Michigan Challenges Its No-Fault Insurance Mandate with Optional Caps

Any time you talk about "capping" or limiting coverage for personal injuries, you're playing with fire. This is primarily because the runaway healthcare system in America has made costs for medical treatment and other healthcare involved in treating and rehabilitating personal injuries so wildly unpredictable. In theory, a set amount-even if it is quite large-can sound perfectly reasonable as an upper limit on the amount of compensation or coverage available to an injury victim. However, in practice, it just takes one unusual case or devastating loophole to demonstrate just how one-sided such agreements are against those suffering from life-threatening accidents.

But when you're given a choice to preemptively opt out of coverage-effectively capping future compensation-the decision isn't quite so clear. The real question is, can lawmakers let you choose something that might be against your best interests?

A bill on the table in the state of Michigan would allow drivers to opt out of the generous unlimited medical care that is currently required as part of the state's no-fault auto insurance law. The bill is a response to high prices, and proposes caps to drive down prices. This makes good business sense, because if insurance companies know how much they will be liable for, they will be able to translate their own lowered financial obligations into lower premiums.

The new system enacted by the bill would allow motorists to choose levels of $50,000, $100,000, $200,000 or $400,000 in coverage, or alternatively remain with the unlimited coverage level.

The price for each driver to pay into the Michigan Catastrophic Claims Association fund is $104.58, an annual fee that changes each year. There is no indication in news reports what the modified fee would be for limited coverage, or what savings if any a motorist would gain from choosing to cap coverage.

However, regardless of costs, the potential for unknown in automobile accidents makes Michigan's expansive, unlimited no-fault insurance mandate one of the best in the country in terms of providing coverage for victims suffering from all manner of injury trauma. The director for the state's rehabilitation programs, Margaret Kroese, suggested that those most likely to cap coverage at a low level (young people) were also those most likely to suffer serious and permanent injury.

For now, the bill remains on the table, but many former accident victims who have benefited from the state's unlimited coverage mandate and would like to pass on the wisdom of their experiences are moving forward with public statements in different forums.

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