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Michigan takes steps toward solving no-fault insurance woes

Legislators in Michigan are making progress toward an overhaul of the state's no-fault auto insurance system, which is expected to benefit consumers through cost savings.

Both the state House and Senate have passed bills that would provide additional options for insurance coverage and guarantee a reduction in rates of at least 10 percent -- and with some choices, significantly higher -- for the personal injury protection part of the no-fault insurance policy.

Personal injury protection, or PIP, makes up about 50 percent of the insurance premium.

The vote in the House was largely along partisan lines, with Republicans saying their action would bring about rate relief that is desperately needed. Democrats, the minority in the chamber, said the rate relief didn't address the way insurance companies calculate rates, such as by considering the driver's ZIP code and credit score.

Rep. Jason Sheppard of Temperance sponsored the legislation. He said Michigan has the highest insurance rates in the country and that legislators need to fix that.

"Auto insurance works in 49 other states," he said. "And no other state is pushing to move away from their system to match what we do in Michigan. Our state's auto no fault system is broken and Michigan families are paying the price."

The bill approved by the House gives drivers five options for their insurance:

  • Opting out of personal injury coverage. A driver would be required to have medical coverage that would pay for medical bills associated with injuries.
  • $50,000 in coverage, which would drop the PIP bill by 80 percent.
  • $250,000 in coverage, with a 60 percent drop in PIP premiums.
  • $500,000 in coverage, with a 30 percent decrease in PIP costs.
  • Unlimited medical coverage with a 10 percent reduction in PIP rates.

The House version now will be sent back to the Senate for consideration. The Senate's bill was less comprehensive than the House version.

Should the Senate pass a bill, it will go to Gov. Gretchen Whitmer to sign. She has said she would veto any bill that doesn't provide deep rate reductions for drivers.

No-fault insurance in Michigan is a complicated concept. If you have any questions, you should consult an experienced attorney.

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