Jeffrey Wade
Michigan's no-fault auto insurance law has undergone significant changes in recent years, with the state Senate passing several bills aimed at reducing auto insurance rates for Michigan drivers. The main bill, Senate Bill 1, was passed with bipartisan support and signed into law by Governor Gretchen Whitmer in 2019. This bill offered drivers more choices for personal injury protection (PIP) coverage levels and prohibited insurance companies from using non-driving factors such as ZIP code, gender, and credit score to set rates. Amendments were also passed to prevent insurance companies from refusing coverage or limiting coverage based on ZIP code or gender. However, proposed amendments to mandate a 50% rate reduction and prohibit the use of non-driving factors in determining rates failed. The legislation aimed to lower rates by reducing medical costs and fraud and provide relief to drivers from high insurance rates. Subsequent bills, Senate Bills 530, 531, and 575, were passed by the Michigan Senate in 2023 to modify reimbursement rates for medical providers treating car crash victims and make further changes to the state's auto no-fault law. These bills have not yet been signed into law, and it remains to be seen whether they will be approved by the House and enacted.
| Characteristics | Values |
|---|---|
| Date of Vote | May 7, 2019 |
| Bill Number | Senate Bill 1 |
| Result | Passed 24-14 |
| Sponsor | Aric Nesbitt (R-Lawton) |
| Aims | To lower auto insurance rates for Michigan drivers, allow drivers to choose their level of coverage, and reduce fraud |
| Changes | Drivers can choose from four No-Fault PIP medical benefits coverage levels: $50,000 for drivers on Medicaid, $250,000, $500,000, or unlimited/no limit. Drivers with Medicare can opt out of No-Fault PIP medical benefits. Auto insurance fraud authority created under Michigan State Police. Michigan Catastrophic Claims Association to be wound down. |
What You'll Learn
The bill was sponsored by Senator Aric Nesbitt
On May 7, 2020, Michigan Senator Aric Nesbitt (R-Lawton) introduced the Michigan auto insurance reform bill, Senate Bill 1. The bill was passed by the Michigan Senate on a 24-14 vote on the same day.
The bill was designed to reform Michigan's auto insurance system, guaranteeing lower rates for all Michigan drivers, protecting insurance coverage options, and strengthening consumer protections. It was negotiated by Governor Gretchen Whitmer with legislative leaders.
The bill was sponsored by Senator Nesbitt, who said:
> Our families are demanding this. It’s time for this death spiral to end. Our constituents are fed up with paying the highest [insurance rates] in the nation.
Senate Bill 1 reforms a broken auto insurance system and offers historic protections for drivers across Michigan. The bill guarantees lower rates for drivers for eight years and protects people's choice to pick their own Personal Injury Protection (PIP) options with coinciding PIP rate reductions. It also increases consumer protections by banning companies from using non-driving factors such as ZIP code, FICO score, gender, marital status, occupation, education attainment, and homeownership to set rates. Finally, it sets fee schedules for hospitals and providers to prevent overcharging for auto-related injuries.
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The bill passed with bipartisan support
> Our families are demanding this. It’s time for this death spiral to end. Our constituents are fed up with paying the highest [auto insurance] rates in the nation.
The bill was also supported by Governor Gretchen Whitmer, who said:
> By signing this legislation, we are providing relief to millions of drivers across the state and guaranteeing a better auto insurance system for everyone. This historic deal shows that, when we put party aside, we can find common ground on our state’s toughest issues to provide realistic and affordable coverage options for drivers across Michigan.
The bill was designed to reform Michigan's auto insurance system, guaranteeing lower rates for all Michigan drivers, protecting insurance coverage options, and strengthening consumer protections. The bill's provisions included:
- Giving drivers a choice of four No-Fault Personal Injury Protection (PIP) medical benefits coverage levels: $50,000 for drivers enrolled in Medicaid; $250,000; $500,000; and unlimited or no limit.
- Allowing drivers with Medicare to opt out of No-Fault PIP medical benefits altogether.
- Banning auto insurance companies from using non-driving factors such as ZIP code, FICO score, gender, marital status, occupation, education attainment, and homeownership to set rates.
- Setting fee schedules for hospitals and providers to prevent overcharging for auto-related injuries.
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The bill guarantees lower rates for drivers for eight years
On May 30, 2019, Governor Gretchen Whitmer signed Senate Bill 1, which passed with bipartisan support, to reform Michigan’s auto insurance system. The bill guarantees lower rates for every Michigan driver for eight years, protects insurance coverage options, and strengthens consumer protections.
