Michigan drivers will soon receive a $400 refund for each vehicle they own, Gov. Gretchen Whitmer announced on Dec. 7.
The refunds are intended to help return surplus insurance funds to Michigan policyholders and will be distributed in the second quarter of 2022, Whitmer’s office said in a news release.
The money comes from the Michigan Catastrophic Claims Association, an organization that covers claims for people injured in car accidents. The MCCA found that about $3 billion of its $5 billion surplus could be returned to policyholders, the news release said.
Michigan drivers have been required to pay into the fund “for decades,” Whitmer said, and anyone who was an insured driver in Michigan as of October 2021 qualifies for the refund, according to the release.
People won’t need to do anything to receive the money — the MCCA will send the money to insurance companies, who will distribute the funds within 60 days, the release said.
Michigan has some of the highest auto insurance rates in the country, according to the University of Michigan’s Poverty Solutions team.
The newly announced refunds have been attributed to lawmakers’ decision to overhaul the state’s insurance policies about two years ago. The 2019 change allowed drivers to choose how much personal injury protection medical coverage to purchase when taking out an insurance policy and sets limits on payments to providers who care for accident victims, NPR reported.
The new laws were met with both praise and criticism — the Poverty Solutions team at the University of Michigan found that even though the reforms did make a difference by bringing insurance rates across the state down by nearly 20%, rates in Michigan remain the highest in the country and disproportionately affect people of color.
“More must be done to eliminate discriminatory rate-setting practices and further reduce premiums,” Amanda Nothaft, senior data and evaluation manager at Poverty Solutions, told The Detroit News.
Lt. Gov. Garlin Gilchrist said there “is still work to be done” but called the refunds “a major win for all drivers — especially Detroiters — who have paid the highest insurance rates in the nation for decades.”
“The Governor and I called for these refunds because we recognize that this surplus money belongs to Michigan drivers, and we need to put it back in their pockets,” Gilchrist said in the release.