At issue: Michigan’s no-fault auto insurance

On Oct. 31, 1972, Michigan Gov. William Milliken signed sweeping reform of Michigan's auto insurance system, assuring payment for “all reasonable charges” for an accident victim's care and rehabilitation.

To date, it is the only insurance law in the nation that prescribes unlimited medical and rehabilitation benefits to accident victims. Depending on the source, the no-fault law is either a blueprint for compassionate care or an unaffordable burden to Michigan drivers.

Some points of contention:

Cost

Opponents of the no-fault law point to rankings that place Michigan at or near the top in cost of auto insurance. They contend its generous accident benefits are chiefly responsible.

In 2013, Insure.com, an independent insurance consumer website, found Michigan ranked second in the nation in premium rates, at $2,520. Only Louisiana, at $2,699, was higher. Its average was based on its survey of the cost to insure a 2013 model car for a single, 40-year male with a clean driving record who commutes 12 miles to work.

A national survey of 2010 insurance rates reported by the Insurance Institute of Michigan, an industry group, found that Michigan drivers paid an average annual premium of $1,073, eighth highest in the nation. The rate was higher than neighboring Ohio, at $699; Indiana, $716; Illinois, $812; and Wisconsin, $682. The national average was $907.

A 2013 report by the nonpartisan, Lansing-based Citizens Research Council found that Michigan's no-fault law accounted for medical claims in Michigan that cost insurers 57 percent more than claims in similar crashes in other states. It also found that auto insurance premiums in Michigan are 17 percent higher than the average in other states.

Cost shifts

Motorists in Colorado saw premiums drop by about $200 after its no-fault policy expired in 2003.

A closer look suggests that medical providers and health care consumers were stuck with the bill, as costs shifted from the auto insurer to hospitals and health insurers.

A study by the Colorado Office of the Governor found that health provider charity care – unpaid bills – doubled, from 14 percent in 2002 to 29 percent in 2006. Another study found that Colorado Medicaid expenses related to auto accidents increased by 205 percent after its no-fault law lapsed. Hospitals typically pass along unpaid bills through higher charges, which in turn leads to higher health insurance rates.

Who pays

Auto insurance policyholders pay $186 per vehicle per year to cover catastrophic injury claims. The funds go to the Michigan Catastrophic Claims Association to reimburse insurers for personal injury protection benefits after they exceed $530,000.

According to the MCCA, it paid out $10.9 billion in catastrophic claims from July 1, 1978 to June 30, 2013. It listed more than 14,000 active claims. Annual payouts climbed from about $100 million in 1991 to more than $900 million in 2012. According to the Insurance Institute of Michigan, the average auto insurance Personal Injury Protection medical claim jumped from $13,617 in 2000 to $44,138 in 2012.

Who makes claims

According to the MCCA, as of June 2012, more than 14,000 of 32,627 total claimants had brain injuries, 1,145 were quadriplegics, 952 were paraplegics, 154 were burn victims and more than 14,000 were categorized as “miscellaneous.” Nearly 70 percent were between the ages of 16 and 55.

