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I can still remember the shock of discovering what I’d have to pay for my Michigan car insurance. I had just graduated from college, and wasn’t exactly rolling in dough.

Moving from Oregon, it was hard enough getting used to pumping my own gas (yes, they do that for you in my home state).

But when I learned I would have to pay twice as much just to insure my car — not to mention higher registration fees — I started second guessing my decision to move here.

After calls to several different insurance companies, I became familiar with three words I had never had to worry about before: personal injury protection.

It’s Michigan’s requirement of unlimited lifetime medical benefits for those severely injured in a crash that is a fundamental driver of the astronomical rates here. Add to that other factors such as rampant fraud and no cost controls — fee schedules — on medical services, and it’s obvious why drivers have to pay so much.

Michael Van Beek, research director at the Mackinac Center for Public Policy, says Michigan’s system “gives us the worst of everything.” And he says it’s a tiny fraction of people who will ever access the state’s Bentley-style lifetime payouts, even though all drivers pay the price.

Michigan is one of only 12 states that is “no-fault," meaning each driver’s insurance is responsible for picking up the tab, regardless of who caused the accident. Yet the state is alone in forcing drivers to pay for these unlimited benefits. All no-fault states mandate some form of this coverage, but most require between $3,000 and $50,000 of personal injury protection.

This is why Michigan’s average annual insurance premium of $2,610 is 83 percent higher than the national average of $1,427, according to the car insurance tracking site The Zebra. In Detroit, those rates are much steeper, reaching as much as $6,000 in some cases.

A recent study from the University of Michigan’s Poverty Solutions think tank found Detroiters spend between 12 and 36 percent of their pre-tax income on auto insurance. No wonder 60 percent of city residents don’t bother with insurance. That study also discovered car insurance is unaffordable in 97 percent of the state’s ZIP codes, using the federal definition of affordability.

Michiganians already know this. Sen. Aric Nesbitt, R-Lawton, says it’s the top concern he hears in his district. And that’s why he began the year with a bill laying out his caucus' intention to harness the costs of no-fault.

“We are the only one in the nation to do it this way, and the most expensive in the nation,” Nesbitt says. “No one else has followed us. It’s not the right model.”

Nesbitt points to failures in the system. One example is that lawsuits are prevalent, even though no-fault promises less involvement by lawyers.

“We have a no-fault system where trial lawyers oppose going to a tort system,” he says.

Lawyers aren’t the only ones who want to preserve this no-fault boondoggle — other special interests and medical providers actively lobby to keep the status quo.

“There is a whole industry that has developed to profit off the system,” says Van Beek.

Gov. Gretchen Whitmer recently ordered an accelerated state audit of the Michigan Catastrophic Claims Association, after it announced it would hike its annual fee on auto insurers by 15 percent. Those rates have skyrocketed and are passed directly to driver premiums. The state-created nonprofit handles reimbursement to insurers for claims that hit a certain threshold.

More: Whitmer orders audit as Michigan auto insurance fee rises to $220

That’s a start, but Whitmer also needs to sign on to what lawmakers are proposing by giving drivers a choice in their medical coverage, and it’s not clear if she’d support touching lifetime benefits.

Lawmakers should show some gumption. They know what reforms are needed for meaningful relief for drivers.

“If we can’t do it legislatively, shame on us,” Nesbitt says.

If they can’t do it soon, however, this should go before voters. And rather than tinker with a failed model, Michigan ought to join the vast majority of other states that use a tort system — and offer drivers insurance they can actually afford.

ijacques@detroitnews.com 

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