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New package of bills could mean big cuts to high auto insurance premiums in Michigan

Car insurance premiums could be cut by 20% if a new bill passes.


If you’re a Michigander, odds are the only thing you complain about as much as the weather is the cost of your car insurance.

And you’re right to.


According to a study conducted by Insure.com, car owners in the state pay an average $2,400 premium, 82% higher than rates throughout the country.

But all that might change if a bill introduced today by Michigan Speaker of the House Tom Leonard and Detroit Mayor Mike Duggan passes.

Chad Livengood of Crain’s Detroit Business says the bill could reduce costs by as much as 20% for most drivers and 50% for drivers with personal liability protection over the next few years.

“This is a 5-year plan meant to take cost out of it now, contain cost, and prevent insurers from increasing the rates above the rates of inflation for that five-year period,” he said.

The bill would cut costs by setting a rate schedule for car insurance for the first time in the state, setting up three car insurance plans to choose from.  

“It’s a three-tier system. You can equate it to the Obamacare Healthcare.gov bronze, silver, and gold plans,” Livengood said.

Michiganders could choose from a $250,000, $500,000, and unlimited liability plan. 

Any car accident costs exceeding the cap could be paid by a government or personal health insurance plan, especially useful for seniors who could use Medicare to pay hospital bills. 

“Every other state, senior citizens can use their Medicare to cover auto accident injuries and yet in Michigan they’re prohibited from doing so," Livengood said. "They make the argument that they’re buying something they don’t need to because they’re already entitled to this under Medicare and that they could be utilizing those benefits rather than buying something."

Most importantly, the new bill would create a safety net if the new system of rate schedules and using health care to pay additional costs fails.

“It creates a mechanism for the first time for the State Insurance Commissioner to deny rates if they’re above the rate of inflation," Livengood said.

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