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Comments

dlb333
Tue, 03/11/2014 - 8:37am
So giving up unlimited coverage in case of a catastrophic accident will save me $10 - 25 per month. I'm all for saving money, but that doesn't seem like much savings. Is it worth giving up necessary coverage in exchange for saving a few bucks? Do I want anyone to give up needed care just so I can buy an extra three coffees each month? I don't think so. Hmm... Why do I think that the motivation for this bill to cut coverage is motivated by something other than saving constituents a few dollars.
Pinne666
Tue, 03/11/2014 - 3:45pm
Have no idea of where this author gets his facts and figures from but I can prove that they are BS straight out. The fact that I know is that a single woman, at age 50, travels 12 miles to work 5 days a week. Has an older car worth maybe $3.000/00 and pays a monthly payment of $120.00 for her $500.00 deductible insurance premium in Michigan. Just a pittance right. NOT so, it is a rape, on a person with a minimum wage job and a son to support. In comparison I know that she could avoid this terrible rape of no fault, if she moved to Iowa to live and paid the comparable, insurance premium, on the same coverage policy at $13.33 per month or a annual premium of $160.00 per year. I know for a fact the the above is true. I have scene the paperwork and know the individuals personally. The lies that are stated in this article are the problem. Residents of Michigan are feed this crap and just accept it as fact, like most brainless humans, when something is printed. Evidently the main stream believes that no one in Michigan has an individual in another state that they can compare apples with apples with. I challenge each reader to contact another individual in a neighboring state to get the truth of the asinine Michigan no fault rape. Then, when the facts are clear in your mind, contact the worthless representative in the house and senate and demand relief from this, unjust rape, of Michigan no fault.
kim
Thu, 08/28/2014 - 9:05pm
Perfect analogy!
EARL
Fri, 05/15/2015 - 9:14am
I AGREE MICHIGAN AUTO INSURANCE IS NOTHING SHORT OF RAPE IN OUR POCKET BOOKS... I THINK WE SHOULD PUT REAL PEOPLE IN CHARGE OF OUR INSURANCE LAWS FOR SURE...
Jack33
Fri, 08/29/2014 - 1:01pm
Michigan's auto insurance is a disaster, and the bought & sold politicians that refuse to do anything about the worst-in-the-nation rates are making matters worse. Want to know how bad it is? - try living in a perfectly fine upper middle class suburb northeast of Ann Arbor, with some of the lowest crime in the State, at 47 years old with a spotless driving record, and yet still be forced to pay $178/month for a 3 year old base model Fiesta for basic full coverage. Between business & government corruption, high unemployment (back to 3rd worst in the nation...thanks Snyder), and stuff like this, it's really no wonder why everyone is leaving the horrid State.
kim
Thu, 10/16/2014 - 9:56pm
What if we all just quit being sheep and said no. No! You will not extort me ! No! We have a right to travel the public roadways without undue hardships that (no matter what the propaganda being taught to make us believe otherwise) are afforded to us by virtue of our citizenship status! Truly, insurance in Michigan is unreasonable at the very least, be pissed off. If we do nothing, nothing will change except that with record profit mentality we will have to pay more. Out of fear my suggestion to refuse To pay will never happen. But what if thousands of us threatened not to? Cash is king, money talks, bullshit walks. I have already emailed one of our state senator's and I'm going to keep writing until (hopefully in my fairy tale world) someone listens.
Ron
Tue, 03/11/2014 - 8:42am
It sure would be nice if the Michigan Catastrophic Claims cost/benefits were opened up to public scrutiny so we could make an intelligent decision based on cost/benefit.
Jeff
Tue, 03/11/2014 - 9:14am
It's hard to reconclile such generous benefits and then turn around and allow riding motorcycles without helmets. Now I don't care if you want to ride without a helmet; that's your decision. I should not be required to pay more for insurance because you are willing to ride without proven safety equipment. It is not a leap in logic that riding without a helmet will cause an increase in serious head/brain injuries. Perhaps we need to limit liability for those who fail to wear their seat belts or helmets...
Ted
Tue, 03/11/2014 - 10:05am
@ Jeff- You do understand that motorcycles are not covered under Michigan no-fault insurance unless they are involved in an accident with a covered motor vehicle ie: a car or truck. If they strike an environmental object or another motorcycles no-fault does not apply and if the injuries are severe they end up on Medicaid, a dependent of the taxpayer.
Mike
Thu, 03/20/2014 - 9:30pm
Most accidents are vehicle to vehicle, and they are covered. Also, Ted doesn't speak to the treatment and care for those with head injuries who are not wearing helmets. Insurance companies should not be required to cover anyone with a head injury who rides without a helmet, and such persons should also not be covered by Medicaid (health care for indigent). People riding without helmets should bear 100% of the risk and if they have dependents, they should post a bond that ensures their dependents also do not become wards of the state -- taxpayers. I am with Jeff on this. If they ride without belts or helmets, they simply are not covered by insurance; that will bring down rates. But taxpayers should not be responsible either. That's the true price of liberty; permit them to pay it.
