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Michigan Catastrophic Claims Association fee decrease shows reforms will work

The Michigan Catastrophic Claims Association’s (MCCA) announcement its yearly, per-vehicle fee charged to drivers in Michigan is decreasing to $100 for drivers who choose unlimited, lifetime medical benefits is proof reforms signed into law earlier this year will work, according to the Insurance Alliance of Michigan. Drivers who choose other tiers of coverage will not pay any fee, which is currently $220 per-vehicle.


The fee covers the cost of medical care of people catastrophically injured in a car accident. The MCCA oversees the fund, which reimburses auto insurance companies for the cost of medical care when it exceeds a certain amount, which this year is $580,000.


“Today’s announcement by the MCCA that the per-vehicle fee is dramatically decreasing is just the first in what we hope is a series of cost savings for Michigan drivers,” said Tricia Kinley, executive director of the Insurance Alliance of Michigan. “By next summer, drivers will finally be able to choose the level of medical coverage that works best for them, which should further decrease costs. The combination of new choices for consumers and the enactment of a fee schedule to stop medical providers from charging three and four times more for auto accident injuries should allow drivers to see savings on their premium.”


Michigan’s new auto no-fault law took effect June 11 and includes several changes expected to reduce costs for drivers, including a fee schedule to rein in overcharging by medical providers and tiered choices in medical coverage. In making its announcement, the MCCA cited the fee schedule as a major factor for the decrease even though it won’t take effect until July of 2021.


For more than 40 years, drivers have been forced to purchase unlimited, lifetime medical benefits, which drove up the cost of auto insurance in Michigan to the most expensive in the country. Michigan was the only state in the country to place such an expensive mandate on its drivers.


Beginning July 1, 2020, drivers will be able to choose between several levels of medical coverage, including:


  • Unlimited lifetime medical benefits, which is required now

  • $500,000 in Personal Injury Protection (PIP)

  • $250,000 in PIP coverage

  • $50,000 in PIP coverage for those on Medicaid

  • Opt-out of PIP coverage entirely for those with Medicare or if you have separate health insurance that covers auto accident-related injuries


“Thanks to this dramatic fee decrease from the MCCA, Michigan drivers who have been clamoring for reform for years will finally start to see the relief they deserve,” Kinley said. “The latest reduction from the MCCA proves the legislation was definitely a positive step in the right direction. This announced decrease from the MCCA should send a signal to anyone looking to repeal these reforms that it would be a bad idea to do so, and the full reforms should be allowed to go into effect.”

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