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A few recent studies have shown just how significant auto insurance costs in the state of Michigan can be, and that may be particularly tough for drivers to deal with in a state that is still struggling to recover from the recent economic downturn. As such, a number of lawmakers in the state are now moving to find ways to bring down those costs, and that could be a boon for both residents and insurance agents in the near future.

One of the biggest reasons that Michigan residents typically end up paying thousands of dollar more per year for their auto insurance than the average person nationwide is that current state law mandates that such policies come with unlimited medical benefits, according to Crain's Detroit Business. Now, a bill advanced by Republican lawmakers in the state's House of Representatives would change that, with an eye toward cutting premiums 10 percent for the next two years, by eliminating that allowance for medical benefits. Instead, it would allow consumers to buy personal injury protection worth $10 million, and just 0.1 percent of those people would reach that limit. Those with lower incomes could buy PIP worth as much as $50,000, with the rest potentially being covered by insurance or Medicaid.

Michigan is currently the only state that allows for unlimited medical benefits in this way, the report said. Even the $10 million cap is some 200 times higher than the next-closest state, which grants as much as $50,000 in benefits.

Some opponents say other problems would persist
However, some experts say that such a plan could end up being catastrophic for many consumers. The Michigan Health and Hospital Association pointed out that those rate cuts would only last for the next two years, but the loss of unlimited medical benefits would be permanent, and at the same time, the government would impose a no-fault system for accidents, the report said. Moreover, those in the insurance industry itself say that there would have to be significant transparency for any no-fault system to be put in place, and others say that consumers will only be able to find actual relief from high premiums if insurers aren't able to base them on credit ratings or increase them as freely as they can at present.

Insurance agents operating in Michigan will certainly need to keep track of the ways in which the state deals with auto coverage costs and regulations going forward, as this could increase competition for consumers looking for the best deals available.

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