Medical bills drive auto premiums
The problem with Michigan’s no-fault auto insurance system is not unlimited personal injury protection. The problem is unlimited medical bills.
Although legislative efforts to rein in escalating premiums appears dead for now, as sure as there will be a fender-bender on Pine Grove Avenue today, someone will again propose slashing the uncapped medical coverage that every Michigan motorist now gets with his or her insurance policy. That’s the wrong approach. The proposal the state House voted down last week would have set maximum coverage levels at $250,000 and $500,000, giving drivers a choice of how much coverage they would be willing to purchase.
Drivers would have to decide both how much premium they could afford to pay and how disastrous their futures would be if they were involved in an accident.
For perspective, an unrelated study from the University of Michigan Transportation Research Institute examines how much car crashes cost. Commissioned by the Michigan Office of Highway Safety Planning, the study is the sixth in a series that began in 1990. It looks at both the costs of traffic crashes and major crimes.
Traffic crashes cost us more than crime — a lot more.
The monetary costs of crime statewide, in terms of medical care, future earnings lost, public services, property damage and loss, court proceeds and jail, totaled $622 million. Crashes add up to $4.6 billion. But there were a lot of crashes — half a million, compared to almost 40,000 major crimes.
In St. Clair County, average costs for drivers or passengers seriously injured in an alcohol-related crash totaled $584,757 — more than the proposed $500,000 coverage limit and more than double the lower, $250,000 limit. What would those people do when faced with such bills?
Because the injuries are typically so much more severe, the costs associated with a motorcycle accident top the scale. In St. Clair County, a motorcycle crash cost the injured rider almost $700,000.
While auto insurance premiums are rising to paying all those bills, the second thing drivers need to know before they endorse slashing coverage is that the cost of their medical care is rising faster than their premiums, according to an analysis by the Center for Michigan.
It’s not true everywhere. Michigan is not the only no-fault state.
With no limit on what doctors and hospitals may charge — and no limit on what insurers must pay — the average auto accident injury claim cost more than $75,000 in 2013. In New York and Florida, other states with mandatory no-fault coverage, the averages were $7,876 and $7,002. But those states set prices for medical care.
— Times Herald (Port Huron)