No Laughing Matter For Women Drivers As Car Insurance Soars

If you are a single car household, with more than one driver, changes to the costs of car insurance for women may mean it's time to change your insurance arrangements. Gender stereotyping dictates that lots of men appear to think that their wives or girlfriends are terrible drivers anyway (and vice versa of course!), so taking 'her indoors' off the policy seems like a good idea! As for women, with insurance costs set to rise by December 2012 at the latest, letting 'him outdoors' think he is right on this point - or better still that it was his idea - could save you a penny or two.

The advantages of sexism

OK, I'm being sexist I know. However, the ruling from the European Courts of Justice hardly seems to be fair, even in the gift wrapping known as equality. Women drivers, despite being statistically safer, are set to see their car insurance costs rise significantly this year. There are various ways of combating this and one option is to take advantage of temporary car insurance. This type of car insurance was originally utilised by those working in the motor industry, but since 2005 has been available to every driver.

Road map to savings

This method of lowering your insurance costs isn't going to work for everyone. However, in households where there is only one car there may be some advantage in the ruling. The effect of the ruling could be a slight drop in the cost of car insurance for men - around 10% - and a bigger rise in costs for women of perhaps 25%. If your daily commute and use of the car allow for it, this could mean that insuring 'him outdoors' may make sound economic sense. It will have the added advantage of leaving him in charge of the driving while you indulge in a spot of drive-by window shopping! When it comes to holidays or long journeys where you might want to share the driving, temporary insurance can prove cost effective.

Finding a deal

There are specialist insurers who will offer temporary insurance for periods ranging from a single day to up to a month - for periods longer than this they'll probably insist on a full policy. As with any insurance it pays to shop around for a temporary car insurance quote. Costs vary, but the structure of these policies is usually similar. The first two or three days of a policy will be charged at a higher rate, then for subsequent days the rate drops, making it a very competitive type of car insurance for occasional drivers. For those whose lifestyles allow for this sort of arrangement, there is a good chance you will be able to save money on your car insurance costs.

Michigan No-Fault Auto Insurance Reforms

If passed, HB-4936 will reform the Michigan No-Fault auto insurance law that was first created in the 1970's. Under the current No-Fault law, all Michigan auto insurance policies contain a coverage called Personal Injury Protection, or PIP. PIP includes several provisions, including unlimited medical benefits and up to 85% of the insured's lost income from work, subject to a monthly maximum amount. Michigan is the only state that mandates unlimited medical coverage.

The crux of the issue is the rate at which the cost of catastrophic injury claims are increasing in combination with the way our No-Fault Law currently works. At present, PIP benefits within the auto insurance policy must pay medical providers the full amount of fees they deem to be "reasonable and customary". Other medical insurance sources are able to pay reduced fees because of PPO or HMO agreements or, in the case of workers compensation, a fee schedule that is part of Michigan's Workers Compensation Statute.

At present, there is no dollar limit on the amount of PIP benefits payable for an injury stemming from an automobile accident. There are two charges within a Michigan auto insurance policy that pay for this benefit: One is the premium paid for PIP coverage. This money is retained by the insurance company and is used to cover the first $500,000 of a claim for PIP benefits. Another charge is the MCCA assessment. The assessment, which will increase slightly to $145.00 per vehicle in 2012, is a fee the insurance companies are required to collect and pass on to the Michigan Catastrophic Claims Association (MCCA). The MCCA fully reimburses the insurance company for the portion of an injury claim that exceeds $500,000. According to the MCCA, the highest percentage of people whose PIP claim costs exceed $500,000 are between the age of 16-20 (12.4%).

According to a report presented by Sharon Tennyson Ph.D. as testimony before the Michigan House Insurance Committee on October 4, 2011, the average amount paid for a Michigan PIP claim during 2010 was $35,446. The report also states that only 1% to 2% of all PIP claims in Michigan exceed $500,000. The problem is that the few claims (1% to 2%) that exceed $500,000 account for 47% of all PIP claims costs. In other words, once the claim cost exceeds $500,000, chances are that it may be huge.

The goal of the proposed legislation is to help curb the rising cost of auto insurance in Michigan. According to a legislative analysis summary from the House Fiscal Agency, there are six key provisions to the proposed change in our No-Fault Law: 

• No-fault policies would no longer automatically cover unlimited lifetime medical and rehabilitation benefits. Instead, drivers could choose personal injury protection (PIP) coverage with (1) a maximum of $500,000; (2) a maximum of $1,000,000; or (3) a maximum of $5,000,000. The default amount would be $500,000.
• The current Michigan Catastrophic Claims Association (MCCA), which currently pays medical and rehabilitation claims once they exceed $500,000, would be divided into two accounts: (1) the MCCA Account, which would only apply to losses attributable to accidents before July 1, 2012; and (2) an Excess PIP Account, which would apply to losses attributable to accidents on or after July 1, 2012. Each account would be self-supporting and assets and liabilities could not be transferred between them.
• Under the bill, for loss occurrences attributable to accidents on or after July 1, 2012, each auto insurance company would pay for 100% of the ultimate loss under PIP coverage up to $500,000. The MCCA would reimburse the auto insurance company 90% of the ultimate loss from $500,000 and $1,000,000 and 100% of the loss in excess of $1,000,000.
• The fee schedule used in the Workers' Compensation system would be applied to payments made by auto insurers to physicians, hospitals, and other providers treating an injured person or providing rehabilitation. (The fee schedule would not apply to emergency medical services provided by ambulance operations.)
• Individuals injured on a motorcycle involved in an accident with a motor vehicle could claim PIP benefits only up to a maximum of $250,000.
• Specific limits would be placed in statue on attendant care or nursing services provided in an injured person's home, including limits on hourly payment for the provision of basic services and skilled services.

If passed, how would claim costs be covered if they exceeded the limit of insurance chosen on the auto insurance policy? Likely, they would become the responsibility of other insurance sources such as private medical insurance, VA Benefits or Medicaid.

The airwaves are alive with radio ads from both those who favor this change and those who oppose this change. Insurance companies and many consumers favor the change as it would help contain spiraling medical costs resulting from auto accidents and help to keep auto insurance premiums reasonable. Health care providers oppose the change.