Michigan auto fee rising to $220 per vehicle in July

LANSING, Mich. (AP/FOX 17) — Michigan’s mandatory fee to cover unlimited medical benefits for catastrophically injured drivers is rising to a record $220 per vehicle, which is more than double what it was a decade ago.

The Michigan Catastrophic Claims Association, a state-created entity that reimburses insurers for personal injury protection benefits paid in excess of $580,000 per claim, announced the increase Wednesday. The annual assessment currently is $192 and will jump $28 starting July 1.

The insurance industry said the announcement highlights the need to change the state’s “broken” system, which the Republican-led Legislature is reviewing.

Michigan is the only state to require unlimited lifetime coverage for medical costs resulting from car crashes — typically for brain, spinal cord, neck and back injuries. The state also allows health providers to bill car insurers much more for care than health insurers pay.

Both factors contribute to what are the country’s most expensive average auto insurance rates. GOP lawmakers have said lowering premiums is a top priority this session, though past attempts to rein in costs or make the unlimited coverage optional have stalled.

The fee, which fluctuates each year, is going up for the fourth consecutive year. The assessment was about $105 per vehicle in 2008-09.

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 Livonia-based association, whose board is comprised of insurance company officials, said the pending fee hike is largely due to an increasing number of claimants, rising medical care costs and lower-than-expected investment earnings. It reported paying $1.2 billion for claim costs in 2018, including $683 million — or 57 percent — for attendant and residential care. Since the inception of the organization nearly 41 years ago, more than 40,700 claims have been reported.

Late Wednesday, Governor Gretchen Whitmer directed the Department of Insurance and Financial Services (DIFS) to conduct an audit into the MCCA.

“From Detroit to the Upper Peninsula, drivers are feeling the pinch of paying the highest auto insurance rates in the nation and it’s time to do something about it,” Whitmer said in a press release. “Michiganders deserve to know why they are being forced to shell out hundreds of dollars in additional fees for car insurance, which is why I’m ordering an audit to provide drivers with the transparency they deserve.”

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  • Jean

    Why is it that people that have try to take money from those that don’t.
    Michigan has the highest insurance rate in the US, one of the highest gas tax, now they want to increase gas by .45,
    NOW THIS???? I would say vote them out, but those who ran and won are bought and paid for by the rich,or they are already very rich, so we lose again. What do they care….they can afford everything or its paid for by tax dollars

  • mr obvious

    The Michigan Catastrophic Claims Association is a private corporation run by insurance companies with little or no oversight by the government.

  • Augster

    Our beloved Lady Gretchen swore she would cut auto insurance premiums! Of course, Mark Bernstein was standing right behind her when she said it so I was left scratching my head. Let’s face it: if the feckless Republicans wouldn’t even touch it during their eight years, this group of elitists sure as hell aren’t.

  • Fed up with Michigan taxes

    This fund has a $4 billion deficit? Obviously, it’s not sustainable and raising the tax every year isn’t helping. It’s time to do away with this “benefit”. The state can’t afford it and neither can we tax payers. Enough already!

  • lml25

    I pay $370 every three months for a 2017 vehicle.It’s outrageous,to put it TV mildly.Guess Whitmer wants everyone to own only cars 10 years old and older.I might just do that.

  • Jimmy supa fly snooka

    Not only are people going to move out of this state with the tactics witchmer is pulling right now. The tourism industry will also suffer because of witchmer’s lack of gray matter.

    Congrats witchmer on a good start to destroying the state of Michigan.

  • jim

    this is insane! I already pay a over 100% up charge for the un insured motorist fund on my motorcycle now! Open MI vehicle insurance back up to out of state vendors!

  • bob

    Taxes going through the roof – now this!
    Will Lady Gretchen fight for us?? Or will I have to move out of Michigan to keep most of money I make.

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