LANSING – The chair of the Michigan Senate Insurance Committee, who is taking a lead role in reforming the state’s auto no-fault insurance system, said Thursday he is preparing a new version of legislation that would set the minimum coverage for personal injury protection at $250,000.

Sen. Joe Hune (R-Hamburg) told Gongwer News Service the bulk of auto accident claims are less than $250,000, which is why he’s seeking to increase the sliding scale of PIP coverage from that point upward. His original legislation, SB 293 and SB 294 , started coverage at $50,000 per driver.

That change, along with measures dealing with capping attendant care and worker fee schedules, will either be introduced in a new bill or substituted into the original legislation, he said.

Under current law, Michigan drivers receive unlimited medical benefits. Their insurers pay for the first $500,000 in claims and then the Michigan Catastrophic Claims Association, which all drivers pay into, reimburses for the remaining costs.

There is still no date set for a hearing on the legislation, but Hune said it would be sometime this month and that would include testimony on SB 514 . That bill, introduced by Sen. Virgil Smith (D-Detroit), creates a low-cost insurance pilot program for residents of Wayne County with household incomes below 300 percent of the federal poverty level.

Also on Thursday, the Michigan Chamber of Commerce, which supports the PIP bill, released a study from a Cornell University professor that concluded the state’s auto no-fault system is unsustainable.

The law has reached its original goal of increasing benefits for those who are injured and ensuring prompt payments, as well as reducing the amount of premium dollars that go toward legal costs, the study found. But Michigan’s average cost per claim is now four times higher than the average no-fault state, which the study attributed to the unlimited medical benefits provision.

Since the MCCA was created in 1978, there have been 25,216 claims and more than 50 percent of those cases remain open.

“Michigan’s average cost per auto no-fault claim in 2010 was $35,446, an amount substantially greater than in any other no-fault state. The second highest-cost no-fault state is New Jersey, where the average no-fault claim costs just over $16,000,” the study found. “All other no-fault states have average claim costs under $10,000, and about half of the no-fault states have claim costs averaging under $5,000. The state with the lowest average cost per no-fault claim is Massachusetts, at just over $1,800 per claim.”

Earlier this week, opponents of changing the no-fault coverage limits released their own study saying the legislation will hurt the economy and leave people underinsured.

This story was provided by Gongwer News Service. To subscribe, click on Gongwer.Com

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