Transportation Law Hub

While Michiganders rang in the New Year, the State of Michigan was ringing its cash register with proceeds from a new gas tax and hefty additional vehicle registration fees.

At the stroke of midnight, residents began facing a 20-percent increase in annual vehicle registration fees, which typically reach upwards of $100. Couple that with a 7.3-cent per gallon gasoline tax that also went into effect on the same day.

In addition, the Michigan Catastrophic Claims Association (MCCA) recently announced a 6.3 percent increase in the annual assessment per vehicle. The current rate of $160 per year per vehicle will rise to $170 per year per vehicle.

The MCCA fund is used to cover catastrophic claims. When an insurer surpasses the threshold (currently set $550,000 per claim), the insurer can then turn to the MCCA and seek reimbursement for benefits above and beyond the $550,000 threshold. The threshold is determined by the date of the accident.

Michigan is the only state that requires all Michigan motorists to purchase unlimited lifetime medical coverage in the case of a motor vehicle accident. According to the Detroit Free Press, the MCCA has explained that the additional fee is expected to cover a $1.9 billion estimated deficit for future losses.

Critics have long complained that because the MCCA is not subject to the Freedom of Information Act, there isn’t enough transparency, preventing the public from confirming or even challenging whether the fees are proportionate to the amount of losses actually paid or likely to be paid.

In light of the increase in the MCCA annual assessment per vehicle, insurers should update their systems and notify their agents of the new changes.