By on December 8, 2021

Despite being one of the last hero states to not require routine vehicle inspections, Michigan is infamous for boasting the highest auto insurance rates in the whole country. Blame the double-edged sword that is the state’s no-fault insurance scheme, the region’s relatively high number of uninsured motorists, or the general popularity of personal injury lawsuits (an American pastime). Heck, blame the whole insurance industry while you’re at it because it’s the one that managed to become wildly profitable off the concept that you’ll be bankrupted if you don’t pay in.

But don’t blame Michigan’s formerly mandatory unlimited personal injury protection (PIP) requirement that’s been around for decades, because it was done away with in 2019. The previous arrangement required drivers in The Mitten State to purchase unlimited PIP insurance, allotting for those at fault (no-fault insurance schemes be damned) to provide a lifetime of medical benefits to victims. On Tuesday, Gov. Gretchen Whitmer’s administration announced that the Michigan Catastrophic Claims Association (MCCA) fund will also be issuing $400 checks to drivers in the spring of 2022 as part of a $5 billion surplus that’s being handed off to insurers. 

According to The Detroit News, the MCCA board voted in favor of issuing refund checks to drivers across the state on November 3rd. A plan has since been submitted to issue refunds with aid from the Department of Insurance and Financial Services. Anyone with a Michigan-based insurance policy from October 31st will be deemed eligible, with automatic payouts coming via their chosen insurance firm next year. Michiganders will be receiving $400 per car unless it’s wearing historic plates (which is worth $80).

From The Detroit News:

The Democratic governor called on the MCCA to issue refund checks to distribute its $5 billion surplus in November. Democratic and Republican lawmakers have supported the refund effort. Under state law, the MCCA levies an assessment each year to cover claims for those catastrophically injured in car accidents.

The organization’s analysis found that about $3 billion of the surplus could be returned to policyholders. The MCCA sought “to issue the largest possible refund to policyholders while maintaining sufficient funds to ensure continuity of care,” said a letter from Kevin Clinton, the association’s executive director.

Whitmer said Tuesday that “these refunds and the recently announced statewide average rate reductions are lowering costs for every Michigan driver.”

“Michiganders have paid into the catastrophic care fund for decades, and I am pleased that the MCCA developed this plan so quickly after unanimously approving my request to return surplus funds to the pockets of Michiganders,” the governor said.

There are downsides, however. Insurance agencies (which backed the plan) are still benefiting immensely from the refund and the state’s updated insurance rules have seriously reduced the reimbursement rates insurers are required to pay for health services that lack a Medicaid code. This pertains largely to homecare, with providers now eligible for just 55 percent of their previous rates.

“This kind of energy and focus is misguided when we have people who are losing care,” said Tom Judd, president of the Michigan Brain Injury Provider Council. “When we have people who are struggling to provide care and we have families who are in turmoil. For those people who are going through that process, it looks as if the concern and priority of the governor and the Legislature are not with them.”

[Image: Hanson L/Shutterstock]

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15 Comments on “Insurance Refund: Michigan Drivers Getting $400 Per Vehicle Next Spring...”

  • avatar

    So they are turning over $5 billion to Big Insurance but only distributing $3 billion to the plebs?

    • 0 avatar

      They need to keep the fund solvent. So they can not return all $5b. I know somebody that is getting a house due to her brain injury after being hit by a red light runner while she was jogging.

    • 0 avatar
      Greg Hamilton

      The Lumpenproletariat or plebs as you call them will be lucky to get anything at all. Many of my associates who grew up behind the iron curtain have seen this play before.

  • avatar

    What a scam. And the worst part is that insurance rates are (still) so high in Michigan that many go uninsured or lie about their residence to get a better rate.

  • avatar

    I will say that I am pleased to be (eventually) receiving $1200 as a refund. I will also say that very little has changed since the new law in 2019. You are an idiot if you don’t still pony up for unlimited PIP as it really doesn’t increase your premium by a substantial amount.

    My firm has some lawyers who deal with this on the defense side and it is going as strong as ever. I think if the average person understood, just how much of their premium was driven by graft in the medical system, frivolous lawsuits and attorney fees in general, they would demand the whole thing be scrapped right now. We jokingly call the Michigan “No-Fault” law the; “Full Employment for Attorneys” law.

