By Lynne Beauchamp,

In 1972, Michigan legislature passed the “no-fault” law on auto insurance on the premise of lowering rates and having fewer losses.¬†Currently, Michigan has one of the most expensive auto insurance rates in the nation.

“No-fault” cases make up over 40% of civil dockets statewide. This has led to high auto insurance premiums with a system subject to fraud and abuse, along with price gauging in the medical profession to auto accident victims.

This information comes from State Representative Jason Wentworth, Speaker Pro Tempore and Chairman of the Select Committee on Reducing Car Insurance Rates. Wentworth was a guest speaker during an auto insurance tele-town hall hosted by State Representative Julie Alexander. The tele- town hall took place on June 26 and allowed constituents the opportunity to ask questions on the upcoming change in auto insurance.


During the tele-town hall, Representative Alexander explained Governor Gretchen Whitmer, in May 2019, signed the bill to reduce auto insurance rates. Wentworth added that the change being made to auto insurance is in regard to “personal injury protection” (PIP). Currently, Michigan auto insurance policies and PIP have an unlimited medical benefit in the event of catastrophic auto injury medical claims. Prior to July 1 2020, those with auto insurance policies will now have to choose a PIP amount of either the unlimited option, $500,000, $250,000 or $50,000. Wentworth added that in July 1 2021, there will be a fee schedule change, the reimbursement to medical providers. He added that fee schedule change will increase in 2022 and in 2023. He added this savings will help maintain the level of reducing premiums over those terms.

Those who tuned in to the tele-town hall had several questions for the State Representatives.

One caller, a senior citizen, voiced her concerns over her insurance rates on her limited income. Alexander explained under the new plan, there is legislation indicating that senior citizens will not be required to purchase the PIP coverage of the auto insurance. Alexander added Michigan is the only state that requires seniors to buy this duplicated coverage.

A separate caller asked about Medicare/Medicaid not currently paying a portion toward auto accidents (PIP coverage) and how will those entities pay for it once the auto insurance change goes into effect. Wentworth stated under federal law, Medicare coverage is secondary and only kicks in if there are no other available payers. In Michigan right now, because of the unlimited medical benefit in an auto accident, Medicare does not cover it. He said with this change, car insurance will not be the primary payer if one chooses to opt out. He added 49 other states are taking advantage of the system in which Michigan has not taken advantage of under the “no-fault” law.

Another caller asked why credit scores impact auto insurance rates. Wentworth replied that writing insurance is an ability to access risk and whether one’s credit score relates to one’s driving. He added that Senate Bill No. 1 eliminates the insurance company’s ability to write insurance based on one’s credit score.

For more information on Senate Bill No. 1, reducing auto insurance rates or general questions on auto insurance reform, visit the web page of State Representative Julie Alexander .

In a separate interview, Insurance Agent, Rick Eder with Farm Bureau Insurance Agency in Chelsea said he sees some good changes within the auto insurance reduction bill. He said putting caps and a fee structure on the medical payments on auto accidents is a step in the right direction. However, he added that customers usually choose the least expensive auto insurance coverage and said he was concerned that some may not fully understand the PIP option, since consumers have had unlimited medical benefits for so long under Michigan’s current auto insurance plan.

“The best place to get hurt in Michigan is in your car,” joked Eder under Michigan’s current “no-fault” auto insurance. “I think it will still be a good place to get hurt but I don’t think it will be as good as it once was.”

Eder added there are a lot of unknowns with this bill. He also added a lot of drivers in the state currently are driving without auto insurance. He said Michigan will still be a “no fault” auto insurance state, even after the changes from this bill go into effect.