Comparing MI auto insurance to other states

GRAND RAPIDS, Mich. (WOOD) — Car insurance bills especially hit a nerve with people in Michigan. Michigan drivers pay some of the highest premiums in the country, according to insure.com.

Every time 24 Hour News 8 does an automobile story or a town hall with the governor, we get bombarded with questions from viewers about Michigan’s high auto insurance rates.

So Target 8 did some comparison shopping from state to state and discovered some surprising differences in price simply based on whether you live in Michigan.

“I think it’s outrageous.  It’s just very, very expensive,” said driver John Sorensen.

Sorensen has a 2003 truck and an even older Jeep.  The 71-year-old says he has a perfect driving record — yet he pays more than $1,600 per year to insure his vehicles.

Sorensen blames two things: that Michigan is a no-fault state and that drivers pay $188 per year into a catastrophic fund to pay for lifelong treatment for seriously injured car accident victims.

One insurance company quoted his 11-year-old truck at $463 for six months in Michigan.

In Ohio, he would shell out $420, Target 8 found. In North Carolina, he’d pay $397. In Iowa, he’d only pay about $268. And in Idaho, he’d pay even less: $239 for six months — about half what he pays to drive in Michigan.

“I think it needs to be revamped. Something needs to be done with how it is in Michigan,” Sorensen said.

State Rep. Ken Yonker (R-Caledonia) said his office gets calls about Michigan’s high insurance rates on a regular basis. He says Michigan’s insurance system needs an overhaul.

But to be fair, Target 8 discovered our state isn’t alone in high premiums.  In Oklahoma, Sorensen’s old truck would run him $549 for a six-month premium and in Louisiana it would cost $780. That’s roughly $300 more than in Michigan.

Still, according to insure.com, Michigan topped the list in 2011 of the highest insurance rates in the country.

Last week, House Speaker Jase Bolger (R-Marshall) and the House Republicans surprised lawmakers when they suddenly unveiled a reform proposal.

It puts a $10 million cap on payouts from the catastrophic fund and requires insurance companies to reduce policy premiums by a minimum of 10% for at least two years so some families of four would save $250. It also creates an authority to investigate and prosecute fraud and abuse.

Rep. Yonkers previously pushed similar legislation, but couldn’t get the votes.

“I think the big thing is the majority of the lawmakers want to protect the integrity of the catastrophic claim,” Yonkers explained. “Because we know what happens if we don’t have that, is we go into bankruptcy. That’s where you go before you can get Medicaid. And that’s very hard on families. Very, very hard on the economy.”

Sorensen understands the what the catastrophic fund is for, but he wants a way to opt out of paying into it and taking his chances at not getting into a crash.

“I have no options. I’m forced to be in this fund. And believe me, I can understand to be in an auto accident and be permanently disabled for the rest of your life is horrific,” Sorensen said.

==Tuesday morning on Daybreak, Rep. Yonker will be in studio to answer your questions about auto insurance. Post them in the comments below or email them to ReportIt@woodtv.com.==

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Online:

Insure.com

Price insurance by states at esurance.com

Inside woodtv.com:

A infographic breakdown of Michigan’s no-fault insurance policy and the reform proposal from House Republicans (pdf)

The House Republicans’ auto insurance reform proposal (pdf)

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