A
presentation given last month by the president of the Insurance Information Institute
(III), Robert Hartwig, highlights the coverage industry’s positive impact on
the state’s economy but also points out that fraud, abuse and the basic makeup
of the state’s auto insurance system is driving costs for motorists to
unsustainable levels.
According to
the presentation, the average claim filed under no-fault car insurance in Michigan
has skyrocketed to $36,463—up nearly 50 percent from the 2004 average. That’s
the highest of any of the states with no-fault systems. If the average no-fault
claim cost for the next three highest states—New Jersey, New York and Florida—were
combined, the total still wouldn’t equal the average for Michigan. Hartwig says
that this can be attributed at least partially to “rampant fraud and abuse.”
Although many
states with no-fault insurance systems are reported to have serious fraud
problems, the benefits that are promised to Michigan policyholders may have
something to do with the incredibly high average severity level.
A report
from the state’s consumer advocate pointed out some of the abnormalities of the
Mich. system, and one large issue appears to be the personal injury protection
(PIP) benefits that are extended to policyholders. While PIP in states like
Florida have only a $10,000 minimum upper limit, Michigan’s is much, much
higher. PIP policies in the state provide “health care coverage for life, and
up to $4,589 for lost wages for a maximum of three years,” the consumer
advocate wrote in his report. “Michigan is the only state in the nation which
protects its citizens in this manner.”
Source: http://www.michigan.gov/documents/lowerratesnow/EXECUTIVE_SUMMARY_266162_7.pdf
To learn more
about coverage issues in this and other states, readers can go to http://www.onlineautoinsurance.com/Michigan/
where visitors will find informative resource pages and a quote-comparison generator
that can help consumers find the most affordably priced policies on the market.
Depending on
location, some Michigan drivers will have to do extensive comparison shopping
to find a low-cost policy in the state. According to one report, Detroit had
the highest annual premium of any city in the country in 2010.
