It’s that time of year, your auto policy is renewing and it’s time to pay your premium. With no claims, accidents or tickets you don’t expect much of a change, however, when you open your bill you’re shocked to see the increases to your premiums. Here are three reasons why your insurance policy may have gone up.
1. Unlimited Medical Coverage.
Michigan motorists are required to pay for unlimited medical coverage on their auto policy in the event of an auto accident injury whether they have health insurance or not. If you are injured in a car crash, your policy will pay all reasonable and necessary medical treatment associated with the accident for the rest of your life. There are 12 other states that offer no-fault auto insurance, but Michigan is the only one that has unlimited medical coverage. Most states limit the amount of medical coverage on the policy, but Michigan does not.
2. No Set fee schedule.
Not only do we have unlimited medical coverage, we also do not have a set fee schedule like there would be with Blue Cross Blue Shield, Medicare/Medicaid, or other private healthcare insurers. Under the Michigan no-fault medical system, auto insurance companies pay more for treatments than health insurance companies. When an injury happens in an auto accident, whatever the hospital bills, the auto insurance will pay for. If it cost $162 for an xray the auto insurance would pay the $162 whereas the health insurance may only pay $75.
3. Shift within health insurance industry
Most health insurance plans used to pay primary in the event of an auto accident injury. In the last few years, that has changed. Most plans now require the auto insurance to pay first and then cover what is left. This is costing the auto insurance companies a lot more than in the past. This cost is expected to rise due to the new health plans under the Affordable Healthcare Act. These plans that are purchased through the exchange are required to cover auto accidents, however due to the unique no fault laws in Michigan the auto insurance will pay first. This will more than likely increase the cost on your auto policy.
With unlimited medical coverage, no set fee schedule, and the shift in the health insurance industry, auto insurance companies pay more medical cost in Michigan than in any other states. This is causing the cost of insurance to increase. What can be done about it? There are two things that you can do.
First, if you believe that your health insurance will pay first in the event of an auto insurance, contact your healthcare provider to find out. If it does, make sure to then get ahold of your insurance agent. Chances are, if you are not currently, you will get a discount on your Personal Injury Protection portion of your policy. Also, your insurance agent is the best source to ensure that you have the protection you need at the price you can afford. He or she will be able to review your policy and make sure that you are getting the best price possible.
The second thing thing that you can do is contact your legislator. Forty-nine states are different than Michigan. Our Governor, Rick Synder, and state legislators are working hard on a proposal to help reform our no-fault structure. If you feel that changing our laws regarding medical insurance on your auto policy will help, then write to your legislator and tell them how you feel. You can do so at www.house.mi.gov/mhrpublic or www.senate.michigan.gov/fysenator/fysenator.htm.
For more information on Personal Injury Protection, please visit www.michigan.gov/difs. Click on “Purchasing Auto Insurance” under the consumers’ heading. There you will find several articles which provide more detail on coordinating PIP coverage.
-Matthew Perry, Independent Insurance Agent