Heartland Institute: Michigan PIP Bill Is a Step in the Right Direction

September 23, 2011

A Michigan proposal that would end the state’s mandate that all motorists buy policies that include uncapped personal injury protection (PIP) coverage would be a step in the right direction for the state, according to Eli Lehrer, vice president of Washington, DC operations for The Heartland Institute and national director of its Center on Finance, Insurance, and Real Estate.

“The current Michigan insurance system is unaffordable for a sizeable fraction of the state’s drivers,” Lehrer said. “Auto insurance costs more than a house in some areas of the state. It’s a major barrier to economic development.”

Unlike any other state, Michigan requires all drivers to purchase an insurance policy that provides limitless “no fault” (that is, paid by one’s own insurance company rather than that of the “at fault” individual) medical benefits for all accidents.

The resulting policies are the most comprehensive in the world but are unaffordable in areas of the state such as Detroit, where policies cost more than $5,000 a year.

State Rep. Peter Lund (R) has introduced H.B. 4936, which would change the system by offering a variety of medical benefit tiers ranging from $250,000 to $3 million.

Lehrer says the legislature should go even further. “Michigan’s pure ‘no fault’ system keeps most auto cases out of court, and that makes a lot of sense. It would make even more sense to take it to its next logical step and make automobile insurance optional altogether for people who have health insurance.”

Lehrer is the author of “Michigan Auto Insurance Reform: The Case for Choice and Consumer Power” (2010), a policy paper that makes proposals similar to those advanced in Lund’s bill.

He can be reached at 202/615-0586.


The Heartland Institute is a 27-year-old national nonprofit organization with offices in Chicago, Illinois; Washington, DC; Austin, Texas; Tallahassee, Florida; and Columbus, Ohio. Its mission is to discover, develop, and promote free-market solutions to social and economic problems. For more information, visit our Web site or call 312/377-4000.