    The whole scheme is absolutely ridiculous. If you get hurt, have no car, no insurance of any kind……just bring your carcass to the nearest intersection, tell the police a car hit you, a motorist threw something at you, etc and you can get medical benefits for life, replacement costs, etc. All the scammers know this and all of us normal folk are paying for it and giving 30% to their attorneys. That is why you see a personal injury attorney commercial on local networks every other minute. I hate local TV because of it.

    • 0 avatar

      “I think if the average person understood, just how much of their premium was driven by graft in the medical system, frivolous lawsuits and attorney fees in general, they would demand the whole thing be scrapped right now. ”

      +1 million on the medical costs remark Some anecdotes:

      1) A few years back, one of my friend’s kids made a suicide threat at school (oy) and got taken to the hospital (which could pass for a Hilton, by the way). They kept him in a holding room for a few hours hours for a psychiatric bed to open up, during which time he was apparently not given any meds, was not seen by a doctor, or hooked up to any machines. The hospital billed insurance $5,000 for the room stay. Apparently building hospitals that look like nice hotels is pricey.

      2) I underwrite mortgage loans, and see doctor’s applications all the time. The lowest paid doctor I ever saw was an ER doc. Meanwhile, we have the specialists. One needed to take $150,000 cash out of his second (!) vacation home. Why? To pay the balloon note…on his Lamborghini. Another wanted to buy a third $2 million investment condo in the same building in Marina Del Rey (apparently having two was just not gonna cut it). Both of these guys were making well into seven figures, which is not uncommon at all for physicians. Meanwhile, the guy in the ER who will literally bring your a** back to life after you keel over from a heart attack or get run over by a bus makes about 150. What’s wrong with that picture?

      3) My brother died of esophageal cancer a few years back. He needed an operation to resect his esophagus, and was referred to several surgeons. One told him that he couldn’t take his case because – get this – they wouldn’t make enough on the operation. That’s right…not “we won’t get paid” but “we won’t make enough.” When my brother reminded the office that if he would die without the operation, they hung up. Several others declined as well. He found another guy who would do the operation with the proviso that my brother would have to sign away his right to file medical bankruptcy afterwards. If he’d lived, he’d have been a debt slave forever.

      I have no problem with people making a way-above-average living doing medicine, but people should NOT be getting rich off it. How much of that Lambo and third investment property ended up in their patients’ bills? I looked up that doctor that hung up on my brother, and he lived in a $5 million house in St. Louis (and if you know anything about St. Louis, you know a $5 million house there is basically Southfork Ranch).

      This isn’t people making a great living – it’s greed, plain and simple.

      • 0 avatar

        Our system of financing health care is the most f#%ed up thing you can possibly imagine. You could hardly design a better device to remove all accountability if you tried. Multiple layers of billing, unpopular insurance companies seeing most of the bills, employers paying most of the premiums, government forbidden from using its negotiating leverage as a big payor, no pricing transparency anywhere.

        You could do better with either a liberal approach (either government as payor or regulating payors as utilities) or a conservative one (full price transparency and competition) but either one would impose accountability on doctors, hospital executives, and insurance executives that they really don’t want at all, so they block meaningful political progress except to further subsidize people who can’t afford to participate in the existing system.

        • 0 avatar

          The basic issue is that health care providers are inflating what they should be charging. The insurance companies are then enabling the overcharging by paying the claims, and then charging higher premiums. Everyone gets well.

          I suppose you could try a “shop-around” approach. My last employer had a plan like that, and the benefits lady announced it during a town hall meeting. She extolled how great it is to shop for health care. All good until someone asked her, “so if my kid’s wailing in my back seat with a bone sticking through her skin, I’m gonna shop around for an ER?”

          Cue crickets chirping.

          Any solution has to start with costs, and that means that we are going to have to tell providers – physicians AND hospitals – that they can’t get filthy rich doing this anymore.

  • avatar

    To be fair, Michigan insurance rates were high before they came up with the current system, which caused them to try something new. Michigan has more than its share of bad roads and bad weather. I would like to see some state take a try at “pay at the pump” first party auto insurance, which would practically eliminate the uninsured driver problem.

  • avatar

    Nothing is preventing Tesla from agreeing to unionize to take part in that sweet $4500/vehicle subsidy. Note there is a domestic manufacturer subsidy separate from the union subsidy.

