LANSING, Mich. — State Sen. Jon Bumstead on Tuesday joined both Republicans and Democrats in supporting the Senate plan to reduce Michigan’s highest-in-the-nation auto insurance rates.
“The current system is unaffordable for too many people,” said Bumstead, R-Newaygo. “This plan will offer drivers the option to choose which coverage best works for their family’s budget.”
All motorists in the state are legally required to carry costly, one-size-fits-all PIP coverage, which pays for uncapped medical expenses resulting from injuries sustained in an auto accident. Auto insurance companies must also pay an assessment to the Michigan Catastrophic Claims Association (MCCA) to cover medical costs for claims that surpass $555,000, which is ultimately passed on to drivers.
The system is also riddled with fraud and lawsuits; lacks a transparent fee schedule for medical care; and passes the costs associated with uninsured drivers onto law-abiding Michiganders.
Senate Bill 1 would allow drivers some flexibility when choosing their coverage. Specifically, it would eliminate the PIP requirement as it currently exists and allow drivers over the age of 62 the option of allowing Medicare or their other health care benefits to cover medical costs. It would also give younger drivers the ability to choose an amount of coverage that suits their needs and budget — providing savings that would correspond to the chosen benefit level.
The bill also aims to provide greater transparency and equity in health provider billing practices; crack down on unnecessary medical treatments; reduce the system’s susceptibility to lawsuits, fraud and conflicts of interest; and cut down on the number of uninsured drivers through more affordable rates.
“The consistent message that I hear from residents in my district is that they want lower auto insurance rates,” Bumstead said. “The reforms passed today will provide transparency in our auto insurance system and bring down the costs for drivers. I look forward to working with the members of the House of Representatives and the governor on this continued process to bring auto insurance rate relief to everyone in Michigan.”
SB 1 was approved by the Senate with bipartisan support and will now move to the House of Representatives for further consideration.