Michigan Governor Gretchen Whitmer officially signed a landmark no-fault auto insurance reform bill today (May 30). The legislation, which passed with bipartisan support, is designed to lower the state’s ‘extortionate’ insurance premiums by letting drivers forego a one-of-a-kind requirement to buy unlimited medical coverage for crash injuries.

The bill, which will take effect next week once it has been filed with the Office of the Great Seal, will guarantee rate reductions for every Michigan motorist and offer choice among personal injury protection, or PIP, levels, which often make up about 50% of car insurance premiums. According to earlier Associated Press reports, a rollback in PIP rates will start in July 2020 and last for eight years.

The legislation also prohibits the use of several non-driving factors in setting rates and scale back reimbursements for health providers that treat accident victims to 190% to 230% of what Medicare pays, according to a report by wwjnewsradio.com.

In contrast to some other no-fault auto insurance states, Michigan doesn’t have a fee schedule for care covered by auto insurers, which means they’re often paying much more for the same services than employer plans or government insurance, such as Medicare, have to pay.

This has contributed to Michigan’s very costly average auto insurance premium. According to a recent report by The Zebra, an insurance comparison website, the average auto insurance premium in Michigan is $2,693, which is 83% higher than the national average of $1,470. Detroit’s premium on average is a staggering $5,464, which is much higher than any other US city.

After signing the reform bill into law at the Mackinac Policy Conference, Governor Whitmer told WWJ that the bipartisan cooperation in Michigan is a stark contrast to what’s coming out of Washington.

She said: “When we focus on these fundamentals, I think we can find common ground. There’s so much ideology and dysfunction in Washington D.C. and I am determined not to let that divided government paralyze us in Michigan, but to make it incredibly productive.”

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Just weeks after Michigan Governor Gretchen Whitmer signed a landmark no-fault auto insurance reform bill, legislators are demanding for more to be done to reduce the state’s extortionate auto insurance rates.

US Rep. Rashida Tlaib has introduced a bill called the Prohibit Auto Insurance Discrimination Act (PAID), which would prevent auto insurance companies from using non-driving factors like zip code, census tract, gender, education, occupation, employment, homeownership, credit score, and marital status, to determine rates.

According to a report in the Detroit Metro Times, Tlaib brought PAID to the table alongside Rep. Bonnie Watson Coleman, D-N.J., because she believes the bill recently signed into law by Governor Gretchen Whitmer “does not go far enough to stop these harmful practices” of using non-driving factors.

“Auto insurance rates should be determined by your driving record, not your credit score, gender, marital status, education, residence, or any other non-driving factor that has nothing to do with your safety on the roads,” Tlaib commented. “Drivers in Michigan’s 13th congressional district face some of the highest car insurance rates in the nation, and non-driving factors that serve as proxies for race and income and allow modern-day redlining are a main culprit. The use of non-driving factors puts marginalized communities at a disadvantage and creates obstacles to economic opportunity for families.”

According to the insurance search engine, The Zebra, Michigan has the highest auto insurance rates in the country, with an average premium of $2,693. Some drivers in the state are paying in the realm of $5,000 every year to get on the roads, which takes a significant chunk out of the average annual income of Detroiters.

Watson Coleman told the Detroit Metro Times: “Car insurance is absolutely necessary for most American families, so when companies raise rates for unfair, undisclosed, and unproven reasons, families are going to be hurt. Income proxies like where you work or whether you have a college degree don’t weed out bad drivers — they just create a two-tier system where those who make less get charged higher rates. Working families deserve better than a system that is fundamentally unfair.”

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Driving a Tesla may save their owners money on gas – but, according to a report, they’ll probably end up using those savings on insurance premiums.

A 24/7 Wall Street report found that two Tesla Models – the Tesla Model X Electric 4WD and the Tesla Model S 4dr Electric 4WD – were America’s two most expensive vehicles to insure. Coming in first place, the Model X has an annual average cost to insurers of $1,909, while the Model S has a $1,866 annual average cost to insurers.

Read more: These are the most, least expensive cars to insure in 2016

24/7 Wall Street said that it reviewed data on insurance claim payments made by insurers by make and model from the non-profit Insurance Institute for Highway Safety in order to find the cars with the highest insurance costs – with the model that is most expensive to insure having the highest overall average cost to the insurer per year.

In third place is the Mercedes-Benz S-Class 4dr LWB ($1,783), followed by the Mitsubishi Lancer ($1,556), the BMW 4 series 2dr ($1,485), the Dodge Charger HEMI ($1,475), the Kia Optima Hybrid ($1,475), the Scion/Toyota FR-S/86 series ($1,447), the Chevrolet Camaro ($1,402), and the Dodge Challenger ($1,399).

