car insurance

House Passes Bill To Cut Auto Insurance Premiums

May 09, 2019 - 6:26 am

LANSING (WWJ/AP) - Legislation to cut auto insurance rates is advancing in Michigan, which has the highest average premiums in the country.

It took until 2:09 a.m. Thursday, but the Republican-led State House approved a sweeping auto insurance reform that would let people opt out of mandatory unlimited medical coverage for car crashes. The Senate passed a plan earlier in the week, setting up a potential showdown with Democratic Gov. Gretchen Whitmer if a bill reaches her desk.

The House bill would let motorists forego mandatory unlimited personal injury protection, a requirement only in Michigan. Insurers would have to cut PIP rates, for five years, by between 10% and 100%. That could equal an estimated $120 and $1,200 in savings for someone paying $2,400 annually, according to Republicans' projections.

"Here's what you've got: There is a five-year guarantee, the Republicans say, that there will be rate relief that could range between $120 per consumer up to $1,200 depending on the kind of coverage that you buy," said WWJ Lansing Bureau Chief Tim Skubick. "After that, any additional rate increases from the insurance companies would have to be OK'd by a state agency."

The pending measure is expected to call for eliminating Michigan's one-of-a-kind requirement that people buy unlimited medical coverage from their car insurer for crash injuries. Instead, motorists could choose lower levels of coverage.

"It does give motorists the option to opt out of the mandatory catastrophic coverage -- in other words, pick lower coverage," said Skubick.

Democrats oppose the bill, saying it favors the insurance industry and would not guarantee long-term rate relief or ensure the elimination of non-driving factors in setting rates. Republicans say people should not be forced to buy unlimited coverage.

"This is different than the Senate version. At 10 o'clock this morning, we'll get a feel for what the Senate Republicans will do," said Skubick. "They could pass this plan and then it would go to the governor."

Gov. Whitmer has threatened to veto fast-tracked legislation that won mostly party-line passage from the Senate, saying it would not guarantee rate cuts or address discriminatory rate-setting practices.