New Proposal Could Hike Auto Insurance Rates

Date: March 09, 2016 Last Edit: March 15, 2016

NFIB is working to halt efforts to fund public school
pensions with an indirect tax hike on auto insurance.

Small business and auto insurance consumers are being
targeted with an $80 million dollar tax hike to bail
out the Detroit Public Schools
. A new proposal would eliminate a tax
credit previously allowed to auto insurance companies to offset the cost of
Michigan’s expensive unlimited medical benefits under our No-Fault law. The $80
million increase in tax revenue to the state from eliminating the credit would
be dedicated to reducing the Detroit Public Schools debt and bolster the
union pension fund. Auto insurance companies will simply pass the additional
cost onto Michigan drivers and small business. It is estimated that this will
result in an additional $40 a vehicle in insurance rates.

Michigan already has some of the highest auto insurance premiums
in the country because of our state No-Fault mandate that everyone purchase unlimited,
lifetime medical benefits without controls over medical costs. While NFIB has
been working to pass reforms
to address our high auto insurance rates
, the elimination of the No-Fault
tax credit to fund other state spending will only make matters worse.

Since 2013, auto insurance companies have used this credit to
reduce premiums to law abiding drivers. The tax credit allows the cost of uninsured
motorists to be spread to everyone, not just to auto insurance consumers who
are operating their vehicles lawfully and properly. If the credit is eliminated,
it is the insuring public that will pay through higher auto insurance premiums.

Insurance costs are already a big expense item for small business
in Michigan. Our auto insurance rates are already among the highest in the nation
because of the failure to address out of control unlimited No-Fault medical coverage.
Adding another $40 per vehicle will put even more pressure on our small business
job providers.

Related Content: Small Business News | Insurance | Michigan

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