No-Fault Repeal Legislation: Bad Policy, Poorly Written

A blog post by CPAN Legal Counsel George Sinas

The sponsors of the 7-bill package identified as HB 5517 – 5523 claim that these bills will repeal the Michigan No-Fault Act and return Michigan to a system of pure tort law. Apart from the social irresponsibility of such legislation, is the harsh reality that these bills, as currently written, are a drafting nightmare that are virtually impossible to fully understand.

Clearly these bills outlaw the sale of all no-fault PIP policies after January 1, 2020. Therefore, people injured in auto accidents after that date must pursue other legal rights. Yet those rights are unclear under the language of these bills. The point is well demonstrated by a review of the language of HB 5517 which appears at page 42, line 19 through page 45, line 22. Anyone supporting these bills should be challenged to explain exactly what that language really means. On one hand, this language could be read to mean that victims of accidents occurring after January 1, 2020 have full legal rights to pursue, in tort, economic and non-economic loss claims against the at-fault driver. However, this language could also be read to mean that, for policies issued after January 1, 2020, the tort law provisions of the statute do not apply in any respect. As a result of this confusion, no clear rules emerge for auto accidents occurring after January 1, 2020. In fact, the ambiguity is of such a nature that one could argue there are no specific rules governing the rights of people injured in auto accidents occurring after January 1, 2020.

At a minimum, the language deficits that exist in this legislation, if passed, will probably result in years of litigation seeking clarification from the Michigan appellate courts regarding the true intent of the legislature. Michigan citizens deserve far better than this mess. If the legislature is going to seriously consider repealing the Michigan Auto No-Fault Law and replacing it with a pure tort law system (a policy decision that would be an egregious mistake), those offering such legislation have a duty to write it in a manner that is precise and unambiguous. These bills are a colossal failure in that regard.

What is even worse, is that the proponents of these bills do not seem to care much about the current ability of the Michigan tort system to fully replace the No-Fault System. Apparently, it is the intent of this legislation to provide that auto accident victims will have only one place to turn for reimbursement of medical expenses, lost wages, and diminished quality of life – the at-fault drivers’ liability insurance policy. Nevertheless, these bills have left in place the antiquated state minimum liability insurance requirements mandating that drivers carry only $20,000 of liability insurance. That minimal level of coverage will not be enough to pay for even a few days of hospitalization, let alone compensate the other substantial expenses incurred by accident victims.

In addition to the fundamental failures discussed above is the disturbing fact that this package of bills sets the stage for insurance companies to help themselves to the $21 billion-dollar MCCA bank account after the MCCA closes out its last PIP claims. Under the MCCA “Plan of Operation,” insurance companies can theoretically act to refund to themselves any “surplus” that may exist in the MCCA coffers. The only protection against such a taking is the prohibition contained in the current no-fault statute that allows the Michigan Department of Insurance and Financial Services Director to invalidate any provision in the MCCA Plan of Operation that would be inconsistent with the objectives of the MCCA. Recognizing that this provision could interfere with a money grab by insurance companies, the bill [HB 5517] at page 39, line 17 to page 40, line 1, eliminates the power of the Department Director to block such efforts to commandeer money belonging to Michigan policy holders. Perhaps that is the real motivation for the repeal of the Michigan No-Fault System – to allow insurance companies to seize the $21 billion-dollar fund amassed from the MCCA assessment fees Michigan drivers were required to pay over the past four decades.

No one who is sincerely interested in creating an auto insurance reparation system that adequately meets the needs of seriously injured citizens could ever support such a reprehensible piece of legislation as that which is embodied by HB 5517 – 5523. CPAN believes it is time to stop playing politics and look for reasonable and realistic solutions to reform the Michigan Auto No-Fault Law – a law which has consistently achieved national recognition as a model insurance system.

