Michigan Auto Insurance Reform Would Mandate Nation’s Richest Injury Coverage

If a proposal in the Michigan House to reform auto insurance becomes law, vehicle owners here would be required to purchase the nation’s most generous coverage for treatment of crash-related injuries.

The proposal would require motorists to buy at least $250,000 in personal injury protection coverage, down from the current unlimited amount. It would still leave Michigan’s personal injury protection mandate the highest among the 12 states that have adopted no-fault auto insurance systems.

High-profile critics have characterized proposals to reduce the state’s current mandate in stridently negative terms.

Under existing law, every Michigan vehicle owner must buy insurance that includes unlimited personal injury protection benefits. In eight of the 12 no-fault states that require personal injury protection, the minimum coverage is $10,000 or less. After Michigan, the state with the costliest coverage mandate is New York, which requires owners to carry policies that cover at least $50,000 in personal injury protection expenses.

If personal injury protection and all other forms of coverage mandates are added together, then New Jersey comes in second after Michigan, with a requirement that auto insurance cover at least $265,000 in expenses.

Michigan House Bill 5013, sponsored by Rep. Lana Theis, R-Brighton, would allow but not require vehicle owners to purchase less-than-unlimited personal injury protection coverage: either $250,000 or $500,000.

Some bill detractors, like Oakland County Executive L. Brooks Patterson, argue $250,000 is not enough to cover the severe injuries and disabilities someone may suffer in a serious crash. Consequently, he says, costs will be shifted to the taxpayers through the state-run Medicaid system. He compared the proposal to “the Great Train Robbery.” Patterson was implying that insurance companies would no longer have to provide unlimited personal injury protection.

The change called for in the proposal could result in $150 million in extra annual Medicaid costs in 10 years, according to an analysis by the House Fiscal Agency. But the summary also estimates that the legislation will save drivers about 10 percent on their overall car insurance bills.

Theis is confident that the combination of greater consumer choice and other cost-cutting mechanisms in the legislation will cause her colleagues to support it.

“People think they’re paying too much and I think they should have a choice and when I sit down with other members [of the Legislature] they agree that this is a problem and they believe people need a choice,” Theis said.