LANSING, Mich. (WXYZ) — When lawmakers passed auto insurance reform last week they said it would save you money. But are there loopholes that savings could fall out of? The insurance industry says there definitely are.
Lawmakers who voted for no-fault auto insurance reform last week made it clear. They heard from voters who wanted to be able to choose how much coverage they paid for, so they could, if needed, save money. The goal they said was to address the facts that car insurance costs drive poverty and some people don’t buy insurance at all because they can’t afford it.
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“This bill saves money for everybody,” said Rep. Joe Bellino (R-Monroe County).
“It is definitely going to bring down the cost. There are guarantees that it will bring it down,” said Rep. John Reilly (R-Oakland County).
“This bill will help drivers from Detroit all the way to the U.P. It guarantees lower auto insurance rates for eight years, protects people’s choice to pick their own insurance and coverage options while preserving the safety net, and bans insurance companies from using discriminatory non-driving factors when setting rates,” said Gov. Gretchen Whitmer (D-Michigan).
They promised savings that added up to at least ten percent of the cost of personal injury protection on average for all Michigan drivers.
As lawyers look closely at the 120-page bill that lawmakers voted on after only having a full copy for a few hours, some see potential loopholes. For example, when it comes to insurance rate reductions the bill only mandates cuts for the personal injury protection portion of your bill.
“The thing that people have to understand is this law does not guarantee that the total cost of their auto insurance premiums are going to actually go down,” said Stephen Sinas, Associate Legal Counsel for the Coalition Protecting Auto No-Fault, a group that lobbied against this bill.
He says as it is written, insurance companies can raise their overall rates, even if they lower their personal injury protection costs.
But will that happen?
Seven Action News reached out to the Insurance Alliance of Michigan, which represents insurance companies in Lansing. It actually agreed with CPAN, an organization it often opposed.
In a statement the Executive Director of the Insurance Alliance of Michigan Tricia Kinley said quote, “Senate Bill 1 took several important steps toward reforming Michigan’s broken, outdated auto no-fault system. The bill reflects a compromise and as a result many of the reforms that could truly reduce costs for consumers are not as robust as they should be. Also concerning, some aspects of the bill increasing liability on consumers will actually increase, as opposed to decrease, auto insurance premiums in Michigan, raising real questions whether this proposal can live up to the savings the governor and lawmakers have promised, and consumers deserve.”
CPAN says it is concerned that drivers are giving up the right to medical care needed if they suffer a catastrophic injury and are insured in Michigan, expecting a level of savings they will not see.
You can read Senate Bill 1 at http://www.legislature.mi.gov/documents/2019-2020/billconcurred/Senate/pdf/2019-SCB-0001.pdf.