For more affordable car insurance adjust unlimited coverage rule

Michigan’s auto insurance rates might be the highest in the nation, with a typical driver paying more than $2,500 a year for coverage. In Detroit, where unaffordable insurance rates have forced tens of thousands to drive uninsured, many motorists pay double that or more.

Without question, the rising cost of Michigan’s unique mandate for unlimited coverage for injuries is one reason insurance rates are out of control. The costs of treating the state’s worst accident injuries rose again late last month, when the Michigan Catastrophic Claims Association announced that drivers will pay a record $145 per vehicle, effective July 1, to treat accident injuries that exceed $500,000 in medical care. Overall, the average paid claim for personal injury protection for 2010 rose to $36,245, nearly three times higher than in 2000.

Legislators cannot continue to shrug their shoulders and do nothing. Statewide, 17% of drivers are on the road without insurance, up from 11% in 1989. In urban areas like Detroit, up to half of the drivers are uninsured.

A package of bills introduced two weeks ago in the state Senate by Democrat Virgil Smith of Detroit and Republican Joe Hune of Hamburg Township should provide the starting point for overdue change.

The most controversial measure would modify Michigan’s unlimited no-fault system by setting a minimum for personal injury coverage of $50,000. So-called PIP choice would still put Michigan above the minimums of all other states, except New York, which also has a $50,000 minimum. It would save policyholders 10% to 30% while covering almost 95% of claims, according to the Insurance Institute of Michigan.

To be sure, given the high cost of medical care, the $50,000 minimum is far too low, but even a minimum of $250,000 would save policyholders plenty while offering some extra injury protection for those few drivers who needed it.

Legislators should at least approve a uniform fee schedule for medical treatments and services, similar to workers compensation, as called for by SB294. It’s reasonable to ask medical providers to accept the same payments for the same services in auto-related injuries as they do for injuries incurred on the job.

Other less controversial, but worthy, proposals include strengthening efforts to fight insurance fraud and requiring medical care providers to bill insurers within 90 days of treatment. That would enable insurers to properly review claims and pay them in a timely manner.

Unfortunately, the reform package does not include a pilot program to provide affordable insurance to low-income drivers, as other states such as New Jersey and California have created. It should. Such a program would allow people now driving uninsured to at least buy basic coverage. The insurance industry supports the idea, said Lori Conarton of the Insurance Institute of Michigan. It ought to persuade legislators to include such a plan in the package currently before the Legislature.

These proposals are not perfect, but they beat the ongoing stalemate. Eliminating territorial ratings, which punish drivers in Detroit and other urban ZIP codes, is a good idea but politically unattainable. For now, legislators should focus on reforms that would ease the problem of affordability and have a prayer of reaching the governor’s desk.