Car owners in the state of Michigan will soon have to pay more for their auto insurance. Beginning on July 1 of next year, motorists in the state will have to shell out an average of $20 more for insurance. That figure totals to around $124 per household. The extra insurance collection will help provide much needed resources to the Catastrophic Fund, a special reserve fund set aside to help motorists who are seriously injured in a car accident.
While the objective of the rate hike may seem to be noble, some motorists are not so pleased with the plan. State citizens say that the latest development can only mean more expenses and fewer savings, especially with salaries staying the same and jobs harder to retain. Some car owners expressed outrage over the change, saying that in the uncertain economic climate, “every penny counts.”
Insurance experts explain that the Catastrophic Fund would insure that all motorists who get badly injured will be entitled to substantial medical assistance. Policyholders will also be compensated for any lost income during their hospitalization. Specialists point out that the fund will pay for the victims’ lost wages for up to three years after the accident.
Industry sources say that the special program is directly funded by the state’s drivers themselves. Insurance companies have no control or influence over the fund, they add.
Analysts say that there is little chance that motorists in Michigan can avoid paying their dues for the Catastrophic Fund. The Insurance Institute of Michigan says that the additional money will be used to augment the present fund. At present, the fund has a substantial deficit. Experts contend that the hike in premiums is necessary to help protect the state’s motorists even better.
Despite the criticism, insurance specialists say that the fund’s benefits far outweigh the costs. They point out that severely injured policyholders would be able to rely on the fund to pay for extended hospitalization, additional medical expenses, and even lost income. Analysts say that for just a few additional dollars, car owners can enjoy a tremendous amount of benefit from the fund.
Experts also add that the decision to collect more from policyholders is debated every year. This year’s deficit is the result of rising medical costs and other increasing expenditures. Supporters of the fund say that motorists have been reimbursed accordingly in the past whenever the fund experienced surpluses.