Monday, July 22, 2013

Consequences for Michigan Auto Accident Victims

Hard Times for Auto Accident Injury Victims, Policy Holders in Great Lakes State

Some Michigan legislators and insurance insiders are proposing a cap on insurance payouts for auto accident injuries in a desperate bid to tamp down costs for auto insurance policies in the state.
A Michigan Radio post in May characterizes the proposal as a plan endorsed by Michigan’s Governor, Rick Snyder. Legislators are hoping to bring down policy premiums with this payout limit that caps an auto accident injury payout at $1 million.

Other lawmakers have other ideas. This article in the Insurance Journal points out that the new limit on injury payouts is largely a Republican plan, and that Democrat lawmakers want to take other approaches involving the scrutiny of the processes that insurance companies use to set premiums.
According to the Insurance Journal, Detroit’s Democratic State House Caucus has unveiled a proposal to limit how insurance companies use personal information, including credit history and occupation or educational status, to set premium amounts. The plan also takes a page from the Affordable Care Act in mandating that 80% of premiums be spent on payouts.

There’s no doubt that Michigan residents pay some of the highest premiums in the country. Reports from Bankrate show Detroit residents paying up to around $5000 per year just to keep vehicles legally on the road.

Some state legislators believe that more transparency from the insurance companies could help solve the problem. The Michigan Radio coverage quotes Thomas Stallworth, chairman of the Democratic caucus, claiming that an industry board called the Michigan Catastrophic Claims Coalition or MCCA “sits on $14 billion of our money but refuses to open their books.”

All of these proposals are characterized as “auto no-fault reform.” Michigan is one of several states with a no-fault auto insurance policy that requires a driver’s insurance company to pay out for injuries regardless of fault in an accident. Some critics of no-fault systems see them as adding costs to an already complicated and expensive insurance product, requiring an extensive system of multi-party claims adjusting, dedicated medical and legal services, and third-party efforts like auto accident telemarketing just to keep claims fair and working their way through an often clogged documentation system.

Consequences for Michigan Auto Accident Victims

While today’s no-fault system may cause Michigan policy holders to pay high rates for auto insurance, the above mentioned claims cap could hurt auto accident victims. Many of those who have been injured in an accident won’t really know about limitations to their payouts until they talk to either front-line staffers like auto accident telemarketing professionals, or others higher up in the legal and medical fields who will provide professional consultation and care. Doctors, lawyers or third party companies are often the vehicles of advocacy for explaining how to get the compensation auto accident victims deserve, and how to work around any effective or pending state laws that seek to constrain this important financial compensation.