The people of Michigan just cannot win when it comes to car insurance rates. The latest effort to “help” Michigan drivers lower their car insurance rates would to add a $2 charge to each vehicle insured in the state. That’s right the state wants to control costs by increasing premiums.
The money would be used to fight “car insurance fraud” in an effort to keep rates down. The charge was recommended by the Fighting Auto Insurance Rip-Off Task Force set up by Secretary State Ruth Johnson and an organization called the Insurance Institute (a lobbying group for the insurance industry).
The money raised by the fees would be used to fund an “auto insurance fraud authority.” The authority would join the Automobile Theft Prevention Authority is funded by a $1 charge on car insurance policies. Note don’t the people of Michigan already pay taxes for police forces whose job it is to fight auto theft. The authority would analyze car insurance fraud data, consolidate fraud investigations and provide training to prosecutors and law enforcement.
Those measures might benefit the auto insurance industry but they certainly would not help average Michigan residents who can barely auto insurance. As we pointed out recently, Detroit now has the most expensive auto insurance in the nation, the average resident of the Motor City pay 130% more for insurance than the average American. In contrast Cleveland area residents pay 31% less than the national average for car insurance.
The measures would benefit the insurance industry by forcing more people to buy insurance. They would not help lower insurance rates or provide relief to working and middle class families that can barely afford to drive.
Notice that the Taskforce isn’t tackling the real causes of Michigan’s high auto insurance rates: the state’s no-fault auto insurance system. That system penalizes good drivers because insurers are not allowed to raise rates for lousy drivers. Most states have a system of individual responsibility.
Simply getting rid of no-fault auto insurance and putting limits on personal injury payouts in Michigan would quickly bring auto insurance rates in the state down to Earth. They would also benefit average people and end the insurance fraud problem.
Last year the Insurance Institute estimated that around 16.1% of auto insurance certificates in Michigan were fakes. In the Detroit area the percentage of fake insurance is nearly 45%.
Obviously a lot of the people using those fake or invalid insurance certificates are responsible law abiding citizens. Say a single mother who needs to drive to reach her job to put food on her children’s table but cannot afford insurance.
What’s truly disgusting is that Michigan’s political leaders have no plan to help such individuals by abolishing no-fault auto insurance. Instead they plan to increase insurance rates and launch of plan of enforcement that could land many low income people in jail with a felony record. Or worse take their cars away so they won’t be able to work and support their families.
After reading about Michigan’s no-fault auto insurance situation, the Samurai is glad he lives in Colorado. He’s also grateful to the Michigan state legislature for making him a little prouder of his home state. He never thought that there was a worse state legislature than the one in Colorado, well apparently there is in Michigan.