Understanding No Fault Insurance in Michigan and the Truth About It

Residents of Michigan, and especially Detroit, typically have to pay some of the highest auto insurance rates in the country. Many people like to blame the state’s “no-fault” auto insurance laws that are in place, but that is really quite misleading and downright distracting. The fact is that no-fault auto insurance is actually a very positive thing for consumers to have, as can be seen by the fact that they have repeatedly voted to keep it in place.

If it is such a good option, however, why are our insurance rates so high? This is the real question that needs to be answered. As an attorney who often represents clients who have been in serious auto accidents, I can point to one main cause: Insurance companies have virtually no regulations in place to keep their rates reasonable.

What Causes High Insurance Rates?

There are many factors that contribute to the high auto insurance costs in Michigan. The following are some of the biggest issues, which should be addressed legislatively, rather than simply blaming no-fault policies:

  • How Prices are Set – Insurance prices are set using a number of factors, including things like credit score, zip code, and occupation. This often results in poorer residents getting the highest rates possible, which often causes them to be unable to hold a policy. Being an uninsured motorist simply passes the costs on to other motorists or the state.
  • Unreasonable Profits – All businesses, including insurance companies, are there to make profit, and that is a good thing. Michigan insurance companies, however, are being deceptive in order to justify their extreme profits and shift the blame. For example, in the latest plan that failed to become law just recently, insurers alleged that it included a high cap of $250,000 for care, but that was not the case. The $250,000 cap was for emergency care, but for any care provided after the emergency room, the cap was set at just $25,000, which is not nearly enough for those injured. In addition, insurers cited the high cost of healthcare as the reason no-fault premiums are high, but insurers almost never pay the full amount billed by healthcare providers.
  • Aggressive Defense of Accident Claims – Few people outside of those of us who go to court for a living are aware of how much money insurance companies spend to fight even legitimate claims. Rather than just paying bills for their insureds, insurers often send people to defense medical exams (sometimes referred to as “independent” medical exams even though they are not) or order surveillance of the insured, their families and friends that can cost thousands of dollars for an hour or less of work. The insurance-paid medical examiners, whose bills are never denied, almost always render the opinion that the insured is not injured. Further, insurers also often pay more to their lawyers to defend cases than the amount of the bills at issue. This is just another example of the issues that are caused by a lack of oversight.

Whether you’re curious about why Michigan auto insurance is so high, or you have been in an accident and want to fight for your rights, we are here for you. Please contact us to go over your options and get the representation you need.

Written by Carla D. Aikens

Carla D. Aikens

After years of working for large law firms on major corporate cases, Carla D. Aikens chose to go out on her own and found her own firm because she is passionate about helping people of whom others have taken advantage.