Michigan drivers could save a significant amount of money on their auto insurance policies thanks to an auto insurance reform deal passed in May. The plan eliminates the law requiring motorists to purchase insurance plans that include a guarantee of lifetime medical coverage for catastrophic injuries sustained in car crashes.
Policyholders could see savings of anywhere between $120 to $1,200 annually. The savings will start to take effect around June of 2020.
A Change For The Better
While advocates of the lifetime medical coverage requirement argue that it ensures crash victims receive the best medical care, critics allege that it imposes discriminatory rate-setting practices and unsustainable levels of personal injury protection. So, how will insurance policies and medical care costs change once the reform goes into effect?
Personal Injury Protection
If Michigan Governor Gretchen Whitmer approves the plan as expected, lower-income motorists with Medicaid health insurance would have the option to select insurance policies with as little as $50,000 in medical coverage. Drivers in higher financial tiers could carry $250,000, $500,000, or unlimited personal injury protection.
Older drivers who have Medicare health insurance could opt out of medical coverage altogether. Motorists who carry private health insurance that covers auto accident injuries for all members of their household would qualify for a 100% personal injury protection rate reduction.
Lower Rates
Under the reform, drivers would start to see savings when they renewed their policy after the July 2020 deadline imposed on insurers for reducing insurance rates. Over the next eight years, insurers would be required to decrease average PIP portion premiums by 10% for unlimited coverage plans, 20% for $500,000 plans, 35% for $250,000 plans, 45% for $50,000 Medicaid plans, and 100% for senior drivers on Medicare.
Rate Restrictions
The new legislation would bar insurance companies from setting rates based on non-driving factors such as zip code, gender, marital status, education level, homeownership, occupation, and credit score.
However, insurers could still set rates based on “territories,” which bears a striking resemblance to zip codes. Additionally, they could use “the numerical score ranging from 300 to 850 assigned by a consumer reporting agency to measure credit risk” to determine rates. The definition of that number sounds very much like a credit score. The reform also states that it includes FICO credit score.
Medical Care
As part of the legislation, a medical fee schedule for medical providers would take effect in July 2021 and phase in over the course of three years. At the outset of that time period, the amount that providers could charge insurance companies for crash victim treatment would be capped at between 200% and 250% of Medicare.
The changes could affect motorists who were catastrophically injured in a crash prior to July 2021 because the fee schedules would apply to both future and open claims.
Under the new legislation, insurers would be given the option to sell motorists their own “managed care” health plans with the incentive of reduced vehicle premiums. The plans could look very similar to coverage through a health insurance provider, with co-pays and deductibles. The insurance company would select the medical network. The plan would not apply to emergency care received following a car crash.
Start Enjoying Lower Rates Now
You do not have to wait for the lifetime medical coverage reform plan to go into effect to save money on your car insurance coverage. As an independent agency, Compass Insurance Agency has the freedom and flexibility to offer a wide selection of plans from 17 different insurance carriers to ensure you get the best fit for your needs at the lowest price.
We can help you navigate the changes created by the new legislation because we live and work in Michigan to provide policies exclusively to Michiganders. As a result, we have honed a high level of expertise on the specifics of the state’s auto insurance policies.
We are proud to partner with the following top auto insurance carriers:
- AAA Insurance
- Nationwide Insurance
- Liberty Mutual Insurance
- Travelers Insurance
- Citizens Insurance
- Progressive Insurance
- Safeco Insurance
- And More
Start saving today and save even more later by getting a quote from multiple insurance providers through Compass Insurance Agency.
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