Theis-Led No-Fault Elimination Plan is an Irresponsible Cost Shift to Taxpayers

Viable “Fair and Affordable Reform Package” still awaiting a committee hearing

LANSING – A select group of Republican state lawmakers introduced legislation today that would completely dismantle Michigan no-fault auto insurance system. House Bills 5517 – 5523, co-sponsored and led by Rep. Lana Theis (R-Brighton), would take away the lifetime auto injury coverage guaranteed under Michigan’s current auto insurance system and replace it with a tort system where injured drivers would sue at-fault drivers to recover costs for their injuries.
“Tort auto insurance systems force both at-fault and innocent accident survivors into lengthy lawsuits that unnecessarily delay care that is so critically important to their recovery,” said Coalition Protecting Auto No-Fault President John Cornack. “The result will be more lawsuits, a clogged court system and worse coverage for every single driver in this state.”
Cornack notes that with tort system like in Ohio and Indiana, families injured in an accident who are deemed to be at-fault will have nowhere to turn to for payment of their medical bills because they will not be able to sue anyone for their care. As a result, even more Michigan residents could be forced into medical bankruptcy and then on the state Medicaid System. When Colorado changed from a no-fault to a tort state, its Medicaid cost increased by 205 percent.
Recent legislation that would have capped auto injury coverage in Michigan was estimated to cost state taxpayers an estimated $80 million after 10 years. A complete switch to a tort system would likely cost Michigan taxpayers tens of millions of dollars more.
“It is extremely disappointing that lawmakers would even consider such fiscally irresponsible legislation when there are viable reforms sitting on the table,” said Cornack. “Rep. Theis has a bipartisan bill package sitting in her committee that would contain medical costs, stop fraud and put an end to unfair insurance company rating practices. These are real reforms that will make auto insurance in Michigan more fair and more affordable, so what are we waiting for?”
CPAN will continue to urge Michigan lawmakers to consider reforms that will improve Michigan’s no-fault system, such as the Fair and Affordable No-Fault Reform package.

The Top Five Things Mike Duggan and Tom Leonard Don’t Want You to Know about their Auto Insurance Bill

Vote No on HB 5013

LANSING – The House Insurance Committee just voted to move legislation forward that would have dramatic and draconian effects on Michigan auto insurance system. House Bill 5013, sponsored by Rep. Lana Theis (R-Brighton), is being pushed by Detroit Mayor Mike Duggan and House Speaker Tom Leonard. The bill would make significant changes to Michigan’s auto insurance system by setting stringent caps on medical coverage, taking away legal rights from Michigan auto accident victims, imposing unsustainable fee schedules on health care providers and shifting costs to Michigan taxpayers.

The House Insurance Committee passed the bill on a 9-5 vote, with two legislators passing. In response to today’s events, Coalition Protecting Auto No-Fault President John Cornack issued the following statement:

“The number of problems with this bill could be stacked as high as the Capitol dome. There are ways to reduce Michigan’s auto insurance rates and improve the system without destroying it. Unfortunately, this bill’s supporters would rather sweep the criticisms under the rug so that they can rush forward with a vote rather than working on a comprehensive, long-lasting solution.”

Here are the top five facts about the Duggan-Leonard no-fault bill that its supporters don’t want to talk about:

1) The Cap on Care is $25,000 NOT $250,000
Contrary to statements made by the bill’s supporters, the $250,000 cap proposed in the bill only provides $225,000 in emergency care. Once the patient is stabilized the cap drops to $25,000 for all non-emergency and post-acute medical needs.

While supporters of HB 5013 will contend that accident victims will be able to rely on traditional health insurance or Medicaid, these insurance plans do not provide for many of the rehabilitative services needed by serious auto accident victims.

In addition, many of the very backers of HB 5013 are the same politicians who opposed the expansion of Medicaid through the Affordable Care Act.

2) HB 5013 is a Tax Increase for the Entire State
Because many seriously injured drivers will have capped care, the House Fiscal Agency Analysis predicts a massive cost shift to state taxpayers. Once an accident victim exceeds the cap, they will ultimately need to rely on Medicaid for their care. As a result, it is estimated that Michigan taxpayers will see a $10 million increase in the first year the bill goes into effect with costs rising to $150 million per year after 10 years.

3) HB 5013 Punishes Children
Under Michigan’s current law, virtually all Michigan children involved in an auto accident – even those whose parents fail to purchase auto insurance – receive lifetime coverage for their injuries. Under HB 5013, children will be subject to the coverage limits their parents purchase. This could leave a catastrophically injured child with just $25,000 in care to meet their needs for the rest of their life.

4) Shields Insurance Companies and Agents from Lawsuits
The legislation virtually eliminates a patient’s right to sue an insurance company due to the chilling effect that strengthened legal powers granted to insurers under this bill. HB 5013 includes language that requires patients to pay insurance company attorney fees and court costs if the benefits in question were found to be “not medically necessary” as opposed to “reasonably necessary,” as is stated under the current law. The phrase “medically necessary” has a very strict legal definition that essentially refers only to life-sustaining care.

