Michigan motorists beware: The cost of driving won't just be going up this summer because of gas prices. The Michigan Catastrophic Claims Association on Friday announced that auto insurance, mandatory for every vehicle on the roadways, will increase by $30 for each policy on July 1.
The 21 percent increase — to $175 per vehicle — is the highest in the history of a state fund that covers claims for unlimited lifetime medical benefits under Michigan's no-fault auto insurance law, the Detroit Free Press reported today.
That fund is adjusted annually. Of the $175, $141.93 is to cover claims, $32.72 is to address a long-term deficit in the fund, and 35 cents is for administrative costs, according to the Free Press.
Pete Kuhnmuench, executive director of the Insurance Institute of Michigan, told the Free Press that the cost of medical care for auto accident victims has risen 166 percent since 2002. Those costs are getting passed along to all drivers, he said, which "validates our calls for reform."
Patch reader Ron Dwyer, an insurance agent based in Waterford, agrees.
"As an insurance agent I can tell you Michigan's auto insurance rates are one of the highest in the nation," he wrote on the Bloomfield Patch Facebook Page. "No-fault law was to have kept our rates low, but with loop holes in the system and unlimited benefits our rates keep rising to astronomical levels. Legislators in Lansing are looking at plans that will put optional caps on coverage to help lower costs. To be paying $ 175 per vehicle to the Michigan Catastrophic Claims Association is ludicrous!"
But the reforms shouldn't be limited to insurance, he added.
"We must also get reforms in our health care. Insurance companies usually pay twice as much if not more for health care. Some of these costs are mandated! Why should an insurance company be forced to pay twice as much for health care? These costs get passed on to you and I," Dwyer wrote.
Legislators quoted by the Free Press indicate the increase is sure to add to the ongoing debate in Lansing about whether the MCCA needs more transparency and that the no-fault law needs changes.