Every driver in Michigan is required to have auto insurance just like you and me and policies can differ state to state. In Michigan, drivers have to pay an annual fee of $175 per car per year for the MCCA fee, or what is known as the Michigan Catastrophic Claims Association fee. And now Insurance Journal.com reports that a judge has ruled that the MCAA must make their records public and prove how their rates are set because people deserve to know where their money is going.
Michigan is a no-fault insurance state. This means that if you are involved in an accident, the state of Michigan says that your auto insurance company is required to pay you for damages, both property and bodily injury, regardless of fault. Also, in many no fault insurance states, anyone involved in the accident is entitled to medical payments and lost wages. With a normal insurance policy, you have to add additional coverage to make sure that those types of things are covered in the case of an accident. In Michigan, the MCAA was created by the state to pay back insurance companies for claims that were over $500,000. If you’re in a pretty serious accident, things like medical payments and lost wages reimbursement can add up quickly.
The lawsuit was brought against the MCAA by the Coalition Protecting Auto No-Fault (CPANF) and the Brain Injury Association of Michigan (BIAM). The two parties had requested public records and the MCAA refused, claiming that they were a private group. Judge Clinton Canady III thought differently. John Cornack, president of the CPANF, summed it all up, saying, “It’s plain and simple: This is the public’s money, and the public has a right to know all the facts about how there is managed and whether what they pay in premiums is adequate to handle future claims.” With the judge’s ruling, the MCAA will have to release their records which hold information about how they set their rates, the number of claims they’ve worked with and other expenses of the company.
How Does the MCAA work?
In Michigan, drivers pay a yearly fee for the peace of mind that if they are severely injured in an accident, they have an unlimited cap on medical claims. If you are in an accident, your auto insurance company is responsible for the first $500,000 of your medical claims and anything that exceeds that, the MCAA takes over. Think of it as the MCAA is your insurance company’s insurance company and they have a $500,000 deductible they have to meet before the MCAA will pay anything. While it may seem like an additional high cost on top of all your other insurance payments, the MCAA fee has benefits. We all know the cost of health care is extravagant and a hospital stay is enough to break the bank for people so if a car crash injures someone permanently, the policy could pay for itself over and over again. And since it’s a state law, it doesn’t matter who your provider is, you will pay the MCAA fee and be protected.
The Nay Sayers
There are those who aren’t fans of this fee though. You can understand people’s frustration if they have a 3-4 car household and are never involved in a serious accident. That’s a lot of money they are shelling out each year that is paying for other people who have been in serious accidents, regardless of fault remind you. Because Michigan has taken a lot of heat for this policy, some members of the legislation are trying to make an effort to revise the law so the driver can at least choose how much of a toll it takes on their wallet. Emily Delbridge with About.com says that in the new law when are deciding on their auto insurance, they would be able to pick varying amounts of coverage and then pay a fee based on that amount of coverage. Right now, everyone pays a flat fee for unlimited coverage but the revised law might help squash some controversy, save people some money, and protect them at the same time.
What If You Don’t Live in Michigan
There are more people that don’t live in Michigan than do live in Michigan so it’s important to know how your auto insurance will work in the event of a serious car accident. All states (except New Hampshire) require that people have liability coverage but that isn’t going to do anything for you if you need medical treatment. Liability is only going to cover damage that you cause to someone else’s property so it’s a very smart idea to always opt for a more comprehensive coverage plan. One of the things that you might want to ask your insurer about is Medical Payment Coverage.
Many people think that they might not need this in their plan because they have health insurance but Medical Payments can pick up where health insurance leaves off. With this type of coverage, you have a wide range of protection and it also protects your passengers and other family members. It still won’t matter if you cause the accident, this coverage will protect you. It’s normally offered in different coverage amounts, similar to what Michigan is thinking about doing with their policy but the amount are normally much less. And dissimilar to Michigan, the rates on this are actually very reasonable. If you are in an accident and your health insurance requires that you meet a deductible, your medical payments coverage can help you reach it or even come into play after you’ve met your health insurance limits.
Some people think that Medical Payments coverage isn’t necessary and it’s best to look at all your insurance policies as a whole when making any kind of decision. Examine how each can the other and speak to your agent about the best options for you and your family.