providers, attorneys, or other persons and unfair claims practices of insurance companies.” The Task Force’s annual report will also assess “the impact of the fraud and unfair claims practices on rates charged for automobile insurance.” To assist in compiling the Task Force’s annual report, the Insurance Commissioner will provide records and statistics that include information about auto insurers’ “unfair settlement practices and claims practices, including those reported to the department under section 261, reimbursement rate practices, timeliness of claims practices, and the use of independent medical examiners.”
  • Insurance Commissioner involvement when insurers refuse to pay No-Fault benefits: The Insurance Commissioner will be required to create a page on the Department of Insurance and Financial Services (DIFS) website describing how the Insurance Commissioner “may be able to assist a person who believes that an automobile insurer is not paying benefits, not making timely payments, or otherwise not performing as it is obligated to do under an insurance policy.” Additionally, the Insurance Commissioner would be required to create a website page that “allows a person to report insurance fraud and unfair settlement and claims practices . . .”

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