How does the MCCA determine the annual premium (assessment) charged to its members?
The law requires the MCCA to calculate the premium (assessment) on an annual basis. The premium is required to be sufficient to cover the lifetime claims of all persons catastrophically injured in that year. The MCCA also adjusts the premium (assessment) for excess or deficiency in earlier assessments.
Each insurance company writing auto or motorcycle insurance in Michigan is required to be a member of the MCCA. The insurance companies pay a premium (assessment) to the MCCA. Companies writing personal auto or motorcycle insurance pay a per vehicle amount to the MCCA and that cost (assessment) is generally passed on to policyholders.
Why does the amount charged on an insurance bill differ from the actual MCCA premium (assessment)?
The MCCA assessment is a per vehicle charge and is the same for all vehicles with the exception of historic vehicles and historic motorcycles (20% of the current assessment). Your insurance company is permitted to include administrative and other miscellaneous costs in the assessment rate which may be passed on to their policyholder. If you have any questions regarding the assessment rate your insurance company is charging, you should contact the company or your insurance agent.
Why is my MCCA assessment based on the number of cars I own instead of the number of drivers in my house?
The MCCA must assess to cover all catastrophic claims occurring during a certain year. Changing the assessment from per car to per person will not change the total amount needed to pay claims. The per car assessment is also consistent with the Personal Injury Protection (PIP) portion of the no-fault law, which is based on each car.
I have a motorcycle. Do I have to pay the MCCA assessment?
Effective December 22, 1981 and pursuant to PA 445 motorcycle insurers are subject to MCCA assessments.
Unless a motorcyclist is injured in an accident with a motor vehicle, he/she is not entitled to no-fault benefits, including MCCA protection for medical expenses that exceed applicable MCCA retention. Thus if a motorcyclist is injured after hitting, for example, a tree, he/she would not be entitled to collect such benefits. The reason is that motorcyclists are not required to purchase no-fault medical benefits. While they can purchase medical benefits in $5,000 increments, requiring them to purchase no-fault unlimited medical benefits would be cost prohibitive. They receive such benefits when injured in an accident with a motor vehicle because they are collecting under the motor vehicle’s no-fault policy and not under their own policy.
If a motorcyclist is involved in an accident with a motor vehicle, occupants of the motorcycle will be eligible to receive unlimited PIP benefits. If a motorcyclist is NOT involved in an accident with a motor vehicle, then the occupants of the motorcycle are not eligible for unlimited lifetime PIP coverage and only eligible for benefits that were purchased from the motorcycle insurer.
Does the MCCA estimate the life span for drivers injured in auto accidents to be 105 years after the accident?
No, it does not. Like a pension plan, mortality assumptions are important in determining the MCCA's future payments; however, MCCA uses variables such as age, gender and type and severity of injury to estimate life expectancy.