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Michigan's car insurance fee raises $28 starting July 1

Published  July 1, 2019 5:16pm EDT
News
FOX 2 Detroit

DETROIT (FOX 2) - Another year, another increase in Michigan's unique catastrophic claims rate - this time climbing another $28 to $220 each year, per car.

The Michigan Catastrophic Claims Association, a state-created entity that reimburses insurers for personal injury protection benefits paid in excess of $555,000 per claim. The annual assessment was $192. It's now $220. 

The association says the hike is because of higher number of claims, rising medical costs, and lower-than-expected investment earnings.

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The fee primarily covers care for people with brain, spinal cord, back and neck injuries.

Michigan is the only state that has unlimited lifetime coverage for medical expenses for injuries received in a car crash. The state also allows health providers to bill car insurers much more for care than health insurers pay.

The fee fluctuates every year, but this is the fourth straight year it's gone up. Ten years ago, it was $105 per vehicle.

Of the $220, $177 will cover anticipated new claims and expenses, and $43 will address a $3.9 billion deficit related to existing claims.

The MCCA was enacted on July 1, 1978. Through the end of December, 40,715 claims have been reported, with 17,751 still open. The MCCA has paid out over $17 billion and paid $1.2 billion last year alone.

Of the $1.2 billion in payments, approximately $911 million, or 76%, were comprised of the following payment categories:

  • Attendant care (including residential care): $683 million, or 57%.
  • Prescriptions: $121 million, or 10%.
  • Hospitalization: $107 million, or 9%. 

Governor Gretchen Whitmer ordered an audit of the group's financial operations and asked more transparency in how the money is being used.

Michigan lawmakers approved a bill that is supposed to help cut auto insurance by allowing drivers to forgo the MCCA if they have health insurance. Whitmer signed the bill into law and it goes into effect in 2020.

Information from the Associated Press was used in this report.