Bill aims to give drivers more options for auto insurance rates
There's a new bill on the table in Lansing that could give drivers more options when it comes to medical coverage on auto insurance, as well as possibly lowering rates all together.
Representative Jason Sheppard (R) District 56, says he's been working on House Bill 5951 for about a year. He says he wants driver rates in Michigan to be able to compete with those in other states.
Michigan is a no-fault state and the only state in the country to offer unlimited medical benefits when it comes to auto insurance, according to Sheppard.
It's a policy that can be expensive for many drivers.
"They pay an awful lot for unlimited coverage," said Tom Cizek of Farmers Insurance.
Cizek says the average auto policy in Michigan costs about $2,000 a year.
He says he and the insurance industry as a whole, would likely support the idea of HB 5951.
"If they can select how much they want and lower their premiums, it's a good thing," said Cizek.
That's Sheppard's goal.
"We pick our level of coverage of every other type of insurance, whether it's health or homeowners, life insurance, we pick as a consumer what we feel comfortable with for coverage, and we do not get that choice in auto," said Sheppard.
If passed as it is, the bill would allow auto insurance customers to choose from four levels of medical coverage.
"The lowest is $250,000 coverage and then it goes $500,000, a million, or you can still purchase unlimited if you so choose," said Sheppard.
To put that in perspective, Sheppard says almost 99% of automobile accident medical claims are no more than $50,000.
He says studies show that under the first coverage level, customer rates could be cut down by as much as 30%.
But what happens if you're in an accident and your medical costs go over your coverage plan?
That's one concern Cizek has.
"When choosing, choose very wisely," said Cizek. "Because after your limit runs out, you're going to need to turn somewhere else for coverage."
Another concern is how far that coverage would go in the hospital.
"When you walk into the hospital with your Blue Cross Blue Shield, Priority Health Card, whatever it is, they have a schedule of what they'll pay for a procedure," said Cizek. "And the hospital is limited to that amount you charge. When you're wheeled into the hospital after an auto accident, there is no schedule, they may charge whatever they feel is appropriate. And that means they're going to get charged typically 3,4, 5 times more for the same procedure than someone with BCBS would have for an injury that wasn't the result of an auto accident."
Sheppard said he's open to suggestions, but he think this is a good start to make some necessary changes.