2019 auto-no fault reforms saving Michigan drivers money, DIFS report says

Auto no-fault reforms are clearly bringing down costs, more can be done to save consumers money

LANSING – The 2019 bipartisan auto no-fault reforms continue to save money for Michigan drivers, rein in rising costs and offer consumers more choices, according to a newly released report from the Michigan Department of Insurance and Financial Services (DIFS). The report was authorized and requested by the Michigan Legislature.

“It’s clear from this independent report that Michigan drivers are continuing to see lower costs because of the auto no-fault reforms approved by lawmakers in 2019,” said Erin McDonough, executive director of the Insurance Alliance of Michigan (IAM). “It’s important to let the reforms continue to work to drive down insurance costs and build upon the success of these important changes so we provide even more relief to Michigan drivers struggling with the high cost of everything. Our message to the Legislature is: Let these important bipartisan reforms keep working and find ways to lower insurance costs even more by reducing Michigan’s excessive requirements for Bodily Injury Liability (BI).”

The report says from 2019 to 2024, the reforms reduced the overall average auto insurance premium per vehicle in Michigan by $357 per year. In addition, the average Personal Injury Protection (PIP) coverage decreased by $369 per year per insured vehicle.

Prior to reforms, PIP was inching up to be almost 50% of a typical auto insurance policy. PIP is now a smaller and shrinking portion of a typical policy because of the effectiveness of the 2019 reforms, which are reining in overcharging and bringing PIP costs in line with other types of insurance, such as private health insurance, Medicare, workers’ compensation, etc.

The DIFS report also details that the costs of BI have risen dramatically due to other changes made during the 2019 reforms, with the cost increasing by $109 per insured vehicle per year. This dramatic increase has offset some of the savings for Michigan drivers.

In Michigan, minimum BI limits are $50,000 per person or $100,000 per accident, but drivers default to $250,000 or $500,000, regardless of whether that coverage fits their needs. The attached chart outlines a state-by-state analysis of PIP limits and BI requirements.

McDonough urges lawmakers to lower the cost of auto insurance even more by removing obstacles for consumers to choose lower BI limits.

“The 2019 reforms are clearly helping rein in rising costs, and it’s important we continue working to save money for Michigan drivers when the high cost of everything continues to be a burden for families,” McDonough said.

It’s also important to highlight the state’s efforts to fight insurance fraud. Car insurance fraud costs policyholders up to $700 each year, even if they weren’t involved in an insurance scam.

“Car insurance fraud is a costly problem that hits the average consumer right in the pocketbook,” McDonough said. “Cracking down on fraud is another way policymakers can help their constituents during tough economic times.” 

McDonough urges the passage of Michigan House Bills 4713–4719, which will crack down on fraud and protect Michigan consumers who pay the price for fraudulent activities.  

“We strongly urge state lawmakers to protect the 2019 bipartisan reforms which are driving down insurance costs, and build on this success story to help people save even more money on their insurance,” McDonough said.

IAM members are committed to making sure everyone receives the care they need. If you have a question or concern about the care you are receiving, please reach out to your insurance company for help or file a complaint on the DIFS hotline at 833-ASK-DIFS or 833-275-3437. 

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The Insurance Alliance of Michigan is a government affairs and public information association that represents auto, home and business insurance companies and related organizations operating in Michigan. Learn more about IAM and its members on Facebook, X or at insurancealliancemichigan.org.