SandyO
Tue, 09/30/2014 - 4:35pm
I worked in a small acute care hospital in a city just outside of Detroit, prior to the helmet law. Every summer we could count on a minimum of 6 severely brain damaged young individuals (primarily male) that were destined to spend the rest of their lives requiring skilled nursing assistance. After their insurance ran out, they would, of course, be placed on Medicaid and the taxpayers would be responsible for maintaining them as long as they lived. The numbers of vegetative individuals dropped significantly once the helmet law was enacted, so it was obviously a success. I was blown away when our supposedly intelligent Governor signed the law allowing a new generation of young people to once again take the risk. He not only placed untold numbers of motorcyclist at risk, but taxpayers as well. Despite all the protestations of motorcyclists, it is irresponsible of these bikers to ride without helmets. . Once again the taxpayers will be forced to bear the burden of their stupidity. When their insurance runs out, and they are unable to work (obviously), and it is unlikely to be that their families will be able to provide the physical care they would require. Nor are most families in a financial position to pay the high cost of medical care beyond what social security disability pays, they would once again become a burden on the Medicaid system. However, when the time comes, they won't care because they are unable to think. Once again, what was this administration thinking?
Chuck
Tue, 03/11/2014 - 11:21am
A neighbor girl was in a car which was struck by a drunk driver. She was five years old. This spring she graduates from a Big Ten university. She hasn't walked since that crash but she has undergone numerous surgeries, visited many doctors, and now has an SUV so she can get around. Her expenses must be over a million dollars. Would I wish her to be on Medicaid so I could save about $15 - $20 a month? NO WAY . There is a stigma to being on Medicaid and Medicaid would not build a wheelchair ramp, build a handicap accessible bathroom in her home, or provide her a vehicle to allow her to get around. Insurance is what you pay for and hope you never use, but it is peace of mind when you have it. Don't drop No Fault.
Joe
Tue, 03/11/2014 - 7:23pm
Agreed. It's penny wise and pound foolish to limit no-fault coverage. We'll all pay in the end through taxes so let's keep what we have and start jailing soccer moms that are breaking the law while killing and injuring others, as well as tailgating suburban dads in their Beamers that do the same. That ounce of prevention will be much more effective in lowering insurance rates and penalizing those that are fault instead of those that are victims. Presently, we lock up black teens for selling pot and let upper-income white suburbanites free for killing families. Traffic accidents are the number one killer of children in this country. If you're at fault in an auto accident, you're breaking the law. If you seriously injure or kill a person, whether alcohol is involved or not, you should do real time. Believe me, the word will get around that suburban white doesn't make right.
Shawna
Mon, 10/20/2014 - 9:51pm
I am hoping that people will see that getting rid of auto no fault would hurt alot of people. While it is expensive you will only save 10-20 a month, but God forbid you get injuries that flip your life up side down and require the use of attendants, wheel chairs, nursing whatever it be you will be thank ful for that coverage. I have been doing home care for over 20 yeas with many auto accident victims and it is heart breaking to think that they would lose what they need to live, as though they have not lost enough!!!! Never walking again, unable to feed yourself etc. While there may be the need for monitoring for fraud to get rid of it only hurts those in need and passes the cost to the tatax payers, will create job loss as well in the health field. So tell me again why it would be good to get rid of auto no fault??? Have a loved lose their abilities and you may see differently.
Sun, 03/08/2015 - 12:21am
10-20$ a month!!?? Where are you people getting your numbers!!?? Wow. I'll give you some examples. BTW I'm a pilot and have lived in many states, so I have a great deal of experience in prices. I was paying $35 a month for liability but high limits in Ohio. In Pennsylvania I was paying $43 a month. Texas was a little higher because of the crime rate of the border city I was living in, it was $67 a month. Now here it is folks, I've called wrote a few insurance companies in Michigan, which I'll be moving here soon, and I had ranges from $180 to $600 a MONTH!! Same car in all states btw, A 2006 Chevy Cobalt. And this is for the bare minimum that the state of Shitigan will allow. Now you can shove this $10-$20 a month where the sun don't shine. Don't speak about something you have no clue about. It's so frustrating to see people talk about a subject they clearly know nothing about. Michigan insurance is the highest in the country!!! By far!! Oh, btw, if someone destroys my car because of their negligence, guess what, I get squat. Any other state, the person that causes the accident is at fault and THEIR insurance pays for the damage that they caused. And that's how it should be! Anyone who thinks different is probably a terrible driver!! I'm so sick of paying for everyone else's god damn mistakes!! Sorry for the language but this is a very touchy subject. The stupidity of the world is beyond overwhelming. Rant over. No fault insurance is the biggest mistake the state of Michigan has ever made. It needs to be eradicated immediately. Damn sheep.
