Drivers Could Save If Insurance Limits Lowered: Bill Would Change Mich. No-Fault Law

By Chris Christoff, Detroit Free Press

Apr. 29--LANSING -- A new, bipartisan -- and in several ways unlikely -- coalition wants to change Michigan's no-fault insurance law to allow drivers to buy less medical coverage and save lots of money.

Lawmakers from Macomb County and Detroit, who are often at odds, and organizations as diverse as the Michigan Chamber of Commerce and Detroit Urban League have joined to lead the coalition.

Their push is certain to rekindle debate over how to reduce auto insurance rates, especially in Detroit, where estimates suggest half of motorists drive illegally without insurance because of its high cost.

Michigan is the only state that requires drivers to buy medical coverage with no monetary limits. Insurance companies say that contributes to high auto insurance rates in the state.

The Drivers for Savings coalition supports a Senate bill that would allow drivers to buy as little as $50,000 in medical coverage.

Detroit drivers who pay $4,000 a year on a comprehensive insurance policy could save as much as $50 a month, said Sen. Alan Sanborn, R-Richmond, the bill's sponsor.

"We are providing a good substantive first step. A 15% savings is nice in these tough economic times," Sanborn said.

Sanborn said drivers could still buy more insurance up to unlimited medical coverage under his bill. Senate Republicans plan four hearings on the bill around the state, he said.

Rep. Virgil Smith III, D-Detroit, joined Sanborn, saying many drivers are covered by other medical insurance so they don't need much coverage from their auto insurance. Smith chairs the House Insurance Committee.

He said a new, $50,000 minimum requirement would be higher than all other states except New York, where drivers also must carry a minimum $50,000 in personal injury insurance. Smith said the lower cost would help drivers afford auto insurance rather than driving illegally without it.

Michigan's average auto insurance premium for a comprehensive collision policy is $1,089 and ranks 12th among states, according to the National Association of Insurance Commissioners. The national average is $949.

The Drivers for Savings coalition includes U.S. Rep. Carolyn Cheeks Kilpatrick of Detroit, the Michigan Chamber of Commerce, the Detroit Urban League, the Small Business Association of Michigan and the Michigan Sheriff's Association.

A competing group is opposed to eliminating mandatory unlimited medical coverage. Michael Dabbs, spokesman for the Coalition Protecting Auto No-fault (CPAN), said without unlimited coverage for all drivers, taxpayers would pay for treating those with severe accident injuries, such as brain and spinal cord damage.

"Not one of us thinks we're going to be in an accident," Dabbs said. "But the reality is many of us will. Let insurance do what it's supposed to do: protect against catastrophic injuries."

CPAN contends that insurance companies reap excessive profits. Dabbs said medical coverage is unfairly blamed for high auto insurance rates, and that liability and collision coverage cost drivers much more.

Sanborn said a minimum $50,000 no-fault medical policy would cover 95% of auto injuries in Michigan. He acknowledged that those severely injured in crashes might wind up on government aid, such as Medicaid, but said the number would be few.

The Michigan Catastrophic Claims Association, which insures severely injured drivers, estimates 1,100 Michigan drivers will suffer catastrophic injuries in the coming year. The MCCA charges a flat fee on every vehicle -- $104.58 beginning July 1 -- to cover individual medical costs in excess of $440,000.

The MCCA covers 11,400 severely injured people whose lifetime care will cost an estimated $66 billion.

Contact CHRIS CHRISTOFF at 517-372-8660 or christoff@freepress.com.

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