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Rathbun Insurance Blog

All You Ever Wanted to Know About Insurance

First, A Refund. Now, A Charge!?

It’s no secret that Michigan drivers pay some of the highest insurance premiums throughout the nation. However, in doing so, some Michigan drivers are afforded unlimited and lifetime medical benefits from the Michigan Catastrophic Claims Association (MCCA) that no other state can match.

The MCCA was created in 1978 to reimburse auto insurance carriers for medical expenses paid in excess of $580,000 per claim. It serves as a means of spreading the cost of providing such unique benefits across all Michigan auto insurers. The auto insurers pay a portion of the premium they collect from their policy holders into the fund.

Prior to No-Fault Auto Reform in 2020, the law required people to carry unlimited medical coverage on their auto policy.  That means all insured drivers were automatically eligible to receive unlimited medical benefits from the MCCA in the event of a catastrophic accident. No-Fault Reform removed the mandatory unlimited medical coverage requirement and provided people with coverage options to help reduce premiums.  Post No-Fault Auto Reform, those who choose to continue carrying unlimited medical coverage are still eligible for the same unlimited benefits and pay into the fund a fee of $86 per vehicle. For those who choose to carry an option other than unlimited, you are not charged the fee because you are not eligible to receive the benefits. The coverage provided under your auto insurance policy is maxed out at the limit you choose.

Each year the MCCA analyzes the amount needed to cover the lifetime claims of all people catastrophically insured in a car accident for the coming year. The last analysis performed yielded a reimbursement of up to $400 per covered auto, depending on the type of vehicle, to all Michiganders insured as of October 31st 2021. This reimbursement was delivered to policy holders in the first quarter of 2022. During late September of this year, the MCCA released it’s 2023-2024 analysis and determined that the amount of actual claim costs received was significantly higher than anticipated due to the Michigan Court of Appeals ruling that the rules of No-Fault Reform could not be applied to any existing claims prior to July of 2020. This analysis has projected an estimated $3.7 billion dollar deficit that needs to be made up.

So, what now? How is this going to impact you? Beginning July 1st, 2023, the MCCA has restructured the fees they charge which gets passed down to insured drivers.

For those who continue to carry unlimited medical benefits:

  • You will be assessed a fee of $74 per vehicle (down $12 from the current fee).
  • You will be assessed a fee of $48 per vehicle to recover the deficit.

For those who choose to carry medical coverage other than unlimited, or, choose to carry no medical coverage at all:

  • You will not be assessed the standard MCCA fee.
  • You will be assessed a fee of $48 per vehicle to recover the deficit.

Navigating the winding road of Michigan No-Fault Insurance can be tricky and confusing. You can count on the Rathbun Agency team to keep you educated and up to date on the important details you need to know and understand.