Increasing Auto Insurance Rules May Give Policyholders a Harder Time


MICHIGAN – The idea that introducing more automobile insurance rules will make life easier for drivers is a farce, according to Pete Kuhnmunech, Executive Director of the Insurance Institute of Michigan, Lansing.

Increasing Auto Insurance Rules May Give Policyholders a Harder TimeSingling out Michigan State Representative Barb Byrum, Kuhnmunech said that the legislator is not prioritizing what really matters. He said that Byrum’s promotion of increased regulation and tighter price controls is actually detrimental to the “stable” insurance industry job market. This industry provides jobs for an estimated 55,000 residents.

Ohio, however, has taken advantage of the impending scenario by offering an “extensive public information campaign” to attract some of the Michigan insurance companies away from the state and into Ohio.

Kuhnmunech said that although Byrum uses Michigan’s average premium rate as a political trump card, there are fundamental differences in automobile insurance which are overlooked. For instance, though the state offers the 12th most expensive premiums in the country, it also provides the highest mandated benefits. In essence, the state’s policy offers more substantial benefits despite its price tag.

Moreover, due to the state-mandated “no-fault policy,” state car owners are compelled to avail of unlimited medical benefits. This is an essential high-level benefit which is exclusively required by the state, according to Kuhnmunech. A minimum rate of $5,000 is typically mandated among some states, while most state does not legally compel their car owners at all. In comparison, Michigan drivers may have the upper hand since they will benefit from unlimited, lifetime medical benefits, provided that they comply with state law.

The Executive Director said that 15 states, including the District of Columbia, currently apply this same proposal offered by Byrum. He explained that the average auto insurance premium is $1,288 in the District of Columbia, but it does not require any sort of medical coverage. Meanwhile, Michigan premiums typically average $1,055.

Kuhnmunech is not in favor of the direction that Byrum wants to take. However, the Insurance Institute itself has offered several solutions which could lower the cost of auto insurance by as much as 15% to 45%.

The Executive Director outlined the following proposals which include letting policyholders decide for themselves on the level of medical benefits that fits preferences and meets their needs, implementing a medical fee schedule for automobile accident injuries and being more pro-active in addressing insurance fraud.

The Insurance Information Institute, according to recent data, revealed that the United States average premium cost is at $1,753. For several years, car insurance prices in Michigan are usually more expensive compared to the nationwide average.