DETROIT (FOX 2) - In a few weeks, Michigan drivers will see their insurance rates jump.
Starting July 1, the Michigan Catastrophic Claims Association (MCCA) fee will increase for all insured drivers.
How much more insurance will cost
Drivers with unlimited personal injury protection coverage (PIP) will see a 42% fee increase. The current annual fee of $86 per vehicle is rising to $122.
Those without unlimited PIP coverage currently do not pay a fee, but will soon pay $48 annually.
This rate hike comes after some drivers saw their rates decrease after changes to Michigan's no-fault insurance were approved in 2019.
Drivers were required to carry unlimited no-fault medical coverage until the insurance changes. After the changes, drivers with qualified medical coverage could opt out of unlimited coverage, thus saving money on their auto insurance.
The insurance reform also led to those with registered cars in Michigan receiving $400 in refunds from the MCCA in 2022.
Why rates are increasing
Those savings also meant a reduction in the fees that providers rely on for care for those who were critically injured in crashes. A subsection of the state’s no-fault auto reform law slashed the amount of money that insurance companies will reimburse post-acute care providers by 55%.
However, the Michigan Court of Appeals later ruled the no-fault auto insurance reforms do not apply retroactively, which means the law cannot limit benefits to those severely injured.
According to the MCCA, this ruling is the basis for increasing the fee, along with "lower than expected investment returns."
The MCCA said that the Court of Appeals ruling means that claims costs will be around an estimated $3.7 billion.
Essentially, the MCCA is upping rates to recoup losses faced after it was ordered to keep paying the same benefits people injured before June 2019 were receiving prior to insurance changes.