Annual Auto Insurance Fee Cut by 55% or Eliminated in 2020
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Annual Auto Insurance Fee Cut by 55% or Eliminated in 2020

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Recent News

On November 13, 2019, The Michigan Catastrophic Claims Association (MCCA) announced that its annual, per-vehicle fee would be reduced to $100 for the period beginning July 2, 2020 through June 30, 2021 – a 55% reduction from the current fee of $220. The MCCA evaluates this fee annually.

Moreover, the MCCA fee will be eliminated for drivers choosing less than unlimited Personal Injury Protection (PIP) benefits, which provide medical insurance benefits if you are in an accident. There will continue to be no MCCA charge for these drivers as long as the MCCA is not in a deficit position.

Lower PIP limits become available to Michigan drivers beginning on July 1, 2020, as part of recent auto insurance reform.

According to the MCCA, this reduction “results directly from savings created by cost controls for medical treatment and other changes made to Michigan’s no-fault insurance law on June 11, 2019.”

The Background

The MCCA is a nonprofit association established in 1978 by the Michigan Legislature. The MCCA reimburses insurance companies for any auto-related medical claims over $580,000. In return, Michigan requires all insurance companies to belong to the MCCA and pay an annual per-insured-vehicle assessment to fund the association, which is reflected in every Michigan driver’s auto insurance policy premiums.

On May 30, 2019, Michigan Governor Gretchen Whitmer signed an auto insurance reform bill into state law. The majority of this bill goes into effect on July 1, 2020, and means significant changes that impact every driver in Michigan, including:

  • The ability to choose a PIP benefit amount less than the currently mandated unlimited coverage or to opt-out of PIP coverage altogether.
  • Additional liability for drivers, due to accident victims being able to sue for uncovered medical expenses.
  • A medical provider fee schedule put in place in 2021, which will normalize the rates charged by doctors, hospitals, clinics, rehabilitation facilities, etc. associated with auto accident claims.

For even more detailed information:

See “What You Need to Know About Michigan Auto Insurance Reform”

See “Four Important New Insights: Michigan Auto Insurance Reform”

See “Michigan Auto Insurance Reform FAQ”

Please Keep in Mind

The MCCA fee reduction means a savings for all insured Michigan drivers in 2020. It may seem appealing to choose less than unlimited PIP coverage and save another $100 per vehicle by eliminating the MCCA fee altogether.

However, drivers should keep these factors in mind when making important insurance coverage decisions:

  • PIP coverage is much broader than a health insurance policy. In addition to covering auto-accident-related medical expenses, PIP includes coverage for wage loss, attendant care (assistance with activities of daily living), replacement services (household activities you can no longer perform) and survivor benefits. Those thinking of reducing PIP coverage and relying on a health insurance policy should keep this information in mind.
  • The auto insurance premium reduction mandated by the law only applies to the medical portion of the policy premium, so it may not be as large as you think, even if you were to opt-out of PIP altogether.
  • The medical fee schedule doesn’t go into place until 2021, leaving a gap from 2020-2021, during which time your lower PIP limit may not cover as much as it will in coming years.

Making the Complex Simple

The MCCA fee reduction will impact all Michigan drivers next year, but is just one small aspect of a complex and evolving issue. We will continue to keep you informed as more information becomes available.

Saginaw Bay Underwriters has made every attempt to ensure the information contained in this document has been obtained from reliable sources. For specific language, please refer to your insurance policy, in addition to state statutes, laws and regulations. Current as of: November 15, 2019

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