In addition, insurance agents who fail to accurately inform consumers of the limitations of their insurance coverage are completely immune from any civil liability for their actions. This places all responsibility on the consumer to understand the complexities of Michigan’s auto insurance laws and zero responsibility on the agent who sells the policy.

5) Unprecedented Immunity for At-Fault Drivers
Unlike other no-fault states that cap care, HB 5013 would make Michigan the only state in the nation that makes reckless, drunk or otherwise negligent drivers immune from being sued for unpaid medical expenses. This immunity problem does not exist under the current law because the accident victim’s medical expenses are not capped.

Cornack notes that any no-fault reform package passed by the legislature must include a ban on the use of unfair rating practices that allow insurers to charge higher rates based on non-driving factors like gender, job title and credit score. That is why CPAN is supporting the Fair and Affordable No-Fault Reform package.

Learn more about the impacts of HB 5013 by reading CPAN’s legislative analysis.


New Legislation Will Make Michigan Auto Insurance More Fair and Affordable

House Bills 5101-5111 include medical cost-containment requirements, bans on unfair auto insurance rating practices and fraud prevention measures

LANSING, MI – A framework of bills, dubbed the “Fair and Affordable No-Fault Reform Package”, was introduced last week that provides a clear alternative to the reforms being pushed by Detroit Mayor Mike Duggan, House Speaker Tom Leonard and the insurance industry. The legislation is among the most comprehensive auto insurance reform packages to be introduced in the past 10 years.

The effort to announce House Bills 5101-5111 is being led by Representatives Frederick (R-Owosso), Webber (R-Rochester), Lasinski (D-Scio Township) and Gay-Dagnogo (D-Detroit), with every bill having bipartisan cosponsors.


The legislative package also includes two previously introduced bills. House Bill 4672, introduced by Rep. Joe Graves, creates a fraud authority designed help lower rates by cracking down on auto insurance fraud. House Bills 4049, sponsored by Rep. Patrick Green, will bring more transparency to Michigan’s auto insurance system by requiring the Michigan Catastrophic Claims Association to publicly disclose the actuarial calculations used to set the annual fee it charges to every insured vehicle in the state (currently $170 per vehicle).

“These bills provide a great framework for making lasting improvements to Michigan’s no-fault auto insurance system. While we are still analyzing the language of the recently introduced bills, we believe this package offers the best opportunity to make auto insurance more fair and affordable for every single driver across the state,” said CPAN President John Cornack. “There are many factors driving Michigan’s high auto insurance rates, including fraud, unfair insurance company pricing practices, increasing medical costs and inefficient billing practices. These bills go a long way toward addressing each of those issues.”

The Fair and Affordable No-Fault Reform package includes:

  • A ban on on-driving rating factors, including credit score, gender, occupation and education level, from being used to determine auto insurance rates.
  • A fee schedule set at 185 percent of Workers Compensation for all medical providers treating auto accident victims, with cost-of-living adjustments. Level 1 and 2 trauma centers would not be subject to the fee schedule. The fee schedule legislation will also streamline the claims process, improve fairness, and reduce costs and improve efficiency by requiring electronic billing between providers and insurance companies.
  • A $15 per hour rate schedule for family-provided attendant care, with allowable waivers to ensure fair compensation for certain patients whose disabilities and needs justify more skilled care. The bill also ensure patients who require 24/7 care will have access to it.
  • The creation of fair standards and qualifications regulating physicians who conduct independent medical exams when requested by insurance companies.
  • Bill language to strengthen an existing law requiring that auto insurance premiums are “appropriately reduced” for any consumer buying policies that coordinate auto and health insurance coverages.
  • Crucial fixes to Michigan court cases that have had a detrimental impact on auto accident patients and health care providers who treat them:
    • Admire Fix – Mitigate the unfairness of the Admire vs. Auto Owners decision, which has been used by insurance companies to deny paying legitimate expenses needed by catastrophic auto accident victims, including handicap accessible transportation and barrier free accommodations.
    • Bahri Fix – Mitigate the unfairness of the Bahri vs IDS Property Casualty Insurance Company decision, which allows insurance companies to void an entire policy for any claims containing errors that the insurance companies claims are fraudulent.
    • Bazzi Fix – Re-instate the innocent party rule, which was overturned in the Bazzi vs Sentinel Insurance Company case, thereby protecting innocent third party claimants who did not participate in fraudulent procurement of a policy.

