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PAINTER: Is relief from high auto insurance rates coming?

• Oct 23, 2017 at 1:00 PM

When the time came to renew our auto insurance policy, I was anticipating a reduction in our premiums. After all, my family didn’t have any accidents, tickets or claims filed in the previous six months, and we have a good credit score. We also have college educations, which I understand is factored in setting auto insurance premiums

So, you can imagine my dismay when our renewal policy revealed a significant price increase.

As any person would do, I called my insurance company and asked for an explanation as to why our premium had jumped so high.

Because we had a policy with a national insurance company, the first thing I was asked was, “What state do you live in?” When I replied Michigan, the person on the other end of the phone quickly answered: “Michigan has the highest insurance rates in the country.”

The agent went on to explain that Michigan is the only state where auto insurance includes unlimited personal injury protection, thus driving up the cost of auto insurance premiums.

Another factor, the agent explained, is the high cost of claims in Detroit, which has a higher-than-normal number of uninsured motorists, and has a high rate of vehicle thefts, all of which lead to higher insurance premiums for those of us who live in Michigan. It is estimated that 20 percent of drivers are uninsured.

But the biggest culprit for Michigan’s high insurance is the state’s no-fault insurance system, which provides unlimited lifetime medical benefits, the agent said.

According to insure.com, the annual cost of an insurance premium in Michigan is $2,394. The national average is $1,318.

Those numbers, of course, have us wishing we could do something about our high auto insurance rates. Even the state Legislature is weighing on the issue. A number of state legislators want to reduce the cost of auto insurance, including Senate Majority Leader Arlen Meekhof, R-West Olive.

In fact, state Rep. Lana Thies, R-Brighton, has sponsored a bill that would give motorists a choice as to how much health insurance they want to buy as part of their auto insurance policy. This could reduce the cost of insurance.

Thies told the Detroit Free Press in an Oct. 15 story that people are given a choice as to how much health insurance they purchase and how much life insurance they purchase, so they also should have a choice as to how much medical coverage they want to pay for with their auto insurance policy.

This is not the first time that lawmakers have sought to revise Michigan’s no-fault law. Lawmakers have been looking at ways to reduce insurance costs since the no-fault system went into place in 1973.

Not everyone, however, is in favor of reducing no-fault medical coverage, saying taxpayers would still end up paying higher medical costs through Medicaid.

There does seem to be a lot of finger pointing as to who is to blame for the rising insurance premiums. Some Democrats believe that insurance companies need to be more transparent as to how much they are profiting. Insurance companies blame the unlimited personal injury protection for the high costs.

Lawmakers like Rep. Sherry Gay-Dagnogo of Detroit told the Detroit News for a story that any reform plan should prohibit insurers from using ZIP codes, education levels and credit scores to determine auto insurance premiums.

Steve Gursten, a Detroit attorney, was quoted on the Michigan Radio website as saying that one factor that drives up insurance costs is the lack of transparency. He said insurance companies should be required to reveal their profit margins.

It will certainly be interesting to see if our Legislature can come up with a plan that will be more beneficial for all of us.

Both the Detroit News and Detroit Free Press have produced excellent articles on the auto insurance reform debate. They are worth reading.

Even if no changes are made, there are other ways to get better deals on insurance premiums. One suggestion made is to go to an independent insurance agent who will be able to compare different companies’ policies. Although my insurance premiums are still more than I would like, I was able to lower them by contacting different agents online.

We may have the highest cost in the nation, but we also have the best coverage. It is a trade-off that we will have to live with for now. But let’s hope the state lawmakers can hammer out a deal this time.

— By Len Painter, Tribune community columnist

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