We all know that Michigan motorists pay a ton of money for their auto insurance. Our no-fault system in Michigan is the most generous in the nation. It has worked well for several decades (since the early 1970s). However, it falling apart under its own weight.

The primary culprit with regard to sky rocketing auto insurance rates are the increasing costs associated with the first party benefits. These benefits, sometimes referred to as the no-fault benefits or economic benefits, include unlimited medical coverage (and the related fee for service reimbursement to medical providers) and reimbursement for lost wages, attendant care and replacement services. The insurance industry estimates that twenty years ago first party benefits accounted for approximately 20% of the premium cost. Today, first party benefits have doubled to 40% of the premium cost. As medical costs increase, the cost of auto insurance will increase. Essentially, Michigan auto insurance companies have become health insurance companies. Despite the fact that most drivers are already paying for their own health insurance.

Recently, an unlikely coalition of legislators and special interest groups including the Michigan Chamber of Commerce, Urban League, Small Business Association and legislators Virgil Smith (a Democrat) and Alan Sanborn (a Republican) introduced an effort to reduce auto insurance rates. Their proposal involves a $50,000 cap on no-fault benefits. This approach is often referred to as “PIP Choice”. The same approach that was roundly rejected (by a 30 point margin) in the early 90’s in two state wide voter initiatives. For many reasons, the specific approach is misguided.

However, an approach that might accomplish the same result – lower auto insurance rates in Michigan – has support from many important stakeholders in this debate. This approach seeks to adopt a fee schedule for medical providers that is identical to the worker’s compensation fee schedule – a system that already works. Importantly, this reimbursement approach is more generous than private insurance (including Blue Cross and all HMOs).

An approach involving fee schedules would accomplish everyone’s objective – lower auto insurance rates – without cutting off (read – shifting the responsibility to the state…read – forcing Michigan taxpayers to pick up the tab) catastrophically injured auto accident victims when they blow through the $50,000 cap.

- Posted by Mark Bernstein

Our office has a well earned reputation for fighting hard for clients in and out of the courtroom.

Last week our law firm scored an important victory in a jury trial in a Michigan courtroom. Michael Battersby, a successful and highly experience Michigan trial lawyer won a jury verdict of approximately $300,000 dollars in a case where the insurance company offered only $35,000 dollars (as a final offer to our client). This offer was rejected because it did not come close to compensating our client for serious injuries sustained in a Michigan auto accident.

Mike took the case to trial and won.

The victory sends a message to insurance companies that they can’t play games with our clients. That we will stand up and fight to maximize the value of each case.

Insurance companies know that many lawyers are terrified to go to trial…they don’t want to lose or they lack the financial resources to support the expenses of trial litigation (expert witnesses, diagrams, etc.). Not us.

Congratulations to Mike and our client on a well deserved victory in court!

It will be interesting to see what impact, if any, rising gas prices will have on the number of Michigan auto accidents this spring and summer. The number of miles driven by motorists (both as commuters to work and as tourists on vacation) directly effects the number of auto accidents that occur. ..the fewer miles driven…the fewer accidents. This is, generally speaking, a very good thing.

Will motorists be safer as a result of fewer miles driven? Our guess is that thsi will be the case. This might be a silver lining in the rising cost of gas prices.

We all know that Michigan motorists pay a ton of money for their auto
insurance. Our no-fault system in Michigan is the most generous in the
nation. It has worked well for several decades (since the early
1970s). However, it’s falling apart under its own weight.

The primary culprit with regard to sky rocketing auto insurance rates
are the increasing costs associated with the first party benefits.
These benefits, sometimes referred to as the no-fault benefits or
economic benefits, include unlimited medical coverage (and the related
fee for service reimbursement to medical providers) and reimbursement
for lost wages, attendant care and replacement services. The insurance
industry estimates that twenty years ago first party benefits
accounted for approximately 20% of the premium cost. Today, first
party benefits have doubled to 40% of the premium cost. As medical
costs increase, the cost of auto insurance will increase. Essentially,
Michigan auto insurance companies have become health insurance
companies. Despite the fact that most drivers are already paying for
their own health insurance.

Recently, an unlikely coalition of legislators and special interest
groups including the Michigan Chamber of Commerce, Urban League, Small
Business Association and legislators Virgil Smith (a Democrat) and
Alan Sanborn (a Republican) introduced an effort to reduce auto
insurance rates. Their proposal involves a $50,000 cap on no-fault
benefits. This approach is often referred to as “PIP Choice”. The same
approach that was roundly rejected (by a 30 point margin) in the early
90’s in two state wide voter initiatives. For many reasons, the
specific approach is misguided.

However, an approach that might accomplish the same result – lower
auto insurance rates in Michigan – has support from many important
stakeholders in this debate. This approach seeks to adopt a fee
schedule for medical providers that is identical to the worker’s
compensation fee schedule – a system that already works. Importantly,
this reimbursement approach is more generous than private insurance
(including Blue Cross and all HMOs).

An approach involving fee schedules would accomplish everyone’s
objective – lower auto insurance rates – without cutting off (read -
shifting the responsibility to the state…read – forcing Michigan
taxpayers to pick up the tab) catastrophically injured auto accident
victims when they blow through the $50,000 cap.