    • 0 avatar
      Art Vandelay

      Nothing is.preventing people in high cost of living areas from moving, nor unemployed from getting jobs. How about all keep your grubby hands out of my pocket for a change.

    • 0 avatar

      “Nothing is preventing Tesla from agreeing to unionize to take part in that sweet $4500/vehicle subsidy. ”

      Actually. there is. It’s not Telsa’s choice. It’s something that’s decided by the employees. Check the NLRA.

  • avatar
    The Snu

    Counter Point for a Plaintiff’s attorney in Michigan. The most expensive part of your auto insurance has always been the cost to repair your car. That’s usually 50% of the policy charge.

    We had unlimited no fault benefits. That meant, for example, if you were rendered a quad in an auto accident, you’d get lifetime medical benefits. If you needed surgery, for example, because after years of conservative treatment, you weren’t getting better, or it wasn’t working any more, you could get that treatment.

    Your average person, if they get hurt bad enough to have a life-changing injury, it will be in a car accident.

    And for what little you paid, you got the best. Full stop.

    Now, here’s what’s going to happen. People are going to buy the cheapest option, which has minimal coverage for medical bills. IIRC it is $50,000.00. No health insurance covers auto claims. So your auto insurance runs out, because 1 day in the hospital will burn through 50k in a heartbeat. Your health insurance won’t pay. So you turn to Medicaid. I’m pretty sure you don’t want Medicaid level of care.

    And suing the negligent driver? Bankruptcy is always an option (other than drunk driving). And what if the accident is your fault?

    Insurance is the real scam. You can’t drive a car in Michigan without insurance. So here’s a product that you have no choice but to buy.

    And everyone thinks that they are insured, they are covered, etc. It’s like the guy who sold raffle tickets for a dead horse. He brags to his friend that he made $9,990.00 from selling tickets for the horse. His friend says “who would buy a raffle ticket for a dead horse?” The guy says “I didn’t tell them the horse was dead.” His friend says “Didn’t the winner complain?” The guy says “Yes, so I gave him his $10.00 back.”

    Everyone who has insurance is now buying a raffle ticket for a dead horse. Except they aren’t getting their premiums back.

    • 0 avatar

      great post, thank you!

    • 0 avatar

      This is always the battle between plaintiff and defense attorneys. I will fully admit that there are some very serious injuries that fully deserve money thrown at them and that there are some horrible insurance companies and players on the defense side. But I also know that 90% plus of the Wayne County “trial” docket is PIP related, I suspect that the bulk of all Wayne County filings are related to “alleged” auto accidents. Judge Colombo threw that statistic out there a few years back when he was still on the bench.

      I have seen medical bills for matters with Auto insurance as the primary payer and know that medical providers jack up their rates to astronomical levels for auto cases. The unassigned claims provision in Michigan law have created an almost criminal enterprise. I know that plaintiff firms have started their very own MRI/CT mills and have cultivated their very own crop of experts to testify to anything. I know the defense side of it does the same thing, but in my experience they don’t have to nearly as often or to the same extent, because objective treating physicians more often than not will contradict the plaintiff “experts” for us. Some plaintiff attorneys have been/are being investigated for illegal kickback schemes from the medical community.

      There is an ad for personal injury attorneys on every network in Detroit to the tune of 10-20 per hour on each network. Ads and billboards are strategically placed in low income areas to bring out the “clients”.

      Now, I am truly a bleeding heart and fully appreciate low income access to justice, compensation for the little guys who are injured and are facing the resources of the insurance companies. But Snu, I think you know this….that the whole personal injury thing related to auto has devolved from justice into primarily a bottomless cookie jar for scammers, attorneys and medical providers. I will fully admit that includes the defense side since they make their living on this as well and are fully interested in seeing it continue.

      My bleeding heart tells me that it is doing far more damage to society than good. Every person in this state is paying the price for this failed system. As you know, there are A LOT of people who cannot afford car insurance. The premiums we spend could put a lot of food on people’s tables, instead, the system is reaching into their pocket to redistribute their limited resources to attorneys, doctors and scammers that don’t deserve a single penny.

      Michigan’s system is excellent in that it provides for those who have suffered catastrophic injuries. They problem is that everyone else is screwed in the process.

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