In addition, two final bills are expected to be introduced today to complete the Fair and Affordable No-Fault Reform package. They include:

  • A solution to allow senior citizens to lower their rates by ensuring Medicare and auto insurance are not providing duplicate coverage for an auto accident.
  • A Covenant Fix – This legislation will resolve issues created by the problematic ruling in Covenant Medical Center vs. State Farm, by restoring medical providers’ legal right to sue insurance companies who fail to pay for a patient’s care and related expenses.

“Some auto insurance companies are charging women as much as 30 percent more just because of their gender. Others charges hundreds of dollars more per year because they have a less-prestigious job title, so stopping insurers from using unfair rating practices should dramatically reduce rates by itself. Add on the fraud prevention and other cost containment measures and those things will add up to some very real and meaningful savings for Michigan drivers,” said Cornack. “We are urging all Michigan lawmakers to support this bill package and move it through the legislative process as quickly as possible.”


Catastrophic Accident Survivor Brian Woodward Talks No-Fault Reform

Detroit resident Brian Woodward was catastrophically injured 30-plus years ago in an auto accident. Listen to him share what his life would be like if he would have purchased an auto insurance policy with a $250,000 cap such as the Duggan/Leonard PIP Cap Plan plan (HB 5013) being discussed in the House Insurance Committee Hearing tomorrow.

Click below to listen to his interview on the Mildred Gaddis Show, WPZR 102.7 FM.

Comparing the Competing No-Fault Reform Plans

How does the Duggan/Leonard PIP cap plan compare to the Fair and Affordable No-Fault Reform proposal?

In the past two weeks, two competing auto insurance reform proposals have been announced in Lansing. While both proposals have some level of bipartisan support and both seek to address fraud and rising medical costs to treat accident victims, there are some significant differences that will impact all stakeholders in Michigan’s no-fault auto insurance system. This post will provide a quick overview of each proposal, but look for a more comprehensive legal analysis of the Duggan/Leonard plan (HB 5013) soon.

The Duggan/Leonard No-Fault PIP Choice – Pip Cap Plan
Detroit Mayor Mike Duggan joined House Speaker Tom Leonard and a group of Detroit pastors and business leaders this week to announce a plan that has as its key feature a cap on personal injury protection (PIP) coverage. This plan proposes to allow drivers the choice of either keeping the lifetime PIP coverage they have today, or to buy lower PIP policies of either $250,000 or $500,000. At least that is how the legislation was announced.

In reality, the Mayor Duggan and Speaker Leonard oversold the coverage offered in their proposal. The bill language shows that the majority of the $250,000 coverage is for “an emergency medical condition and related emergency care only.” That coverage will get a driver through an emergency, but once the real recovery starts the lifetime PIP cap is only $25,000. This is nowhere near enough to cover the lengthy rehabilitation therapy, and possibly years of care needed after a catastrophic accident. What’s worse is that the $25,000 cap would also include wage loss, replacement services and survivor’s loss benefits.

It should also be noted that PIP choice proposals are not new in Lansing. The last time a serious proposal was introduced to cap PIP coverage in Michigan, CPAN commissioned a study by Public Sector Consultants, that found the cost shift to the state Medicaid system would be $30 million in the first year alone.

Other provisions of the Duggan/Leonard PIP Choice – PIP Cap Plan include:

  • A cap on family-provided attendant care of just 56 hours per week. The weekly limit would apply even if the patient requires 24-hours per day  support.
  • Fee Schedules on health care providers treating auto accident victims that would be set at the Medicare reimbursement rate. A schedule of 125 percent of Medicare would apply to services for emergency care or related to an emergency medical condition.
  • People 62 or older would be allowed to opt out of PIP coverage under this plan and rely solely on Medicare. The proposal ignores the fact that Medicare does not cover the long-term care needed by seniors recovering from a catastrophic accident.
  • The creation of a fraud authority that would have a board represented by the insurance industry, law enforcement, prosecutors, one member of the general public and one Detroit resident. This authority would not be subject to the Freedom of Information Act.
  • Mandatory auto insurance rate reductions by insurance companies. For those who purchase the $250,000 plan, insurers would be required to reduce the premiums for the PIP coverage by 40 percent and drivers would not be required to pay the $170 per vehicle Michigan Catastrophic Claims Association fee. However, drivers should not count on the savings as guaranteed because the bill language allows insurance companies to make an exception if they can explain why the required rate reductions are not achievable.
The Fair and Affordable No-Fault Reform Plan
Led by Republican State Rep. Ben Frederick and Democrat Rep. Donna Lasinski, the Fair and Affordable No-Fault Reform proposal aims to reduce costs for drivers, while also preserving lifetime injury coverage and adding consumer protections to Michigan’s auto insurance system.

