ASK AN EXPERT

Question: How is the Insurance Reform act going to affect  claims handling?

On July 1st. Michigan Auto Insurance Reform goes into effect. This is suppose to provide insurance coverage options and lower rates while maintaining the highest benefits in the country and strengthen consumer protections. There is a lot to this new law and everyone should talk to their agent so they can choose the right personal injury protection for your needs. Each insurance company will be required to reduce PIP medical premiums. Your premium will depend on the coverage you select. On average 20-30% savings are expected.

In the new law there is a lot of new consumer protection laws that protect you during the claims process and only applies to new or renewed policies after July 1st. So you may want to renew ASAP. Some examples are:

Elimination of Non-Driving Factors: The new law prohibits auto insurance companies from using sex, marital status, home ownership, credit score, educational level, occupation, and zip codes in setting your auto insurance rates.

Fraud Investigation Unit: A newly-established unit investigates criminal and fraudulent activity related to the insurance and financial markets and works with Attorney General law enforcement to prosecute these crimes.

Michigan Catastrophic Claims Association (MCCA) Transparency: The MCCA is now required to provide an annual report to the Legislature, post an annual consumer statement on their website, and is subject to an audit by DIFS every three years.

Prior Approval: Auto insurance rates and policies must now be filed with and approved by DIFS prior to being offered to consumers.

Fines and Penalties: The new law allows for increased fines on insurance companies, agencies, and licensed agents for certain violations of the law.

Consumers rights:

Under the Michigan Insurance Code, you have important rights governing the payment of benefits from your auto insurance company. Upon receipt of an auto insurance claim, Michigan law requires your auto insurance company to do the following:

Tell you within 30 days of the auto insurance company being informed of the loss, what information is needed to handle your claim.

Pay any part of your claim the auto insurance company has received  proper supporting documentation (proof of loss) for and pay the rest of your claim when proper supporting documentation is received.

If your auto insurance claim for damages to a vehicle are not paid within 60 days after your auto insurance company has received satisfactory supporting documentation, the claim may be considered overdue. Interest may be owed on the amount due at a rate of 12% simple interest.

For more information, please review DIFS’ consumer publication: Insurance Policies and How to Claim What is Yours.

If you are concerned your auto insurance company is not paying your benefits in a timely fashion or is unfairly delaying or denying your claim, you may file a  complaint with DIFS. DIFS will review your concern and will attempt to resolve your complaint and see that your questions are answered.

Your complaint will be reviewed based on the documents you submit, so be sure to include all pertinent information once you file a complaint. DIFS will respond by contacting the insurer and obtain a written response to confirm the insurer is performing under your policy and the law. They will help you understand options that may be available to you.

A note from John and Theresa:

In our experience, we have found that most insurers will initially pay only 50-60% of actual repair cost, hoping you will cash out, and not get your vehicle repair, and if you, do they want you to go to one of their preferred repair shops that will do the cheap repair knowing that you will probably not know the difference. It is our hope that the new complaint department, and  joint task force, will take some of the burden off of reputable repair facilities that only wish to return your car to pre-accident condition using the manufacturers recommended procedures and parts. This is the only way or a vehicle to be properly repaired and for it to perform and react as originally designed in the event of a subsequent collision. In Michigan, the choice of repairer is yours and yours alone. Choose wisely, and select a repairer who will restore your damaged vehicle…and you and your family’s peace of mind!