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The season of RVing is upon us, as families pile into campers, make their way to America’s campgrounds, and explore all that this nation’s parks have to offer. While a policyholder can just hitch up their RV to their standard auto policy, that isn’t necessarily the option that provides the best protection, should anything happen in the midst of an RV adventure.

“The biggest difference between an RV and a car is that the RV is dual purpose. It’s a car or [a form of] transportation, but it’s also used as a home, so there are unique exposures that a standard auto type of policy doesn’t address,” said William Hobbs, president of Recreation Insurance Specialists (RIS), which is a member of the Allstar Financial Group network of companies.

If a neighbor that’s strolling by your house trips and falls in your driveway because their foot got caught in a crack, that is a personal liability exposure. The same applies for an RV.

“If you’re parked at a campground, you’ve got personal liability exposure there as well. Everything from, you could be throwing horseshoes and hit someone,” said Hobbs. “We had a claim years ago in our program where a guy was barbecuing ribs and he was a hunting enthusiast, so he packed his own shot gun shells. He was carrying actual gun powder with him in his RV, and he was grilling a couple of feet away from his RV for an extended period of time.”

The heat from the barbecue ignited the gunpowder and caused an explosion, which affected his neighboring RVers. This incident wouldn’t have been covered by a standard auto policy since it was damage caused to other people’s property.

A few other exposures faced by RVers are also covered by specialty RV insurance.

“In many cases, the contents coverage you have for your home does not apply to things that you’re carrying around in your RV, so a specialty policy provides contents-type coverage for you in that situation,” explained Hobbs. “There’s also a very popular coverage called total loss replacement coverage. That’s a unique coverage in the RV world. It started to make its way in the personal auto world in recent years, but it’s been in the RV industry for over 20 years. If you buy a brand new unit and five years from now, you have a loss [because] your RV is totalled and cannot be repaired, the insurance company will get you a brand new RV of that current model year, wherein most cases, your insurance company is going to pay you a depreciated value or the current value of that unit.”

Though they face some unique risks, RV enthusiasts are insulated from other exposures that an immobile home might not be, such as natural catastrophes.

“What’s unique about an RV is that you can get in and drive away,” said Hobbs. “Florida is a very big RV state, for example, so if a hurricane is coming, people can get in their RV and they can drive away. We’ve done a number of studies over the years that have proven to our reinsurance partners that people that are in Florida during the summer months – the main hurricane season – are actually leaving Florida.”

In fact, a significant portion of RIS’s claims during the season are in states other than Florida, indicating that people are leaving because of the heat, for one, but also because they know when storms are coming.

Read more: Seven tips for insureds with peak tornado season blowing in

“The biggest catastrophe exposure in the RV industry is more so when you get groups of RVers together. RVing is almost a lifestyle and people like to [meet up] at various events,” said Hobbs. “At some of the larger events, as an insurance company, you may have 1,000 units there that you insure sitting in one location, so if a tornado or a hailstorm were to occur during that period of time, you’ve got the catastrophe exposure associated with that.”

Retail agents who count RVers as clients should direct them to the insurance solutions crafted with their exposures in mind, especially since many RV sales happen between individuals rather than a potential buyer going into a dealership, which might have a relationship with an agent specializing in RV insurance. Information about this product might then not make its way to new owners.

“If somebody buys an RV, they can go to their standard auto insurer and get a typical auto policy that insures their RV, but, if they do that, they’re not getting all of the coverages they need to properly insure that RV,” Hobbs told Insurance Business. “RVers can get coverage that’s much better than what they have on a personal auto policy for, in many cases, the same premium or less than what they would be paying from a standard auto insurer.”

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While Level 5 autonomous vehicles aren’t commonplace yet, the car of today already looks vastly different than the vehicles that were on the roads a decade ago – an evolution that has implications for insureds’ exposures and insurance needs.

“Already, new cars today typically have dozens of sensors built into them,” said Drew Aldrich (pictured), principal at American Family Ventures, and a panelist at the upcoming Emerging Risks & Innovation Summit in New York. “As the sensors in the cars become increasingly important to making decisions or actions in the car – nudging the car from swerving into lanes or accident avoidance – the actual compute has to be done in the car itself. It can’t be sent to the cloud for the compute to be held there and then sent back – the feed just doesn’t require it – so that’s causing lots of really interesting things in the world of edge computing, where the actual computer doing all of the compute work is happening in the vehicle itself.”

With the rise of edge computing, which entails the processing of data near the edge of a network where it’s being generated, rather than at a data-processing warehouse, there’s also been increased interest in protecting the vehicle and its various sensors from, for example, viruses.

