No-Fault Claims Fee to Drop 55% Under Michigan Auto Insurance Reform

After years of Michiganians paying some of the highest car insurance rates nationwide, the Michigan Catastrophic Claims Association (MCCA) recently announced a 55% vehicle assessment fee cut, which will begin on July 2020. People will pay $100 to have their vehicles assessed with the option of either reducing coverage or waive it entirely.   

Residents are now paying $220 to the Michigan Catastrophic Claims fund. The cause? Changes to the state’s auto no-fault insurance law, and savings from fees control. So, when a crash results in serious injury, the individual’s insurance company will cover $580 in medical expenses and the MCCA will reimburse these costs afterwards. The changes include health insurance that covers auto-related injuries and senior citizens can opt-out of PIP coverage.

Each level of coverage comes with a sure rate reduction on PIP coverage, effective July 1, 2020 and lasting for eight years. The discounts range between a 10 percent unlimited coverage reduction and 100 percent for those who may wish to opt-out. There is also a fee schedule for what health providers could charge for the treatment of injuries caused by a vehicle accident. The fee will be set to 190 to 230 percent of Medicare rates in 2023.

The MCCA is a private nonprofit association that deals with insurance companies, but not with the general public. Every year, it analyzes the amount needed to cover the lifetime claims of all individuals critically injured in a vehicle accident for the following year. The analysis comprises an assessment of the investment return received by the fund, medical expenses inflation as well as any changes to existing coverage.

Once the analysis is completed, it generates a per insured vehicle assessment. Auto insurers pay MCCA for the assessment, but the cost is generally passed onto policyholders. In other words, the amount assessed will affect every policy holder differently. If you have questions regarding this matter, you may want to contact a licensed insurance agent or insurance company directly.

Michigan has usually had some of the nation’s highest insurance rates predominantly as a result of the state requiring that motorists buy auto insurance policies that ensure lifetime benefits in case a driver is injured in a vehicle accident. The new deal allows insurance companies to sell affordable policies, but the premiums are also reduced. For eight years, insurance companies will reduce their premiums significantly, between 10% and 100% based on the type of medical coverage required. The rates are required to be adjusted by 2020.

Some Michigan legislators say the reform signed into law last June didn’t address issues such as alleged discriminatory rate-setting practices. Personal injury attorneys and Medical providers also criticized other aspects of the current law. By next summer, drivers will, at last, be able to pick the level of medical coverage they desire at reduced cost.  

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