Key features of this proposal include:

  • A medical fee schedule for health care providers treating auto accident victims. The schedule would be set at 185 percent of the Workers Compensation rate, which is far more reflective of the complex treatment and increased attention that auto accident victims require. In addition, this fee schedule would NOT apply to Level 1 trauma centers, which helps preserve funding for those facilities that are among the first to receive and stabilize catastrophic auto accident victims.
  • An hourly rate schedule for family-provided attendant care that would allow for rates that are reasonably related to the nature and extent of the patient’s disability and needs, including providing for patients who require 24/7 care.
  • A ban on insurers from using non-driving related factors such as credit score, gender and job title from unfairly impacting auto insurance rates. These factors have nothing to do with how cautious someone drives or how expensive their vehicle is to fix.
  • A requirement for the fees charged by the Michigan Catastrophic Claims Association to be transparent by making its ratemaking data available to the public.
  • The creation of a Fraud Prevention Authority, that is meaningful and balanced. This authority will address fraud committed by claimants and providers as well as prevent insurance companies from wrongly and knowingly denying legitimate claims, which drives up litigation and expenses.
  • Amends wage loss benefits to better align with the auto accident victim’s actual wage/salary loss.
  • An Admire Fix – Correct the Admire vs. Auto Owners decision, which has been used by insurance companies to deny paying for legitimate expenses needed by auto accident victims, including handicapped accessible transportation and even specialized food needed by patients.
  • A Bahri Fix – Corrects the unjust decision of Bahri vs IDS Property Casualty Insurance Company, which allows insurance companies to void an entire policy if a claim submission was made in error, or if the insurance company alleges fraud.
  • A Bazzi Fix – Re-instates innocent party rule, which was ended in the case of Bazzi vs Sentinel Insurance Company, thereby protecting innocent third party claimants who did not participate in fraudulent procurement of a policy.
  • A Covenant Fix – Corrects the disastrous court ruling Covenant Medical Center vs. State Farm, which prevents medical providers from suing insurance companies, on behalf of auto accident patients when insurers refuse to pay for treatment that has been rendered.
CPAN will be working diligently with its coalition partners and all stakeholders to garner support for the Fair and Affordable No-Fault Reform legislation. This proposal is a far more comprehensive reform package that will provide an overall improvement to Michigan’s auto insurance system while continuing to maintain the lifetime coverage that is so critical to the quality of life for our state’s auto accident victims.
We encourage all members to meet with their state lawmakers and encourage their support for this well-thought out, bipartisan proposal. You can write your lawmaker directly from the CPAN website at
In addition, the Legislative Coffee Hours page on our website includes information on how to look up your lawmaker and is updated regularly with the dates and times each lawmaker holds their coffee hours.

Way Too Many Faults in Mayor Duggan’s No-Fault Reform Proposal

Caps on injury coverage would cost state taxpayers hundreds of millions in new Medicaid expenses, leave patients without care while forcing them into poverty

Lansing – Detroit Mayor Mike Duggan joined House Speaker Tom Leonard and Rep. Lana Theis today to announce a proposal to slash injury care for Michigan auto accident victims. The proposal calls for allowing motorists to purchase insurance policies that cap care at either $250,000 or $500,000, or drivers can continue purchasing lifetime injury coverage.

In response to the proposal, Coalition Protecting Auto No-Fault (CPAN) President John Cornack issued the following statement:

“All stakeholders in the no-fault debate are working on creating a better auto insurance system, but what was proposed today cuts costs on the backs of some of Michigan’s most vulnerable people,” said Cornack. “People who are paralyzed, people with brain injuries and children whose parents who purchase these bare-minimum policies will all suffer under this proposal because they won’t get the care they need. And to make matters worse, the costs of caring for these accident victims will ultimately result in a cost increase for Michigan taxpayers.”

