State Rep. Beau LaFave and other members of the Michigan House have unveiled an eight-bill package that would repeal the state’s unpopular no-fault auto insurance system.
The bills would “bring significant relief to drivers paying the nation’s most expensive insurance premiums,” LaFave said in a news release.
For four consecutive years, Michigan has the dubious distinction of being the most expensive state for car insurance, according to an analysis by Insure.com. Michigan’s average annual premium is $2,394, which is 82 percent higher than the national average of $1,076, according to the website.
The proposal would repeal the no-fault system and move Michigan to a full-tort system similar to other states such as Wisconsin.
Another bill in the package continues benefits for everyone already receiving lifetime health care after a catastrophic traffic accident, according to LaFave.
“I promised during the campaign that I would come to Lansing, play nice and try to reform no-fault,” LaFave said. “The Lansing special interests refused to negotiate in good faith, and House Bill 5013 failed. I’m not playing ‘Mr. Nice Guy’ anymore. The arguments in support of no-fault have run out of gas; the time has come to repeal it.”
Michigan drivers still would be required to have insurance, but the bills would provide them with more choice and flexibility by eliminating the mandate to buy unlimited medical coverage, according to LaFave. Accident victims would have the ability to sue at-fault drivers for economic damages and non-economic damages such as pain and suffering.
The legislation also includes a “legacy fee” to continue to fund the Michigan Catastrophic Claims Association (MCCA) until it is no longer needed. The MCCA system would be closed to new entrants.
“We don’t want anyone already catastrophically injured to lose their benefits,” LaFave said. “We will implement a legacy fee to make sure those now receiving treatment can continue to do so by funding the MCCA.”
Colorado abandoned its no-fault system in 2003. According to a 2008 governor’s study, the average car insurance premium in the state decreased 35 percent since the state moved to a tort system.
Michigan drivers could see greater savings by parting ways with its no-fault system, which is the only one in the nation mandating unlimited medical coverage, according to LaFave.
Florida, one of the 12 states operating with a no-fault system, also is debating repeal.
LaFave said the plan would bring more insurance companies to the state, including some who have been avoiding Michigan because of its no-fault system. LaFave also asserted that the competition from more companies doing business in Michigan would drive down car insurance rates even further.