House committee passes no-fault insurance changes


House committee passes no-fault insurance changesAccording to the existing laws, if someone gets catastrophically injured in a motor vehicle accident, the no-fault PIP coverage will take care of all the medical and rehabilitation costs. The coverage is unlimited with lifetime benefits if needed. However, the proposed changes will put a cap on the medical fees and even bring about restrictions on the type of care that people can get in case they are involved in an accident.

As per the new bill, motorists will have to choose the type of coverage they need and purchase accordingly. The coverage may be worth $500,000, $1 million, or $5 million. After this is done, you are essentially on your own.

The ones who are supporting these changes claim that this will help in lowering auto insurance costs. They have observed that there are a number of motorists on the road without insurance. This they feel is due to the high insurance costs and that is something that they cannot afford.

However, a Michigan watch analysis has found that there may be very little change in insurance rates. They also state that there is no guarantee that these savings will be passed on to the consumers.

Kevin Clinton, the Michigan Insurance Commissioner testified before the committee. He claimed that these predictions that the savings will not be passed on to consumers is a wrong notion.

He assured everybody that this will not be the case as there is a lot of competition in the auto insurance market. Hence, the rates are bound to be lowered and in case the rates don’t see a decline, the OFIR would be more than willing to step in to ensure that the rates are lowered, stated Clinton.

There are legal restrictions on the OFIR or the Office of Financial and Insurance Regulation, regarding when and how it can intervene in order to address the insurance rates.

The commissioner also expressed similar concerns stating that these proposed changes will have to be put in place in order to keep the catastrophic claims funds solvent.

The opponents of the change claim that those who are severely injured in accidents in the future will not be able to get coverage or the care that they may need in case these changes get the approval from the governor or the legislature.

However, Insurance Commissioner Kevin Clinton claimed that there were other options available to people. He added that people could make use of health insurance, Medicare, Medicaid, Social Security etc.