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Insurance Planning Service Blog: car insurance

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The premium charged for all forms of insurance, including car insurance is based on the actual experience of a given insurance company (premiums paid in versus claims paid out) and certain risk factors of the individual policyholder that can be predictors of potential loss.   The premiums that insurance companies are no longer developed by simple charts in a rate book, rather by complex algorithms and formulas that are proprietary and held closely held by each insurance company.  Much of the overall experience is beyond one’s individual control. 

 

Examples of experience factors beyond your control include:

 

·  There are more elderly drivers on the road who have slower reaction times than a middle aged person might have.

·  There are an increased number of youthful drivers on the road and, while their reaction times are amazingly fast, they may not yet have developed the experience needed to be a safe driver.

·  Distractions have increased many times over.  Cars are filled with more gadgets – complicated audio and video system, navigation systems, not to mention cell phones, texting, etc.  There are all kinds of distractions that never existed before and can pull one’s attention away from the road.

·  There are more cars on the road.  Some sources say 17.6 million new cars were sold in 2016 alone – a number that has increased steadily over recent years.

·  The price of gas is lower than years past making it easier for more people to travel by car and leading to more congested roadways.

·  Michigan is the only state that pays for 100% of auto-related medical claims WITH NO DOLLAR LIMIT!  Your own insurance company is responsible for the first $555,000 in medical expenses resulting from an auto-related injury and then they are reimbursed by the Michigan Catastrophic Claims Association (MCCA) for expenses above that amount.  The fact is that very few claims exceed the $555,000 but, when they do, the sky is the limit.  Most claims where an insurance company receives reimbursement from the MCCA are catastrophic in nature involving injury to the brain and/or spinal cord which results in serious and permanent disability such as paralysis, coma, and reasoning ability.1

 

Examples of risk factors that you can control include:

 

·  Your driving record will affect your premium.  Multiple traffic violations or accidents can be a predictor of future claims.

·  A change in drivers within your household.  Adding younger or older drivers can add risk.  Even changing the number of drivers can affect your premium.  More drivers usually mean the car is on the road more frequently.

·  Have you moved to a different address recently?  Insurance company experience and individual driving factors can increase substantially in densly populated areas or areas that are more or less prone to crime.

·  Have you recently retired or changed jobs to where you are driving a shorter or longer distance to/from home?

·  Some insurance companies offer multi-policy discounts so rates can increase if you change to just one policy.

·  Insurance score.  This is not the same as a financial credit score used for lending decisions; rather factors from the credit scoreto predict risk.   

 

For further information or a quote on your auto, homeowner or business insurance, contact us at 800-220-5582 or CLICK HERE to visit us on the web today!

 

1 Michigan Catastrophic Claims Association


AutoWe all know that auto insurance in Michigan is expensive. In fact, according to the National Association of Insurance Commissioners, our premiums auto insurance premiums rank 7th highest in the country.  SB-248 has passed the Senate Insurance Committee and the House Insurance Committee, and sill soon come to a congressional vote.  If passed, the framework will be in place to lower Michigan's auto insurance rates.

One of the largest issues has been a combination of Michigan's unlimited medical benefits coupled with auto insurers being required to pay-as-billed for medical services.  Other medical payers, such as health insurance companies, pay medical providers based on an agreed schedule of fees - as is the case with PPOs or HMOs.  Others such as workers compensation and Medicare pay providers based on a schedule enacted by law.  In contrast, Michigan auto insurance companies have been required to pay whatever they're billed by the providers, often being three to four times more that what other types of insurers pay for the same treatment. One element of SB-248 would establish a fee schedule to enable auto insurers to pay amounts similar to that of other health insurance companies.  This will not change the medical services available - only the amount auto insurance companies will have to pay for them.  Still, there will be no maximum limit or cap on what can be paid...only that along the way, amounts paid will become reasonable and in line with other types of insurers.

SB-248 will provide for an Insurance Fraud Authority to go after schemers who abuse our no-fault insurance system.  Michigan's unique unlimited lifetime no-fault medical benefits have led to increasing fraudulent claims.  According to a study by Hillsdale Policy Group, auto insurance fraud costs an estimated $400 million.  Michigan is only one of eight states without a fraud authority to investigate and prosecute fraud, according to the National Insurance Crime Bureau.

SB-248 still provides for reimbursement for non-skilled family-provided care, but limits payment to family members to $15 hour and no more than 24 hours per day.  That's still $131,000 per year!  This limit doesn't apply if the family attendant is a licensed professional.

SB-248 proposes a $100 / car rate rollback on auto insurance policies.

SB-248 changes the Michigan Catastrophic Claims Association (MCCA) to a new Michigan Catastrophic Claims Corporation (MCCC) that will function differently and be more transparent.  The purpose of the MCCC will be to fund the portion of auto-related medical claims in excess of $545,000.  At present, the MCCA pays out over $80 million per month for catastrophic injuries.

The House Insurance Committee passed SB-248 today, April 23, 2015, by a 9-6 vote.

Changes in committee include a fee schedule that would pay 150% of costs allowed by Medicare, removal of the proposed $15.00 per hour limit on family member attendant care if the family member is a licensed medical professional, and a $100 per vehicle rate rollback.

The Bill now moves to the House - hopefully to be acted upon next week.

Senate Bill SB-248 was passed by the Senate Committee on Insurance by a narrow 21-17 vote on April 16, 2015.

This bill contains basic elements of prior attempts to change Michigan's o-fault auto insurance, including:
  • Creation of an insurance fraud authority
  • Family Attendant Care cost controls
  • Establishment of a new entity to replace the Michigan Catastrophic Claims Association, and
  • A payment schedule for medical costs stemming from auto-related injuries based on payments accepted by medical providers from other traditional health insurers.

The Bill not goes to the House Committee on Insurance.  If passed, this could lead to reduced auto insurance costs in the State of Michigan.


Auto ThiefDid you know?
 Premiums for comprehensive coverage pays for the theft of a motor vehicle.
 Installation of anti-theft devices reduce the chance of auto-theft and qualifies for a reduction in the comprehensive  insurance premium.

What you can do to help eliminate Auto Theft!
 Lock your car—half of all vehicles stolen are left unlocked.
 Take your keys—nearly 20% of all vehicles stolen have keys in them.
 Park in well-lit areas—car theft occurs at night more than half the time.
 Park in attended lots—car thieves don’t like witnesses.
 Don’t leave valuables in plain view—they may invite thieves to break into your car.
 Completely close your windows—don’t make it easy to gain access to your car.
 Don’t hide a spare set of keys in the car—the pros know where to look.
 Don’t keep your registration in your glove compartment. Thieves have just what they need if they steal your car. Keep it in your wallet.

MAKE IT HARDER ON THE THIEF
 Park with your wheels turned to-ward the curb.
 Always use your emergency brake when parking.
 If you have a garage, use it.
 If your vehicle is going to be un-attended for a long period of time, disable it; for example, remove the ignition fuse or coil wire.

Article Source Courtesy Michigan Millers Insurance Company
Image courtesy of Toa55 /  FreeDigitalPhotos.net

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4808 Broadmoor Ave SE | Grand Rapids, MI 49512

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Also serving these Detroit area communities in Michigan: Livonia, Farmington Hills, Ann Arbor, Southfield, Plymouth, Canton, Westland, Northville, Novi, Dearborn, South Lyon & Walled Lake