Detroit Drivers: Here's What You Should Know About Your City's Plan To Save You Auto Insurance Costs

Sherri Ramos

The mayor of Detroit is working diligently to pass an auto insurance reform plan, known as Plan D. If put into effect, Plan D could have a big impact on how much Detroit drivers pay for their auto insurance and how much compensation they're entitled to in the event of a vehicular accident. 

If you're a Detroit driver, here's what you need to know about Plan D.

You'll Be Given A Choice.

Michigan is unique in that it is the only state that offers auto accident victims unlimited personal injury protection. Currently, if you're an insured motorist who is injured in an accident in Detroit, you'll receive all the medical care you need, regardless of the cost of that medical care or the duration of your treatment. The downside to this, however, is that Michigan residents currently pay more for their auto insurance than any other state in the nation.

Under Plan D, Detroit drivers can opt to continue to pay an extremely high insurance policy and keep their unlimited coverage, or they can choose to pay a lesser premium and have a limited amount of personal injury protection.

What Limited Coverage Will Look Like

Should you choose to remain on your unlimited coverage plan, nothing will change for you if Plan D takes effect. If you opt out of your current plan in favor of a limited coverage plan, however, you're facing two big changes. The first of those changes is a reduced auto insurance premium cost. How much will you save? You can expect your coverage to cost about 37 percent less, and you'll save between $600 and $2300 a year on your auto insurance.

How much personal injury protection do you need to give up to see the savings? Under Plan D, the amount your insurance provider will compensate you for injuries sustained during an automobile accident is capped at $275,000. 

Cost Of Accidents Vs Coverage

Is $275,000 enough coverage? If you're ever injured in a car accident, will the coverage you receive be enough to pay for your damages? To put things in perspective, the average cost of injury-only vehicle accidents is $126,000, and the average cost of automobile accidents that result in fatality is $6 million. While there is a chance that your auto insurance coverage will pay out plenty enough money to compensate you for your injuries, there's also a chance that you or your loved ones will be left with a heaping pile of bills even after your receive the maximum amount of coverage guaranteed to you under Plan D capped coverage.

When Your Plan D Coverage Isn't Enough

Fortunately, you have other options if you opt for capped coverage under Plan D and experience an auto accident-related injury that exceeds your maximum insurance coverage payout. Under the plan, any medical bills that are not covered by your insurance policy are to be paid by your health care insurance, whether it be Medicare, Medicaid, employer-provided health care, or any of the plans available through the Affordable Care Act.

What if you don't have medical insurance? Michigan is a no-fault state, but that doesn't mean that the court system will never acknowledge that negligence occurred in an automobile accident; it only means that you must first seek compensation from your own insurance provider. If you've exhausted the funds available to you through your own auto insurance policy, you can then legally sue a negligent party for the remainder of your medical bills and lost wages. And under Michigan law, if your automobile accident-related injuries caused you to have serious impairment of bodily functions, you may also sue a negligent party for pain and suffering. It could be good to talk to a car accident lawyer, such as those at J D'Agostino & Associates, P.C., for more information about how this process works. 

There is a good chance that Plan D will soon pass the approval process and take effect in the city of Detroit. When it does, you'll need to decide whether to renew your current automobile insurance policy or opt for a lesser-priced policy with less personal injury coverage. Be prepared to make that decision by using the information above to understand Plan D's capped insurance coverage and how it will affect you in the event of a car accident.