CADILLAC — The number of uninsured drivers is going up nationwide, but in Michigan and Cadillac, the number of drivers without coverage is already high.
A report by the Hanover Insurance Group in 2017 showed 13 percent of all U.S. motorists were uninsured in 2015, up from 12.3 percent in 2010 following a seven-year decline.
In Michigan, the rate of uninsured drivers is already much higher. The Insurance Research Council ranked Michigan fourth in the nation for the number of uninsured drivers — about 20 percent, and according to local law enforcement, Cadillac doesn’t stray far from the mean.
According to Michigan State Police Sgt. Eric Sumpter, over the past year the MSP Cadillac Post recorded 135 citations for drivers with no valid proof of insurance or insurance that has lapsed, which is a civil infraction, and 96 citations issued for operating a vehicle without security, which is a misdemeanor offense.
These offenses carry hundreds of dollars in penalties, and misdemeanor offenses can result in jail time, but if drivers don’t have money for insurance, they most likely won’t be able to pay a fine. And as long as drivers don’t get caught, many don’t have a reason to buy insurance.
“It’s a big snowball effect,‘ Sumpter said. “If they have no insurance and a citation is issued, they’re not going to have money, and then they get a license suspended.‘
Sumpter said the high instances of warnings — 280 in total — put some motorists on the slope to losing their licenses, which further compounds the issue.
“(The number of warnings show) the troopers were showing compassion knowing what would happen,‘ he said. “But at the same time, they’re not going to get a warning next time. It’s not a good situation.‘
Farmers Insurance Agent James Frizzell said as many as one out of 2.33 drivers, about half of motorists in Cadillac, may be driving without security.
The reason for the high rate of drivers without insurance is that oftentimes, having insurance doesn’t justify the cost. The average cost for a policy in Michigan is $2,476 — the highest in the country.
But why is insurance in Michigan so expensive? The answer many point to is the state’s no-fault insurance policy, but that doesn’t tell the whole story.
According to the Michigan Department of Insurance and Financial Services, a rulemaking authority over licensing, evaluation, and regulation of the insurance and financial industries, one major factor is that the Michigan no-fault system includes unlimited lifetime medical benefits for car accident victims.
The Michigan Catastrophic Claims Association that maintains a fund that reimburses insurance companies when a person’s car accident-related medical costs exceed $555,000 per claim.
If a person is injured in a car accident and needs medical services, physical therapy, medicines or medical equipment, insurance will pay for services related to the accident for a lifetime.
Other states put a cap on this personal injury protection, but only in Michigan is it unlimited. The rising cost of medical care isn’t helping, and it's getting more expensive.
All drivers support the MCCA through fees in their insurance, which is expected to rise from $170 to $192 annually per vehicle this July — a 13 percent increase.
Another factor is that insurance rates are determined by credit scores. This is a fairly common practice by insurance companies, but it structures car insurance in such a way that drivers in poor communities will pay much more than those in wealthy communities.
According to CarInsurance.com, the average cost of a car insurance policy in Detroit is $7,415 — the highest rate in the nation and nearly double that of Brooklyn, New York — while drivers in places like Grandville, Hudsonville and Grand Rapids pay under $2,000.
Frizzell said insurance in Cadillac is not far from the state average.
“Cadillac is not a rich community," he said. "A lot of people rent and there are not a lot of homeowners. There’s no good credit established, so premiums are going to be high."
Moreover, people who lost jobs during the recent financial crisis and the recession that followed continue to pay much more than they otherwise, would despite posing no more of a risk.
“Good people got hurt, and it’s still kicking them while they’re down,‘ Frizzell said. “I have people with three drunk driving offenses on their record who get better insurance than I do. It’s crazy how they come up with numbers.‘
That’s why many have begun to politically organize to amend or repeal the Michigan Catastrophic Claims Association.
A bipartisan group of state legislators attempted to repeal the MCCA requirement through House Bill 5013 in November 2017, but the attempt was defeated.
Opponents of the MCCA want to place price controls on medical services provided to injured individuals.
Repealing the requirement to purchase the unlimited coverage would decrease the cost of insurance by 15 to 46 percent.