Cornack notes that today’s proposal is similar to failed legislation that that also capped personal injury protection coverage. A 2011 Public Sector Consultants report found that capping no-fault medical benefits would result in a cost shift of $30 million to Michigan’s Medicaid system in the first year alone.

“What was announced today is nothing more than a recap of failed ideas from the past – capping coverage and shifting costs to Michigan taxpayers who can’t afford to pay tens of millions more in Medicaid every single year. If we want lasting reform that brings real savings for drivers and the state of Michigan then we need a comprehensive, bipartisan solution that addresses the core issues behind the excessive rates,” said Cornack.

Rather than putting caps on accident victims, CPAN is supporting the bipartisan “Fair and Affordable No-Fault Reform” legislation announced by a group of 15 State House members from both parties.

The Fair and Affordable No-Fault Reform legislation would:

  • Rein in medical costs related to auto injuries by setting reasonable fee schedules that are 185 percent of Workers Compensation and set attendant care limits that accommodate the nature of a person’s injury;
  • Stop non-driving related factors such as credit score, gender and job title from unfairly impacting auto insurance rates;
  • Bring transparency to the Michigan Catastrophic Claims Association by making its ratemaking data available to the public;
  • Aggressively tackle fraud and claims handling abuse by creating a state fraud authority.

CPAN is urging lawmakers to support the comprehensive Fair and Affordable legislation, which maintains lifetime injury coverage for accident survivors while still making significant cost reductions to Michigan’s auto insurance system.

“We think the Fair and Affordable No-Fault reform package is a better, more responsible solution that makes real and lasting reforms without increasing costs to Michigan taxpayers and without taking away coverage for catastrophic accident victims,” said Cornack.


Read the full language of the Duggan / Leonard / Theis Cap on Care Bill here.

CPAN Praises “Fair and Affordable” Auto Insurance Reform Legislation

Proposed bills would implement cost-containment measures, create fair auto insurance rating practices and bring more transparency to Michigan’s auto insurance system

LANSING, MI – A bipartisan group of Michigan lawmakers announced today a comprehensive set of legislation aimed at improving Michigan’s no-fault auto insurance system. The legislation, which lawmakers have dubbed the “Fair and Affordable No-Fault Reform Package,” is currently in the process of being drafted and is expected to be introduced in the coming weeks.

“While we have not yet seen the final bills, this is the closest we have seen to a complete no-fault reform package in a long, long time,” said Coalition Protecting Auto No-Fault President John Cornack. “The proposals unveiled today would bring dramatic and lasting improvements to Michigan’s insurance system that all sides would benefit from. Whether you are a driver, an accident survivor, a healthcare provider or even an insurance company, there is something to like in this package.”

Earlier this year, CPAN unveiled a 24-point plan to reform Michigan’s auto insurance system. The proposals announced today incorporate many but not all of CPAN’s recommendations, including:

  • Adopt reasonable fee schedules and attendant care limits to rein in medical costs related to auto injuries;
  • Stop non-driving related factors from unfairly impacting auto insurance rates;
  • Bring transparency to the Michigan Catastrophic Claims Association by making its ratemaking data available to the public;
  • Aggressively tackle fraud and claims handling abuse by creating a state fraud authority.

Cornack was particularly enthusiastic about proposals that will tackle unfair insurance ratings practices, such as using credit scores and job titles to set auto insurance rates.

“Everyone in this state should be pleased that lawmakers are bringing fairness to auto insurance rating practices,” said Cornack. “Our research has shown that insurance companies will use every excuse imaginable to increase rates for drivers. One company even charges as much as 33 percent more to women than men for the same car, address and driving record. That is completely wrong and must be stopped.”

Legislators announcing the Fair and Affordable No-Fault Reform package included Rep. Rep. Ben Frederick (R-Owosso), Rep. Donna Lasinski (D-Scio Township), Rep. Joseph Graves (R-Argentine Township), Rep. Sherry Gay-Dagnogo (D-Detroit), Rep. Michael Webber (R-Rochester); Rep. Tim Greimel (D-Auburn Hills); Rep. Pete Lucido (R-Shelby Township); and Rep. Ed Canfield (R-Sebewaing).

“We are particularly encouraged to see Democrats and Republicans working together come up with a solution that protects accident survivors while still lowering rates across the state,” said Cornack. This sort of bipartisan approach is something that has all too often lacking when it comes to this issue.”

