Michigan’s auto insurance has been a topic of interest to many for a long time, often due to its cost relative to auto insurance in other states. While our no-fault law is viewed negatively by some consumers that haven’t been involved in a major auto accident, the Personal Injury Protection benefits provided by Michigan’s law, which far exceed those of any other state, have helped many who were seriously injured in auto accidents avoid bankruptcy and receive the care they need.
All auto insurance policies issued in Michigan provide medical and rehabilitation expense coverage with no time limit or maximum dollar limit for individuals injured in auto accidents, as well as replacement of lost income up to $65,000 per year for up to three years. Over half of the claim expenses paid in 2017 were for attendant care for individuals who were unable to care for themselves following a serious auto accident.
As a case in point, we have a client who was severely injured in an auto accident in 1994 who is still receiving medical and attendant care benefits paid by his auto insurance policy. So far, almost $7,000,000 has been paid by his insurance company for these expenses. In any other state, his coverage would have been exhausted long before receiving the care that he needed.
Because a claim of this size could threaten the financial stability of some insurance companies, a non-profit fund known as the Michigan Catastrophic Claims Association (MCCA) was established in 1978 to provide a form of reinsurance to all insurance companies writing auto insurance in Michigan. Currently, an insurance company’s medical expenses over $555,000 for any single claim are reimbursed by the MCCA.
Each year a board of directors for the non-profit MCCA reviews past claims and expenses, as well as projections for future injuries and related expenses, and adjusts the MCCA charge accordingly. Each insurance company is required by the state of Michigan to collect the MCCA charge as part of auto insurance premiums and remit the funds to the MCCA.
For the period of July 1, 2018 to June 30, 2019, the annual charge is increasing from $170 per vehicle to $192 per vehicle, a $22 per year increase per insured vehicle. This charge of $192 is the same for each vehicle regardless of the type of vehicle (old vs. new), the coverage on the policy (PLPD vs. full coverage), or the driver of the vehicle (experienced vs. youthful). Insurance companies do not determine the charge and may not use the funds for their own business. The actual charge shown on your policy will be slightly higher because the mandatory charge also includes a few dollars to fund the Michigan Auto Theft Prevention Authority.
You can find the charge listed on your policy where premiums for the coverages are shown. Each insurance company uses slightly different language when describing the charge, but it is generally noted on an insurance policy as “MCCA/MATPA”, “Programs Required by State Laws”, “State Mandated Assessments”, or something similar.
We know that changes in insurance costs can be disruptive to your budget and think it is important that you understand the source of this change. We feel there are reasonable ways the state of Michigan and the MCCA can better manage these rising expenses (see here), but that’s a story for another day.