Michigan drivers have until Dec. 31 to take advantage of auto insurance amnesty

Detroit — Mayor Mike Duggan joined state and community leaders Tuesday encouraging Detroiters and all Michigan residents to sign up for auto insurance prior to the upcoming amnesty expiration when rates are expected to rise.

One aspect of Michigan’s historic auto no-fault reform legislation which took effect in July 2020 was to provide amnesty to previously uninsured drivers; meaning they could obtain insurance without penalty or increased premiums.

The 18-month amnesty period expires Jan. 1, 2022.

Uninsured drivers have until Dec. 31 to get coverage before facing higher rates and penalties should they get into an accident.

More than 100,000 people who previously weren't insured have gotten coverage in the last two years, Duggan said.

"The single biggest reason for passing this legislation was for those folks of moderate-to-low income who were driving uninsured and were at risk every day," Duggan said during a press conference at Detroit's Public Safety Headquarters. "If you haven't had car insurance for some time, you can be put at higher risk and when you go to buy it, the insurance company can charge you a higher rate than other drivers."

"If you get it by Dec. 31, it's a good chance your rate will be lower than if you wait," he added.

Anita Fox, director of Michigan's Department of Insurance and Financial Services, said it's an important time for everyone across the state to get insured because doing so protects residents.

"The last thing you want to do is be in an accident and have no medical coverage for your family," she said. "If you wait and get in an accident, you could put your family, finances and health at risk for not having coverage."

Of the 100,000 new drivers, 60,000 were previously uninsured for three or more years, Fox said. 

"Michigan had the greatest benefits in the nation, but with that, we also had the highest costs and with the highest cost, we had a disproportionate number of uninsured drivers putting all of us at risk," Fox said. "Do it today. Contact an insurance agent, contact a company, go online or call if you need help navigating your way through at 833-ASK-DIFS."

Gov. Gretchen Whitmer in 2019 signed legislation to put an end to the state's unique requirement that motorists purchase policies that guarantee uncapped lifetime medical benefits in the event of catastrophic crash injuries. 

Instead, insurers are able to sell reduced coverage policies and are required to reduce medical premiums by between 10% and 100% for eight years, depending on the level of coverage a driver selects. 

The plan created a tiered fee schedule for medical providers that limits the rates they can charge auto insurers for motorist care.

The law bars insurers from basing rates on ZIP codes, although they are able to use "territory" as a factor in setting rates based on certain geographic designations. The plan also prohibits insurers from considering other non-driving factors like sex, marital status and credit score. 

Duggan had joined Whitmer and other legislative leaders who had lobbied for the law change that's designed to provide relief for residents of Detroit, where the average costs range above $5,000 a year.

The Rev. Wendell Anthony, head of Detroit's NAACP, said for years the civil rights group has fought high insurance costs imposed on Detroiters, which has had a disparate impact on African Americans and people of color.

"We should not be charged high insurance costs based on where we live, but really based on how we drive," Anthony said. "Efforts have been made to address this issue. The bipartisan auto insurance law signed in 2019 by Gov. Gretchen Whitmer is a major step in the right direction, but it is not all that we wanted and not everything that we need now."

Nearly 60% of Detroiters drive without insurance, but it's not they don't want insurance but rather that they cannot afford it, Anthony said.

"Many have had to make a decision to drive at risk and hope for the best. There is a more responsible, accountable and equitable way to encourage the process," he said. "We urge Detroiters and everyone to take full advantage of the amnesty program and get rid of the financial penalties that you will receive at the end of Dec. 31."

Duggan last summer hosted a virtual town hall meeting ahead of the July 2, 2020, effective date of the auto reform law, providing a line-by-line virtual tutorial of how to save money. 

The mayor, at the time, detailed choices and requirements for opting out of Personal Injury Protection, which covers medical bills if you are injured in an accident, as well as the Michigan Catastrophic Claims Association for catastrophic crashes.

Detroit sent documentation last year to its 8,000 employees to assist them if they chose to opt out.

Until now, drivers for decades have been required to buy both, even if they had health insurance. 

Krysten Jones, a 35-year-old Detroit resident, said she used to pay $550 a month even with her clean driving record and because of the high rate, she was willing to take the risks of driving uninsured.

"When I heard about the new law, I was excited to learn that I can sign up for affordable auto coverage without paying any fees or penalties. I bought a new policy at midnight when the new law went into effect and my rate dropped nearly $400 a month," Jones said during the press conference. "I was recently in an accident and if I didn't have this, I wouldn't have had the coverage and I'm thankful for that."

Consumers who have questions about the new law, including the amnesty period, should contact DIFS 8 a.m. to 5 p.m. Monday through Friday at 877-999-6442 or by emailing autoinsurance@michigan.gov. Consumers can also find a listing of frequently asked questions, tips for shopping for insurance, and an insurance locator to help find licensed agents by visiting Michigan.gov/AutoInsurance.

srahal@detroitnews.com

Twitter: @SarahRahal_