Updated: House looks to take up no-fault overhaul this week in Lame Duck surprise

Michigan Capitol during the holidays | Susan J. Demas
Updated, 5:38 p.m.

Amid the flurry of Lame Duck legislation this year, a plan is circulating in the state House to overhaul Michigan’s no-fault auto insurance system. It could come up for a vote this week.

The Michigan Advance obtained an early draft of the legislation and confirmed with multiple sources that Detroit Mayor Mike Duggan and Quicken Loans founder Dan Gilbert are pushing another plan to create a tiered auto insurance option. Past supporters of such a system say it would offer more affordable rates to Detroiters, who pay some of the highest auto rates in the nation.

The early draft substitute of Senate Bill 1014 would create a lower-cost option that covers up to $250,000 of health costs related to a catastrophic crash, with a mid-level option cap at $500,000 and a third-tier offering unlimited personal injury protection (PIP). The Senate passed an earlier version of the bill in June.

It’s nearly identical to a Duggan-backed plan that failed in a 45-63 House vote last year and would require a 40 percent reduction in personal injury protection costs under the lowest-cost option.

That plan would direct $225,000 to emergency care in an auto accident, with the remaining $25,000 alloted for any ongoing medical costs.

House Speaker Tom Leonard (R-DeWitt) supported the failed House legislation last year. His spokesman, Gideon D’Assandro, declined to comment on the new proposal, which would also mandate a 20 percent PIP cost reduction for the $500,000 medical care option and a 10 percent drop for the unlimited cap.

Detroit | Susan J. Demas

Michigan’s auto no-fault law currently covers a lifetime of unlimited medical care in catastrophic events. Another facet of current law, which remains in the latest no-fault proposal, is that auto insurers can set rates by ZIP code or Census data, leading to some of the highest rates in the nation for Detroiters.

The latest plan does not outlaw auto insurance redlining, one reason many House Democrats balked at the previous no-fault push. Gov.-elect Gretchen Whitmer and other Democrats have called for an end to tying insurance rates to credit scores based on ZIP code.

“Michiganders are paying too much for auto insurance, especially in Detroit,” Whitmer tweeted in June. “We’ll never bring down the cost of insurance so long as the insurance companies are able to decide your rate based on non-driving factors.”

But proponents say it offers a lower cost option for Detroiters and others in the state who want to opt for lower-cost insurance. Critics say the plan would leave people who survive a catastrophic injury with barebones coverage that won’t pay for a lifetime of care, as current auto no-fault plans do.

“SB 1014 (H-1) will gut protections for Michigan drivers and offers no meaningful rate reduction. This legislation is a wolf in sheep’s clothing — it will simply shift the cost of caring for auto accident victims to taxpayers, leading to a secret tax increase on Michigan families,” said Committee to Protect Auto No-Fault (CPAN) President John Cornack. “Residents of Michigan have made themselves clear: A recent statewide poll found that two-thirds reject any plan to limit or eliminate medical benefits for accident victims. SB 1014 (H-1) is sham legislation, designed to strip the ability for Michigan citizens to weigh in on legislation by passing this overnight during lame duck.”

Thomas Constand, president and CEO of the Brain Injury Association of Michigan, agreed, saying the lowest $250,000 option is “nowhere near enough” to cover a lifetime of medical costs related to a severe, life-altering injury.

“Obviously, people would choose the less expensive one,” he said. “Unfortunately, that’s not the one they need.”

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