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Expect less from auto insurance 'reforms'

• Oct 17, 2017 at 3:00 PM

Fixing the auto insurance business has been a perennial priority for the Michigan Legislature probably since the no-fault system went into place in 1973. The clamor from Lansing seems louder this session, but that does not mean that significant reform is likely anytime soon.

The problems just might be too complicated for lawmakers and lobbyists to sort out.

As originally envisioned in Michigan and the dozen other states that have no-fault auto insurance, everyone was going to save money — and insurance companies were going to profit — because all the ambulance-chasing lawyers were going to be put out of business. Lawyers are more resilient than that, though, especially after they and their clients realized that insurers weren't serious when they said they'd pay their customers' claims.

Insurance companies don't want to pay claims, no matter who files them, and that will never change. Paying claims isn't how they make the profits that make directors wealthy and stockholders happy. When they don't pay, lawyers sue. What no-fault means is customers have to sue their own insurance companies instead of the other guy's.

Two things are unique about Michigan policies, though. The first and biggest is our state's unlimited, lifetime personal injury coverage. Someone has suggested a $50,000 cap as a reasonable reform. That isn't reasonable reform; that is a cruel joke. Remember, with no-fault insurance, you're buying coverage to pay your own medical bills if you ever need it. Fifty grand will buy you a day or two in the intensive care unit if you're ever in a bad crash.

How much coverage would you want if you or someone you loved were maimed or disabled in a car crash? How much would you pay for that?

And if you didn't have enough personal injury coverage, who do you think would pay for it?

The other issue that gets everyone's attention is an illusion. Consumers pay for catastrophic coverage in every insurance policy they buy. Only in Michigan no-fault auto coverage is it so transparent.

In case it isn't obvious, the main drivers of auto insurance "reform" are the insurance companies. Their lobbyists who have lawmakers in such a dither are worried about their profits, not your premiums.

— TIMES HERALD/PORT HURON (AP)

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