Study: Michigan Consumers Open to Auto Reform Options, Uncertain About Process

Citizens Insurance Co. of America, a Howell-based provider of property and casualty insurance for individuals and families in Michigan, announced the findings of a recent research study it conducted on Michigan consumers’ and independent agents’ expectations regarding the state’s no-fault auto insurance reform, which goes into effect July 2.
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Citizens Insurance Co. surveyed 300 consumers in Michigan regarding the state’s no-fault auto insurance reform, which goes into effect July 2. // Stock photo

Citizens Insurance Co. of America, a Howell-based provider of property and casualty insurance for individuals and families in Michigan, announced the findings of a recent research study it conducted on Michigan consumers’ and independent agents’ expectations regarding the state’s no-fault auto insurance reform, which goes into effect July 2.

Citizens partnered with Zeldis Research Associates to survey 300 consumers in Michigan at the end of 2019. The survey explored consumer response to reform, how much consumers knew about the new law, and what actions they might take as a result.

The key findings of the research include:

Consumers are open to making a change.

  • Some 70 percent of respondents say they plan to switch from unlimited personal injury protection (PIP) to another level of protection.
  • When making their choices, 60 percent of consumers will weigh coverage and price equally.

Consumers are uncertain about auto reform.

  • 60 percent are unsure when key aspects of reform take effect.
  • 62 percent are unsure whether a driver who causes an accident can be sued.
  • 65 percent are unsure whether non-resident insureds are still covered.

Consumers value the help and support of independent agents. Two-thirds of consumers said they have or will seek help regarding reform from an independent agent. Nearly 60 percent of respondents said independent agents are the most trusted source for information about reform.

“Until this year, Michigan has required drivers to pay for unlimited, lifetime PIP coverage, which far exceeds the PIP coverage required by any other state and contributes to our highest-in-the-nation auto insurance costs,” says Paul J. Mueller, senior vice president at Citizens. “Finally, auto reform will provide Michigan residents with choice and enable them to work with their independent agents to buy the appropriate level of coverage.”

Starting July 2, Michigan drivers will have five PIP coverage options.

  1. Unlimited PIP coverage (10 percent reduction)
    Covers unlimited, lifetime car accident injury expenses. Drivers concerned about maintaining their current level of car injury coverage should keep this option.
  1. $500,000 of PIP coverage (20 percent reduction)
    Covers car accident injury expenses up to $500,000.
  1. $250,000 of PIP coverage (35 percent reduction)
    Covers car accident injury expenses up to $250,000.
  1. $50,000 of PIP coverage (45 percent reduction)
    Covers car accident injury expenses up to $50,000. This is the lowest option available for Medicaid recipients.
  1. Opt out of PIP coverage (100 percent reduction)
    Drivers can opt out of PIP coverage completely only if they have Medicare or a qualifying health insurance plan that covers car accident injuries.

Citizens, which insures nearly 450,000 vehicles in the state, recommends that consumers consider all available options. It’s important, the company says, to balance cost savings with coverage options. For example, according to the Insurance Research Council, 99 percent of Michigan PIP claims are below the new $500,000 PIP coverage option.

The company also recommends consumers assess their total insurance package, including umbrella and bodily injury limits. They should be sure to look at all of their coverages to see if there are any gaps to consider. For example, there are many benefits to bundling home and auto policies together with one carrier.

On Tuesday, the governor’s office and the Michigan Department of Insurance and Financial Services approved rate filings from Michigan’s auto insurance companies that exceed the rate reductions required by Michigan’s new auto no-fault law.

“The landmark auto insurance legislation was the product of bipartisan compromise,” says Wendy Block, vice president of business advocacy and member engagement for the Michigan Chamber of Commerce. “Although far from perfect, it’s clear from this report that parts of the legislation are working to bring savings to Michigan drivers and businesses.

“Michigan drivers have been paying some of the highest auto insurance premiums in the country, and this independent report shows the bipartisan legislation is beginning to work. This is welcome news at a time when businesses and employees across Michigan are facing unprecedented challenges.”

For a more detailed report, read “Cut-Rate Insurance” in the March/April 2020 issue of DBusiness magazine here.

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