Michigan Catastrophic Auto Insurance Fee to Rise 1.3%

Michigan auto insurance policyholders will pay an additional $1.91 starting July 1 to help pay the lifetime medical expenses of people seriously injured in accidents.

The lifetime benefit is a part of Michigan’s no-fault insurance law. Under the law, the Michigan Catastrophic Claims Association (MCCA) reimburses auto insurance companies for personal injury protection (PIP) benefits paid in excess of a set amount per claim. That amount will increase to $500,000 on July 1, 2011.

Member insurance companies will be reimbursed $145.00 per insured vehicle effective July 1, which is $1.91 or 1.3 percent increase over the current MCCA charge of $143.09.

All auto insurance companies operating in Michigan are required to be members and pay premiums for the reinsurance provided by the MCCA. These premiums, together with the PIP premium, represent the cost to cover the mandatory unlimited medical benefits which, like other costs and expenses, are reflected in the auto premiums all Michigan policyholders pay.

Michigan is the only state in the nation that mandates unlimited lifetime medical benefits for people injured in auto accidents.

MCCA estimates that an estimated 850 Michigan insureds will be catastrophically injured in auto accidents within the next year.

The MCCA said it paid out $897 million (more than $128 per insured car) in 2010 for claim costs resulting from catastrophic injuries. The majority of these catastrophic injuries involve closed head injuries, paraplegia, quadriplegia and burns. Since 1979, there have been more than 25,900 claims reported to the MCCA, which will cost an estimated $74 billion.

Topics Catastrophe Auto Michigan