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Michigan Considering Car Insurance Reform

Currently the state of Michigan enforces no-fault insurance, which means that accident victims can claim compensation from their insurance holder, even if it was the other person's fault. In some other states, car accident victims can choose to claim under the other driver's insurance company if they were liable for the accident. The state also allows victims to receive limitless benefits for as long as they live, if they incurred a permanent injury. Many people who have recovered financial help under this policy would otherwise be unable to claim benefits.

The proposed new bill, however, would set a limit on these benefits, if passed. Michigan SB 251 advises that a $50,000 cap be put on personal injury benefits to reduce insurance costs that are becoming unbearable. The bill would also rid the state of the Michigan Catastrophic Claims Association, which helps to pay claims that are over $500,000. Up to this point, drivers have paid $175 per-car to fund this organization.

If this bill is passed, however, victims of motor vehicle accidents would be much less protected. The expenses for medical care would then be shifted from the insurance companies to the families of victims or government programs like Medicaid and Medicare, for those who qualify. It remains to be seen if insurance companies will actually lower their premiums if this bill passes. Past bills of this nature have not passed, but it is still uncertain what will happen.

No-fault insurance originally had the purpose of lowering premiums because it avoided expensive lawsuits and streamlined the compensation process. While this sometimes causes certain disadvantages for certain companies, it was presupposed that drivers who were at-fault would be charged higher premiums so that the insurance companies could cover their losses. This new bill will unfortunately benefit insurance companies rather than accident victims.

If you have any further questions about the no-fault insurance policy or car accident claims, then get in touch with a Detroit car accident attorney from Abrahams Law. My firm is more than happy to answer questions 24/7. You can also visit our FAQ page for additional information.