Fri, 05/08/2015 - 7:13pm
I couldn't agree more.....I'm from Indiana and insurance here in Michigan is almost twice what I paid in Indiana. ALMOST DOUBLE!!! Come on people - wake up!!! I wish I could move out of Michigan!!
J. Strate
Tue, 03/11/2014 - 11:30am
Trying to read through the MCCA report gave me a headache. It's a report only actuaries and lawyers with unlimited time and unlimited billable hours would love. The complexity of the report, unaccompanied by any simple and readable narrative that summarizes what's going on, creates the impression of opportunism. I notice that MCCA employees have a Cadillac defined benefit plan. Is such a plan a common thing to find in a non-profit? MCAA invests through about 17 investment/financial companies. Is that many really necessary? There's really no easy way for a legislator or anybody else for that matter to judge the performance of this nonprofit. My guess is that MCAA likes it that way.
R FAGERMAN
Tue, 03/11/2014 - 11:59am
Leave No-Fault alone. The idea of saving a couple bucks for giving up the benefits of No-Fault insurance is ludicrous. There are multiple caps they want to put on benefits.
Cathy
Tue, 03/11/2014 - 1:10pm
I moved from Michigan to Nevada. My car insurance barely went down and there is a lawyer on every corner. Does Michigan really want to go back to the bad old days of having to sue for health care benefits? There are staged accidents here, people feigning injury to get some money, and lots and lots of accidents. This is one of the few things I miss about Michigan, their great car insurance.
TMacke
Tue, 03/11/2014 - 1:16pm
There is a very necessary need for a public oversight team to monitor and hold the MCCA transparent. The Medicaid program and private insurance companies are more than adequate to support the needs of the claimants. Many other states transfer these financial responsibilities to the federal government through the SSA disability program. Given the increase in the cost of the program it is becoming fiscally unstable, similar to other public obligations, (pensions,) as they have grown. Currently we pay about 20% of the average auto policy to MCCA. There is a need for reform of the program and rationale limits be set.
Maur
Tue, 03/11/2014 - 5:46pm
Actually, for immediate emergency care you may be right. However, if yôu need rehab, it doesn't happen with blue cross or Medicaid. Our son was rejected by bluecross and Medicaid when he needed to move from ICU to rehab. They wouldn't cover him at his low level of activity. Our auto insurance agreed to pay for a month, and a week after being admitted and started on brain stimulants, our son woke and began the long road to recovery. He is now in college. Medicaid and blue cross would have paid for a nursing home, but they do not give brain stimulants there or other treatments that allow recovery. Unless you have had a loved one with such an injury,you can't realize how limited your resources are without catastrophic coverage. When we heard the insurance commissioner from Texas speak, he said that what happens in Texas is that many people with children who are injured are that they end up going bankrupt. Not the best way to deal with Michigan citizens. I am willing to pay $15 month to protect those that are injured in car accidents in Michigan. I know what it meant for us. No one knows desperation until they are refused proper care for their child. No fault with catastrophic coverage is one of the neatest things Michigan has to offer.
Charles Richards
Tue, 03/11/2014 - 3:51pm
I wish Mr. Roelof had done some back of the envelope calculations and given us a rough idea of how this netted out after all the cost shifts in Colorado. How many motorists saw their premiums drop by $200? How many dollars did that increase in charity care from 14% to 29% amount to? And how many dollars did that 205% increase in auto accident related Medicaid costs amount to? It was a good article that confirms my belief that we should leave no fault alone.
Maur
Tue, 03/11/2014 - 5:48pm
Mr. Charles Richard, I agree.
Marcy
Tue, 03/11/2014 - 8:06pm
KEEP NO-Fault! As others have said, not worh saving a few to loose so much!
Seth Phillips
Wed, 03/12/2014 - 2:16pm
Your cost analysis fails to point out a VERY important fact..almost the entire high cost of Michigan no fault insurance occurs in collision and comprehensive coverage, not in the MCCA, which is what insurers want to gut. The cost for unlimited health care is not high per person and getting rid of it will have little impact on rates. This is about insurers making more money and leaving people who need care out in the cold. It is NOT about making insurance more affordable for people.
Jeff
Tue, 03/18/2014 - 9:46am