In addition to containing medical costs and addressing unfair rating practices, lawmakers also announced legislation to fix problems caused by two recent Michigan Supreme Court cases that have drastically harmed Michigan’s no-fault auto insurance system.

Admire vs. Auto Owners has been used by insurance companies to deny paying no-fault benefits for legitimate expenses needed by auto accident victims, including handicapped accessible transportation and even specialized food needed by patients. Lawmakers plan to introduce legislation to ensure that accident survivors will have these basic needs met.

Legislation will also be introduced to fix the disastrous court ruling Covenant Medical Center vs. State Farm, which prevents medical providers from suing insurance companies on behalf of auto accident patients when insurers refuse to pay for treatment that has been rendered. The decision puts patients squarely in the crosshairs of litigation, because health care providers will no longer be able to battle insurance companies on behalf of their patients.

“Both of these decisions were a miscarriage of justice that, if allowed to go uncorrected, posed a serious threat to Michigan’s no-fault system,” said Cornack. “We greatly appreciate the work these lawmakers have done and continue to do to bring lower rates to drivers while protecting the elements that make Michigan’s no-fault system so great.”


Higher Premiums for Widows, Other Single Women in Michigan Auto Insurance Market

Study Finds Some Insurers Raise Rates on Female and Unmarried Customers Despite Michigan Law Prohibiting Use of Gender or Marital Status for Pricing Car Insurance

Lansing – Widowed drivers in Michigan are charged more by some auto insurers than married drivers of the same age, even if they have perfect driving records, according to new data released today by Michigan’s Coalition Protecting Auto No-Fault (CPAN). Testing also found companies charging women significantly more for basic auto insurance than men, including young men often considered the highest risk drivers.  These surcharges appear to violate Michigan law, which states: “an insurer shall not establish or maintain rates or rating classifications for automobile insurance based on sex or marital status.”

A survey of online premium quotes from several large auto insurers operating in Michigan, found that Progressive and Esurance alter rates for drivers based on their gender and marital status, and Liberty Mutual charges more to unmarried drivers.

  • These three companies raise widows’ and other single women’s premiums between five and ten percent compared with married women;
  • Progressive charges women with perfect driving records as much as 38 percent more than men with the same record, same vehicle, and same address;
  • Esurance charges women with perfect driving records as much as 33 percent more than men with the same record, same vehicle, and same address; and
  • Other insurers tested, including Allstate and AAA, appear to comply with state law and do not vary rates based on gender or marital status.

“It is both unseemly and improper to increase prices for someone when her spouse dies,” said Douglas Heller, an independent insurance expert who conducted the research for the Coalition Protecting No-Fault (CPAN). “Michigan law is supposed to prevent insurance companies from charging more to women or unmarried drivers, but some insurers seem to be ignoring the law and charging hundreds of dollars more to drivers simply because they are female, single, divorced, or widowed.”

Using insurance companies’ websites, Heller compared nearly 100 premium quotes provided to male and female drivers of different marital statuses and ages. The research also looked at whether the patterns changed based on geography, testing rates in both Detroit and Brighton, Michigan. Throughout the testing, other factors such as address, type of car, and annual miles were held constant.  In all instances, the drivers tested had perfect records with no accidents, tickets, or claims.

“This study reveals yet another unfair factor that insurance companies use to make extra profits at the expense of Michiganders,” said State Representative Donna Lasinski (D – Scio Twp). “Discriminating in rates based on sex or marital status is illegal, but also fundamentally wrong. We need to make sure that good drivers have good rates, period.”

Progressive and Esurance charged between 10 percent and 38 percent more to women than men in Detroit, in one instance nearly $1,000 per year, despite all drivers tested having a clean driving record (see Figure 1).  The same pricing structure was evident in Brighton, though the penalty for “driving while female” was somewhat less with the increases on female drivers ranging from 3 percent to 26 percent.

“There is no reason to punish good drivers based on their sex, and Michigan law is right to prohibit it,” said Heller.  “But when gender is used as a factor, no one in or out of the insurance business thinks that young male drivers are the ones who should get the discounts, so it is very strange to see companies charging hundreds of dollars more to young women than young men.”

Three companies also charged different rates to married and unmarried drivers. Liberty Mutual, Progressive, and Esurance charged widows (female drivers whose spouse is deceased), higher premiums than if their spouse were still alive. Figure 2 shows the widow penalty in both Detroit and Brighton.

