The average cost of an auto insurance policy in Michigan increased 4 percent in 2004, according to a study by the Insurance Institute of Michigan. The average auto insurance premium in 2004 was $1,130, compared to $1,086 in 2003, the study concluded.
Michigan is the only state that requires insurance companies to provide unlimited, lifetime medical benefits to motorists injured in auto accidents. Auto insurance premium hikes in Michigan and across the country have leveled off after years of increasing. The number of auto accidents, safer cars and fraud-fighting efforts have contributed to this trend, IIM Executive Director Peter Kuhnmuench said in a statement. However, he observed that rising costs for medical care, vehicle repairs and lawsuits remain a problem.
For example, it now costs insurance companies an average of $24,531 for each personal injury protection claim, which includes medical expenses for those injured in auto accidents. This compares to $10,877 just five years ago. The average collision claim has increased from $2,209 to $2,622 during the same period.
Sharply higher jury awards in auto liability cases also caused auto insurance rates to rise. The average jury award in auto liability cases rose from $187,000 in 1994 to $220,680 in 2002, according to Jury Verdict Research, a national database of jury verdicts and settlements. The average liability claim in Michigan increased from $26,922 in 1999 to $33,193 in 2004.
Insurance fraud also contributes to higher insurance premiums and all policyholders pay for it. Insurance fraud costs Americans at least $30 billion a year, or nearly $200 to $300 for each family.
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