Some 2 million drivers throughout the state may see higher rates
Drivers in Michigan are likely to see higher auto insurance premiums this year. Some 2 million people could see a $40-a-year increase, unless a tax credit that benefits insurers is repealed. Governor Rick Snyder has proposed repealing the tax credit as part of his 2016-2017 budget proposal. Doing so would secure more funding for the state’s general fund and may be able to ensure that drivers do not pay higher rates for their coverage.
Insurers are being reimbursed for covering damage caused by uninsured drivers
Before 2012, insurers received money from the state’s general fund. This money was meant to reimburse insurers when they were forced to cover damage caused by uninsured drivers. The Michigan Auto Insurance Placement Facility had managed the funding for these insurers and those paying into the fund were eligible for a tax credit that was unavailable in the past. Repealing the tax credit has gained support from lawmakers in the state, but it may have some consequences for consumers.
Repealing tax credit may result in higher premiums for drivers
According to Bev Barney, CEO of the Michigan Association of Insurance Agents, consumers may end up paying higher premiums if the tax credit is repealed. Insurers will continue to pay more for the damage caused by uninsured drivers, and this may lead some companies to raise premiums in order to overcome financial losses. Despite this, some lawmakers believe that the tax credit represents a problem that was created by the state’s past Legislature. Whether the tax credit is repealed or not, consumers are likely to pay more for their insurance coverage.
Consumers are encouraged to shop around for less expensive coverage
Consumers concerned about facing higher premiums are being encouraged to shop around for new policies. In some cases, drivers can find less expensive coverage whose premiums are lower than what they pay currently. Premiums are constantly changing due to various issues, however, and even those that find less expensive policies may see their premiums grow in the coming years.