Auto No-Fault Overhaul Legislation Moves Out Of House Committee With Changes

Oct 27, 2017

The state is inching closer toward a controversial overhaul of its car insurance law. The House Insurance Committee passed a bill Thursday with several changes. 

The bill gives driver an option on how much personal injury coverage they want. They could pick from three levels. In an earlier version of the bill, only the lowest tier of coverage would have guaranteed drivers lower rates. 

Now, every level comes with guaranteed savings, but if you pick unlimited coverage you will see the least amount of savings. The breakdown is: $250,000 level of coverage could see a rate reduction of 40-percent and $500,000 level of coverage could see a rate reduction of 20-percent. Those with unlimited level of coverage could see a rate reduction of 10-percent.

Those savings on the personal injury protection portion driver insurance premiums would be good for five years. 

"People came up and said that if we're going to make these changes then that should represent savings for everybody, and that's what this does," said bill sponsor Lana Theis (R-Brighton). 

Detroit Mayor Mike Duggan worked with Republic lawmakers on the legislation. Republicans are counting on him to deliver Democratic votes. But Detroit Representative Sherry Gay-Dagnogo (D-Detroit) siad she won't be one of them. She proposed a failed amendment that would have barred insurers from setting rates based on anything besides driving records. 

"With territorial rating in statute, there's no way that Detroiters will receive the type of relief that they need in order to make insurance more affordable," she said.

Gay-Dagnogo is part of a competing auto no-fault bill package in the Legislature. That one has more Democrats and focuses on changing things like the state fraud authority and ending territorial rate setting. They argue letting people opt out of unlimited coverage will cost tax payers more and eventually collapse the system. Bill sponsors recently submitted a letter to Theis, who is also the chair of the House Insurance Committee, asking for a hearing. 

Speaker of the House Tom Leonard (R-Dewitt) supports the bill and worked with Theis and Duggan to craft the original bill. But he says he's not quite ready to put the bill up for a full House vote. 

"I'm still optimistic," he said. "A couple of weeks ago I told you I was cautiously optimistic, last week I told you I was more optimistic that I was the week before, and today I'm more optimistic than I was last week. But we still got a little work to do."

To learn about HB 5013, visit the Legislature's website.