Photo via Shutterstock
Photo via Shutterstock

A slate of auto insurance reforms set to start July 1 look to be providing higher than expected savings to Michigan motorists.

LANSING, MI — The average Michigan motorist is expected to save big on auto insurance.

This is the result of an auto insurance reform package signed in mid-2019 that required insurers to lower rates for Personal Injury Protection (PIP) coverage and went from one form of PIP coverage to five coverage options. Those options include opting out of PIP if health insurance covers collision injuries and a lower rate of coverage for Medicaid recipients. 

Additionally, the Michigan Department of Insurance and Financial Services (DIFS) rejected any PIP coverage filings from insurers that factors like sex, marital status, home ownership, or zip code in calculating costs. 

Infographic courtesy the Office of the Governor

All rates set to go into effect were, for the first time, reviewed by outside independent actuaries.

“This is great news for Michigan drivers and their families,” said Gov. Gretchen Whitmer. “Last year, we worked across the aisle to pass a historic, bipartisan auto insurance reform to bring down costs for drivers everywhere. It’s great to see that it’s paying off for Michiganders, especially during a time when drivers may need extra money in their pockets. I look forward to continue working across the aisle to ensure lower rates for Michiganders.”

SEE ALSO: The UAW Just Endorsed Biden: America Needs “Steady Leadership”

Taken together, these reforms were initially expected to provide at least 10% to 45% savings on plans set to renew after July 1, but so far the reforms have exceeded those expectations,DIFS said in a release. Actual savings are expected to range from 16.5% to 54.3%. This was based on early filings from one-fourth of the auto insurance market in Michigan. 

Infographic courtesy the Office of the Governor

“These filings show statewide savings exceeding the law’s requirement at each PIP coverage level,” said DIFS Director Anita Fox in a statement. “Michiganders can also choose a coverage that best fits their family’s needs and budget, and can expect savings for each option.”

Though, as the Detroit Free Press notes, the Coalition Protecting Auto No-Fault analysed early filings and found these savings aren’t coming from insurers actually lowering their pricing. Instead they’re relying on reductions to the $220 annual catastrophic claims fee assessed to each vehicle. That fee dropped to $100 for some drivers and disappears entirely for others as part of the package of reforms. 

But even when adjusted for required increases in Bodily Injury coverage, Michigan drivers are still expected to save more than was initially projected. 

UP NEXT:  WATCH: 5 Times SNL Spoofed Gov. Whitmer Perfectly

PIP covers allowable expenses for medical care, recovery, rehabilitation, and some funeral expenses and typically accounts for around half of the auto insurance costs in Michigan. The catastrophic claims fee, meanwhile, goes to the lifetime medical care of the worst-injured accident victims.

DIFS did not say which six insurers submitted early filings.