Notably, the testing found that married male drivers actually saw premiums from Progressive and Esurance drop after they became widowers, though Liberty Mutual consistently applied a 5 percent surcharge on all drivers who lose a spouse, regardless of their sex.

“Women already struggle for equal pay, and here we have insurance companies piling on by charging women drivers more for auto insurance. It is a blatant violation of the law and must be stopped,” said State Representative Sherry Gay-Dagnogo, who chairs the Detroit Caucus and also serves on the House Insurance Committee.

As with the widow penalty, insurers charged more to divorced and single women than married woman, as shown in Figure 3. Once again, however, Progressive and Esurance lowered rates for 35 year old men after a divorce, even as they hiked premiums for female divorcees. Liberty Mutual charged more to divorced drivers whether male or female.

“Under state law, every driver must purchase auto insurance, whether they are male or female, married or not, and good drivers should get the best prices, regardless of their sex or marital status,” said Heller.  “When insurance companies are allowed to slice, dice, and price Michiganders according to personal characteristics that have nothing to do with their driving, many good drivers end up paying more than they should or driving uninsured, and it’s one of the reasons premiums are so high in Michigan.”

In August, CPAN issued a report highlighting socioeconomic rating factors used by auto insurance companies in Michigan – including job title, education level, and homeownership status – showing that several insurers charge substantially higher premiums to working class drivers in the state. Unlike sex and marital status, there is no explicit statutory prohibition on the use of those rating factors by insurance companies, though they may be deemed “unfairly discriminatory,” according to insurance expert Heller.


Figure 1. Annual Premiums in Detroit Differ for Male and Female Good Drivers

Figure 1. Annual Premiums in Detroit Differ for Male and Female Good Drivers


Figure 2. Widow Penalty: Insurers Raise Premiums on Good Drivers After Spouse’s Death

Figure 2. Widow Penalty: Insurers Raise Premiums on Good Drivers After Spouse’s Death


Figure 3. Increase (Decrease) After Divorce

Figure 3. Increase (Decrease) After Divorce

Michigan Auto Insurers Among Worst in Nation for Low-Mileage Discounts

Michigan Drivers Get Few Breaks for Staying Off the Roads But Get Punished for Job Title and Other Socioeconomic Characteristics

Lansing – Auto insurance companies provide much smaller discounts to low-mileage customers in Michigan compared to the rest of the country, according to a new report published by  The national study shows that the premium difference between Michigan motorists who drive 5,000 miles per year and those driving 15,000 miles is only 3.5% compared with countrywide average difference of 8.4%.

As one insurance expert, John Espenschied, told, “More miles driven simply means a higher potential of being involved in an accident, which means you’re going to pay more for insurance.” However, because state rules governing auto insurance prices and insurance company practices differ from state to state, the impact of mileage on customers’ premiums varies widely.

“If you drive significantly less each year, you should pay significantly less for auto insurance,” said Douglas Heller, an independent insurance expert who has conducted research for the Coalition to Protect Auto No-Fault (CPAN). “Unfortunately in Michigan, cutting back on your driving hardly puts a dent in your premium while in other states it can save twice as much or more.”

Heller noted that the weak discounts offered in Michigan should be contrasted with the substantial penalties that several auto insurers place on drivers for socioeconomic factors that have nothing to do with their driving, including their job title, level of education, and home ownership status. In a report released earlier this month, CPAN pointed to rate increases as high as $1,000 per year for good drivers solely due to their socioeconomic status.

“A lot of working families have lowered the number of miles they drive every year because they can’t afford the gas or the time off work, but they don’t see commensurate savings on their insurance,” said Heller. “On the other hand, they pay higher premiums because they work in a blue collar job, don’t have a college degree or don’t own their home.”

According to the report, motorists in Michigan who drive 5,000 miles per year only saved $43 compared with those driving 20,000 miles. Californians’ premiums dropped by $209 for the same lower mileage driver. Under California law, insurance companies must emphasize a driver’s safety record and annual mileage as the two most important factors in pricing auto insurance.

“Rates in Michigan would come down for many drivers, and more people would be able to afford coverage, if the state demanded that insurance companies place more of an emphasis on driving related factors like annual mileage and less on factors that have nothing to do with driving,” said Heller. “Since the government requires that every Michigan driver purchase auto insurance, there is a special duty to make sure the companies selling it are pricing it reasonably.”