The MCCA must be forensicly audited bi-annually with a report and actuarial tables shown! After the malfeasance shown by financial institutions in this country who can be against this? Also with more people having health insurance thanks to the affordable care act auto insurance companies out of pocket is much less as with the increase in safety (teen and elderly driving laws,restraints and air.bags,state of the art anti-theft devices premiums should be lowered accordingly not the pittance they beat us out of ! These issues is why our state is the most lucrative to them to the point they buy our leaders to get more! Both the industry and Leaders would not know fairness if it slapped them upside their head!!
kim
Thu, 08/28/2014 - 9:18pm
It is unconstitutional to force, yes force an individual to purchase a product (service) from an individual or a business. Insurance in Michigan is extortion on so many levels. The health care issue? If I'm sick, my car insurance doesn't pay my doctor bill ; if I'm in a car accident and have car insurance, the that insurance should be responsible, period! This is collusion, and we are very shortsighted here to not see these insurance companies are double dipping. But let's not rock the boat, let's continue to comply, the sheep and spineless people we have become!
Penny
Tue, 12/16/2014 - 5:26pm
I live in MI an think the catrastophy fund is CRAP!!! I pay $186.50 for each vehicle i insure. That is $932.50 per year. Now on top of that my auto ins company has raised my PIP portion of ins $750.00 This yr. they said it's. Uz i live in MI an have medicaid an it is considered a secondary ins. So if i were to get in an accident i wouldnt be covered by either. MI government sucks. The rice who make these dumb ass laws should live like the middle income do an see how it really is...
Penny
Tue, 12/16/2014 - 5:30pm
The rich*
Sandy
Wed, 12/17/2014 - 7:32am
Why not charge individuals according to their own claims and driving record? It would save me a ton, just a thought!
christina
Sat, 12/20/2014 - 1:13am
My husband and I pay outrageous premiums for a 2001 Ford focus... our monthly insurance for full coverage went from 105 a month in Indiana to over 550 a month in Michigan when we moved for his work. I don't drive haven't got a license, my husband has never had a ticket not even a fix it ticket and has never been in a car accident. We are being raped with these premiums we pay well over 6000.00 a year for one vehicle with state minimum full coverage. I believe that the way premiums are calculated needs to be re-evaluated. Our standard of living is considerably low we literally had to make cuts to every area of our lives to be able to pay this outrageous price to drive a car 35 miles a day. We've cut out everything in our lives, because we an not afford our insurance and other bills. Car payment, car insurance, renters insurance, rent, utilities, gas in the car, phone bill and not to mention we provide 100% financial support for his disabled mother while she fights for her disability benefits. On top of having 1 child to take care of. In what world can a family bringing home less than 2200 a month afford more than 25% of their income for car insurance. You can't. My husband has literally had to work 12-16 hour days 6-7 days a week plus my minimum wage job at 25 hours a week (I am his mother's primary care giver, so I work when my husband is sleeping) just to be able to put food on the table and provided basic needs for our family. A single mother working full time for minimum wage can not afford to pay 250 a month for plpd insurance and still provide a roof over her kids heads, clothing on their backs and basic needs... and before any one says anythng unfounded about working minimum wage jobs. Think of this my being a cashier at your local grocery provides you with a service that you need... my stocking the shelves of food and personal or household items provides a service that you need. I get zero respect, no perks for giving you my holidays with my family if I'm lucky a. 10¢ raise once a year. I love my job but hate the fact that even though it is just as important as say an auto motive parts assembler in a manufacturing plant it is still a job that provides the public with a much needed service. All I am saying is auto insurance premiums are to high for a lower-middle class barely above the poverty line family to afford. Insurance should be based on several factors The year of the vehicle, the driving record and age of the driver, the safety rating for the vehicle and whether the driver has personal health coverage. All of this should factor in... but in actuality the main reason why insurance in Michigan is so ungodly high is because it is to high for lower wage earners to afford, so they boost the rates for those who do have it but can barely pay for it to begin with. Everyone deserves the right to have affordable auto coverage that doesn't rape them in the ass with a red hot picker and no lube. Don't punish those of us who pay our premiums. We've always had auto insurance and sadly every six months even though we pay our premium in full when we renew it, it goes up every six months instead of down. In the last 18 months our insurance premium has gone up every time we renew our policy... this last time the premium went up nearly 700.00 for a six month policy... when it should have gone down because we have been with our same company for almost 5 years. Insurance should be determined by the year the make the model the safety rating of the vehicle and the drivng record and age for all drivers. But it's not....