“We’re seeing a lot of interesting innovation on how do you bring what was classically the antivirus type of software for your PC way back in the 90s, what’s the equivalent of that for the auto industry?” said Aldrich.

Yet, the installation of emerging technology into vehicles hasn’t affected risk exposure in the way that some might have expected, in that it would drive down claims since a degree of human error has been removed from the equation.

“That hasn’t necessarily been the case because there are a lot of other factors – there’s distracted driving that has likely had a major impact on increasing claims cost, and then the compounding effect of this is that with the added sensors in the bumper or wherever, the claims severity has increased because you now have to replace these sensors,” explained Aldrich. Whereas back in the day, a driver could have a fender-bender and they didn’t necessarily need to report it or they could live with it, if there’s a sensor in that area today, it could be broken after a small collision and will need to be fixed, which impacts repair costs.

“In theory, over the next 10 years or so, these increasing capabilities of the car to avoid accidents should eventually start to drive down incidents, but we’re still in the early stages of that,” added Aldrich, who encourages other insurance professionals to learn as much as they can about innovation in the mobility space now, before major changes take hold.

“It feels like a uniquely pivotal time because, in the medium term, we should actually see some real effects of these sensors, and the cars becoming smarter and acting more autonomously,” he said, though he adds that while the auto broker can sleep a bit easier knowing that full self-driving cars are a way away, they still need to be cognizant that these changes are on the horizon. “They can come to conferences, like this one, and keep tabs on it. Whenever it’s an interesting time, that’s a great opportunity for [brokers] to provide expertise and guidance to their clients.”

Take a deeper dive into this issue at the Emerging Risks & Innovation Summit in May 2019.

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DETROIT (WJBK) – Mayor Mike Duggan has sued the state over no-fault insurance, calling it unconstitutional.

The lawsuit argues the mandatory no-fault auto insurance system violates the constitutional rights of Michiganders because the insurance costs are so high. According to the suit, our annual auto insurance premium of $3,059 is double the national average cost: $1,512.

More so, the lawsuit argues that the extremely high cost significantly affects the Detroit population, where those drivers pay an average of $6,197 a year for coverage.

“Right now it’s either put food on my table or pay this high insurance,” said Gladys ‘Peggy’ Noble.

It’s a choice no one should have to make, much less a 76-year-old retiree. Meet Gladys Noble, a Detroiter living on a fixed income.

She is one of several plaintiffs suing the state over its no-fault insurance law, saying it discriminates against the poor.

“There are a whole lot of people in Michigan making $10 or $12 dollars an hour,” said Mayor Mike Duggan. “Who are driving illegally to work because they don’t have any choice.

“The transit system doesn’t get them there and they can’t afford car insurance and that’s really the crux of our case: you’re denying people their civil rights by pricing the insurance so high.”

The mayor has long been a proponent of insurance reform in Detroit, where many go uninsured, and even announced his own proposal last year to combat the high insurance rates. The proposal was defeated.

Duggan filed the lawsuit in federal court Thursday. The Michigan Supreme Court ruled 40 years ago that because no-fault insurance was mandatory for all drivers, Michigan had to make sure it was available on a fair and equitable basis and the rates were not excessive or unfairly discriminatory.

But now, according to the lawsuit, Detroiters pay an average of $6,100 a year for car insurance. The average yearly premium in Michigan is about $3,000. That’s more than double the average in Ohio, Illinois and Indiana.

FOX 2: “This is your new ride?”

“Yes this is my Jeep Compass,” said Joanne Barnes. “I purchased it in 2018. I’m paying $417 to lease it. I’m paying $330-something a month for full coverage to insure it.”

The lawsuit is asking the court to put Lansing on the clock, demanding the governor and legislature revamp the insurance system within six months. The effort is not without its critics.

“I think it’s important that we understand the importance of really getting to the core challenges and issues and that’s redlining,” said Detroit State Rep. Sherry Gay Dagnogo.

Dagnogo is chief among them.

“The efforts to move forward with a lawsuit that would only address the issue of unaffordability being unconstitutional and then placing the blame on trial lawyers is disingenuous,” she said.

Unfair or not, drivers want lower insurance rates and will take it however they can get it.

“It’s bad, it’s bad,” said Noble. “I hope something can be done about this. I really do.”

Proponents of the no-fault system point to the benefits, which include: All medical care for a lifetime; wage loss up to three years; replacement services; at-home care; and medical mileage. But all that, of course, comes with a price.

“With a pure tort state, people’s auto insurance rates drops by more than half, overnight. No-fault is great, but, it’s expensive and people don’t really understand the benefit that it offers until normally it’s too late and they’ve been injured in a car accident,” Steve Gursten with Michigan Auto Law told FOX 2 earlier this year, when lawmakers also discussed reforming the system.

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