Michigan has an insurance system unlike any other in the United States. While it isn’t the only state in the union to have no-fault insurance, it is the only state that requires its drivers carry unlimited Personal Injury Protection (PIP). Every other no-fault state places limits on PIP, but Michigan stands alone in requiring an unlimited amount of coverage.
And when we say unlimited, we mean unlimited. We’ve long argued that state minimum coverages are unrealistic amounts that fall short of providing drivers with appropriate coverage in the event of a crash. Conversely, Michigan’s requirement of unlimited medical benefit coverage for those who are seriously injured in car crashes fall on the opposite side of the equation.
One issue that Michigan’s no-fault system creates is that residents there currently pay the highest car insurance premiums in the nation, with the average insurance premium in Detroit coming in at $2,541 annually for full coverage. That’s up from last year, when Michigan policies were the second highest in the nation. And even those who opt for state minimum liability coverage face premiums of more than $1,000.
Such high rates can make car insurance unaffordable for most drivers, and the Michigan state Legislature is currently considering changes to the no-fault system in place, setting up a battle between those who support removing the unlimited medical coverage and those who support keeping the system as it exists now intact.
Michigan state Senator Joe Hune told the Battle Creek Enquirer “If you take a look at the cost of the system, the skyrocketing medical costs, it’s simply unsustainable. There’s going to be a tipping point sometime. The system just can’t sustain itself.”
According to the senator, changes to the system could save residents up to 40 percent or more on their car insurance policies. Detractors say that changes to the system, which would give consumers options, would leave them underinsured.
We’ll be watching the actions taken in the Michigan Legislature as the debate continues. For those in Michigan we ask this question: “Would you prefer being able to select your PIP coverage amounts for a lower premium cost, or keeping the system in place as it is now?”