LANSING, Mich. — Sen. Tom Barrett on Friday voted to send bipartisan reform to the governor that will reduce auto insurance rates for drivers throughout the state.
“Michigan’s unaffordable car insurance rates are straining family budgets and putting our state at a disadvantage in the competition for talent, jobs and investment” said Barrett, R-Charlotte. “Legislation that will make meaningful reforms to finally reduce the cost of car insurance is on its way to the governor’s desk to be signed.”
According to an October 2018 report, Michigan drivers pay the highest auto insurance rates in the country — 83% higher than the national average. A recent University of Michigan study also said that auto insurance rates are unaffordable in 97% of the state’s ZIP codes.
Senate Bill 1 would require auto insurers to offer Michigan drivers five new personal injury protection (PIP) coverage options with guaranteed PIP rate reductions:
• A PIP opt-out option for drivers with qualified health coverage, such as employer health insurance or Medicare — 100% PIP reduction.
• A $50,000 coverage option for Medicaid-eligible drivers — at least 45% PIP reduction.
• A $250,000 coverage option — minimum 35% PIP reduction.
• A $500,000 coverage option — minimum 20% PIP reduction.
• An unlimited option like what is currently required — at least 10% PIP reduction.
“Once this reform takes effect, Michigan drivers will once again be able to choose the amount of auto insurance coverage that they can afford and that best fits their needs,” Barrett said. “Every driver in our state will see savings under the reform due to cost controls and efforts to reduce fraud — and many people will see substantial savings depending on the coverage choices they make.”
SB 1 would also ban the use of several nondriving factors in setting insurance rates, reduce out-of-control medical costs that are passed on to drivers via higher rates, cut fraud and conflicts of interest in the auto insurance system, and reduce the announced $220 annual Michigan Catastrophic Claims Association fee by 80% for all options other than unlimited coverage.