Last week, with considerable fanfare, Governor Gretchen Whitmer signed a car insurance reform bill on the porch of the Grand Hotel on Mackinac Island, during the big annual state policy conference there. “This will help drivers all the way from Detroit to the U.P.” she said.
For once, she was joined in her approval and enthusiasm by the Republican leadership in the legislature. Additionally, Detroit Mayor Mike Duggan called it “outstanding,” said “it will cut rates for Michigan drivers significantly,” and was “an excellent bipartisan deal.”
However, if you’ve listened to my podcast on this subject, you know that it unfortunately may be anything but good for most of us. Rates are only guaranteed to be reduced on a portion of your policy – the Personal Injury Protection, or PIP portion – and then only for eight years.
That timeline is significant, because by the time that expires, the governor and everyone now in the legislature will be term-limited out of office.
Additionally, as House Democratic Floor Leader Yousef Rabhi told me, there’s apparently nothing to prevent the insurance companies from adding some other kind of fee to your policy to make up for the loss on PIP. They may not do that, at least not right away.
But none of that is what’s really wrong here. While Michigan has the highest rates in the nation, there was one saving grace about our no-fault system of auto insurance here.
Anyone seriously injured in a vehicle accident has all their medical bills covered for life, after they exhaust the $550,000 in coverage that most people have through their insurance.
So far, the Michigan Catastrophic Claims fund has paid the bills for more than 40,000 people who have been terribly injured, more than 18,000 of whom are still using it.
There are all sorts of legitimate questions about this fund, such as whether it has too much money in it. It lacks desperately needed transparency, and I think the state should be running it, not the insurance companies.
But the bill the governor signs does nothing about that. Instead, it allows most people to save a little money by opting out of the fund. Of course, that means that when this bill takes effect in a year, some people will opt out of the fund to save a little money — and eventually some of them will be catastrophically injured.
What happens to them then?
And that’s not the only worry. In my ignorance, I thought all I needed to do to protect myself was to keep paying to stay in the fund. But that doesn’t protect me if I am in an accident with someone who isn’t protected, and I am found to be at fault.
They will now be able to sue me for their medical expenses, which means I will need new liability insurance to protect myself against that.
I know, or think I do, why Governor Whitmer agreed to sign this bill. Politically, it would have been bad to veto a bill that seemed to lower car insurance rates. Detroit Mayor Duggan put heavy pressure on her to sign it. Additionally, billionaire Dan Gilbert was threatening to finance a ballot drive that would probably have resulted in the legislature enacting an even worse bill that, had they gotten enough signatures, she would have been prevented from vetoing.
But this bill puts many people at risk, and probably won’t lower rates enough to make a difference, especially in Detroit. We deserved better, and this needs to be fixed.
Editor’s Note: You can hear both this essay and my interview with State Rep. Rabhi and Erica Coulston on my podcast on the Zing
