Why are Michigan drivers facing higher Car Insurance Rates?
Michigan drivers are bracing themselves for higher car insurance rates as the Michigan Catastrophic Claims Association (MCCA) plans to increase its fees starting July 1.
The MCCA fee, which is assessed annually per vehicle, will see a significant rise. Drivers with unlimited, lifetime medical coverage, better known as personal injury protection coverage (PIP), will experience a 42% increase, with the fee escalating from the current $86 to $122 per vehicle.
Additionally, drivers without unlimited PIP coverage, who were previously exempt from the fee, will now be required to pay $48 annually.
Currently, this last group of drivers does not pay any MCCA assessment or fees.
What factors have contributed to the Increase in Insurance Rates?
After changes to Michigan’s no-fault insurance in 2019 drivers saw their rates decrease. The changes meant that drivers with qualified medical coverage could opt out of unlimited coverage, which they were required to carry until then.
The insurance reform also led to refunds from the MCCA for people with registered cars in Michigan. The current rate hikes are a consequence of several factors affecting the Michigan Catastrophic Claims Association.
These include a court decision overturning some no-fault medical cost controls for crash victims, resulting in a projected loss of $3.7 billion.
Declines in the stock market, amounting to a $2.8 billion loss, and the issuance of $400 per-vehicle refund checks in response to a surplus, which caused a $3.1 billion loss, have also contributed to the association’s deficit in the MCCA’s statewide fund.
Furthermore, the MCCA fee increase is aimed at recouping losses incurred after the court ruling mandated the continuation of benefits for individuals injured before the insurance reforms of June 2019.
This ruling prompted the need for increased fees to cover the costs. Essentially, the increase in rates by the MCCA is meant to recoup their losses.
Which other Changes are Michigan Drivers facing?
Alongside the impending insurance rate hikes, Michigan drivers are also preparing for a new distracted driving law that will take effect on June 30.
The law prohibits the use of non-hands-free devices while driving, including activities such as making phone calls, scrolling through social media, and other phone-related tasks.
Violators will be subject to penalties, including a $100 civil fine for first-time offenders, 16 hours of community service, and subsequent fines of $250 for repeated violations, along with increased community service hours. The penalties will double if a violation occurs during a car crash.
As Michigan drivers navigate the impending car insurance rate increases and adjust to the new distracted driving law, they will face both financial challenges and increased responsibility on the roads.
It remains to be seen how these changes will impact driver behavior and insurance affordability in the state.