Auto Insurance Industry Backs Medical Coverage Choices

By Chris Christoff, Detroit Free Press

Jul. 17--LANSING -- Michigan motorists could pay as much as 21 percent less on average for auto insurance if the state allowed them to buy less medical coverage than they're now required to carry, according to an insurance industry study.

Part of the savings would come from limiting medical payments for injured motorists to what is paid for workers compensation injury cases under state law.

The study bolsters arguments to eliminate Michigan's requirement that all motorists buy unlimited medical coverage under their no-fault auto insurance, according to the Insurance Institute of Michigan.

The institute supports legislation in the state House that would allow motorists to buy a minimum of $50,000 for medical care or more if they choose, including unlimited medical coverage.

An auto insurance policy with a maximum $200,000 medical coverage would save an average motorist 18 percent, according to the study.

The study, by actuary Michael Miller, found that 94 percent of medical claims under Michigan's no-fault system cost less than $50,000. But the cost of insuring all motorists for unlimited medical coverage has helped make insurance unaffordable for many, said Insurance Institute executive director Peter Kuhnmuench.

He said an estimated 17 percent of Michigan drivers drive illegally without insurance, and that lowering the cost would help them afford it.

Michigan is the only state that requires unlimited medical coverage for no-fault auto insurance. Insurance companies have long sought to undo the requirement, saying it makes insurance unaffordable to many low-income drivers because of the soaring cost of medical care.

Rep. Virgil Smith, D-Detroit, chairman of the House Insurance Committee, supports changing Michigan's no-fault law to allow motorists to buy less than unlimited medical coverage.

A separate analysis by State Farm Insurance Companies shows that Detroit motorists could save $400 a year on auto insurance if they could buy $50,000 in medical coverage, instead of unlimited coverage. The State Farm study pegs Detroit's average auto insurance policy at $2,787 a year.

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