The bill was sponsored by Senator Aric Nesbitt (SD-26) and passed the Senate with a 24-14 vote, with support from Senate Republicans and two Detroit Democrats. The legislation now heads to the state House for further review.
The bill offers drivers a choice of four No-Fault PIP medical benefits coverage levels: $50,000 for drivers on Medicaid, $250,000, $500,000, or unlimited coverage. Drivers who have Medicare can opt out of No-Fault PIP medical benefits altogether. The bill also increases consumer protections by banning companies from using non-driving factors such as ZIP code, gender, marital status, and education attainment to set rates.
Governor Whitmer stated that "by signing this legislation, we are providing relief to millions of drivers across the state and guaranteeing a better auto insurance system for everyone." The bill is expected to save drivers money and offer more protection for drivers across Michigan.
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The bill bans the use of non-driving factors to set rates
- Sex or gender
- Marital status
- Homeownership or residential address, including ZIP code
- Education level or attainment
- Occupation
- Credit score or FICO score
By banning the use of these non-driving factors, the bill aims to prevent discriminatory practices and ensure that rates are set based on driving-related criteria only. This measure is intended to promote fairness and protect vulnerable citizens from predatory pricing practices in the auto insurance industry.
The bill also includes other consumer protection measures, such as guaranteeing lower rates for drivers for eight years and increasing transparency in fee schedules for hospitals and providers treating auto-related injuries. These measures are designed to provide financial relief to Michigan drivers and address the state's high auto insurance rates.
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The bill increases the limit on damages that can be claimed under a mini-tort exception
The bill to reform Michigan's auto insurance system was signed by Governor Gretchen Whitmer in May 2019. The bill, Senate Bill 1, was sponsored by Senator Aric Nesbitt (SD-26) and passed with bipartisan support.
The bill includes a provision to increase the limit on damages that can be claimed under a mini-tort exception from $1,000 to $3,000 for car accidents after July 1, 2020. This change is part of a broader set of reforms to Michigan's No-Fault law, which will have far-reaching impacts on drivers and car accident victims in the state.
The mini-tort law in Michigan allows individuals involved in car accidents to recover up to a certain limit for vehicle damage from the at-fault driver. The increase in the limit on damages under this law will provide greater financial protection for individuals involved in car accidents, ensuring that they can more easily cover the costs of vehicle repairs or replacements.
This change is significant because it offers enhanced financial security for drivers in Michigan. By increasing the limit on damages, individuals can have greater peace of mind knowing that they will be able to recover a larger portion of their vehicle-related expenses in the event of an accident. This can reduce the financial burden associated with car accidents and provide a sense of assurance for drivers.
Additionally, the increase in the mini-tort limit is part of a broader set of reforms aimed at lowering auto insurance rates and providing more choices for drivers. The bill allows drivers to choose from different levels of Personal Injury Protection (PIP) coverage, including $50,000 for drivers on Medicaid, $250,000, $500,000, or unlimited coverage. These options give drivers more flexibility in selecting the level of protection that best suits their needs and budget.
In conclusion, the bill's increase in the limit on damages under the mini-tort exception is a welcome change for Michigan drivers. It offers enhanced financial protection and peace of mind in the event of an accident, contributing to a more secure driving experience for individuals across the state.
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Frequently asked questions
The Michigan Senate voted 24-14 to approve the main auto no-fault bill, Senate Bill 1.
The bill was intended to give drivers more options for coverage and help lower rates by reducing medical costs and fraud.
The bill included the following key provisions:
- Drivers could choose from different levels of personal injury protection (PIP) coverage or opt out if they had Medicare or private insurance.
- Insurance companies could not use non-driving factors such as ZIP code, gender, and credit score to set rates.
- The Michigan Catastrophic Claims Association (MCCA) would continue to cover existing beneficiaries but would not add new ones.
- The bill created an auto insurance fraud authority to monitor and prosecute abuse in the system.
Governor Gretchen Whitmer signed the bill into law on May 31, 2019.
The bill received mixed reactions. Proponents, including bill sponsor Aric Nesbitt, argued that it would provide relief to drivers and give them more choices for coverage. Opponents, including several Democratic senators, argued that it would not offer rate relief and could leave vulnerable citizens unprotected.
