No-fault no longer? Inside MI auto insurance proposal

LANSING, Mich. (WOOD) — Michigan lawmakers are once again taking a stab at changing the way the state’s vehicle insurance system works.

In the latest incarnation, no-fault auto insurance would be eliminated and Michigan would operate like most other states, as a tort or at-fault insurance state.

In a tort or at-fault state, the driver who is responsible for a crash must pay for its costs, or at least a percentage of the cost, based on how much they were to blame for the crash.

Michigan’s House has tried for decades to deal with no-fault auto insurance and the rising cost associated with it. The stumbling block almost always comes down to the catastrophic claims fund, which provides unlimited lifetime payments for serious injuries suffered in an auto crash.

Michigan’s catastrophic claims fund is the most generous in the nation and many lawmakers are hesitant to change it. However, Republican Rep. Jason Sheppard of Temperance says under the new plan he’s sponsoring, that fund would eventually be dissolved.

The new system would still cover expenses for those who currently rely on catastrophic claims funding, but no new claims would be fulfilled.

The new set of bills to eliminate no-fault insurance are expected to be introduced and may have hearings, but face an uphill battle in this election year. Last year, the Legislature rejected a plan that promised lower rates for less coverage. The problem historically has been that care providers, attorneys and insurance companies have been at odds over what to do with no-fault auto insurance, and because of their powerful lobbies, change has been impossible to achieve.

Still, with some people in southeast Michigan paying as much as $600 a month for coverage, there are calls for lower rates.