Home Contributed Michigan Passes Legislation to Lower Car Insurance Rates

Michigan Passes Legislation to Lower Car Insurance Rates


Michigan is known for many things and unfortunately, their high car insurance rates are one of them. But luckily for Michigan residents, that is no longer the case. Gov. Gretchen Whitmer signed a significant overhaul of the state’s car insurance program. The new system, which will start next year, will allow drivers to choose which medical coverage options they want.

Under the current law, Michigan drivers are required to buy unlimited benefits — which can be quite expensive. And with a PwC forecast predicting that about 107 million vehicles will be manufactured globally in 2020, more drivers on the road would still be facing incredibly high insurance rates.

But now, motorists will have the option to pick from a variety of levels of personal injury protection (PIP). And for eight years, insurers will have to reduce the PIP portion of policies by 10% for the unlimited benefit, 20% for the $50,000 coverage, 35% for the $250,000 coverage, and 45% for the $500,000 coverage. Furthermore, insurers will not be able to use non-driving factors, like education level or occupation, for deciding on rates.

Car insurance providers aren’t the only ones that are going to have to make changes — health providers will start charging auto insurers less than current and past amounts for treating injured drivers starting in 2021. With automobile accidents accounting for about 52% of all personal injury lawsuits, these changes will certainly be needed. Having a working relationship between auto insurers and health care providers is imperative for the safety of everyone on the road.

Speaking about signing the new bill, Gov. Whitmer stated, “Today truly is a historic day for Michiganders. These are important improvements as we move forward in the state. They’ll help Michiganders from Detroit all the way to the Upper Peninsula, because people across our state are sick and tired of paying these outrageous rates.”

While there are certainly some drivers who would still want more expensive coverage, like the owners of the 100,000 armored and bulletproof vehicles around the world, the new law is going to result in major savings for most drivers. In fact, Detroit Mayor Mike Duggan estimates that the new bill will help people save around $500 every year.

With Michigan being the only state to require unlimited PIP coverage, talk of change has been increasing over the past few years. Currently, the average premium in the state is $2,693 — which is around 83% higher than the national average.

Even if drivers take steps to reduce their rates, like getting a new car with improved safety features or conducting a good cleaning to remove about 70% of the ash plugged in their vehicle’s DPF, they’re still required to have high PIP coverage.

Despite the bill being passed by the House and Senate with significant support, there, of course, is some criticism. Patient advocates, hospitals, and insurance companies are saying that the new law will have a negative impact on long-term care and cause a greater risk for drivers.

But even with the criticism from some groups, drivers are sure to be happy about lowered insurance rates in the upcoming years.