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The Most And Least Expensive States For Car Insurance In 2013

Car insurance customers must buy PIP as part of the policy. PIP pays the medical bills for car accident injuries of the policyholder, family members in the household and any passengers who do not have PIP coverage. The injured person's car insurance company pays out the first $500,000 for medical treatment. Any expenses above that threshold are reimbursed by a state-created nonprofit called the Michigan Catastrophic Claims Association.

A portion of everyone's premium includes an assessment from the association, which this year is $175 per vehicle.

Last year a bill to set limits on PIP benefits failed, but legislators are expected to introduce another reform bill backed by Gov. Rick Snyder in March.

In addition to setting a cap on benefits, reform proponents have called for capping payments for medical services. Reimbursement costs for PIP claims are about three times the reimbursement costs for workers' compensation and four times the reimbursement costs for Medicare -- for the same procedures, according to the Insurance Institute of Michigan. The average PIP medical claim more than tripled to $44,138 in 2012 from $13,617 in 2000, the institute says.

Still, efforts to change the system face a tough fight from hospitals, patient advocates and some elected officials, such as Oakland County Executive L. Brooks Patterson, who was critically injured in a car crash in August. In an open letter to the public, Patterson vigorously defended the state's current auto insurance system.

The political fight is often portrayed as the "big, bad insurance companies" being stingy versus accident victims who rely on the money for survival, says Jason Verlinde, treasurer of the Michigan Association of Professional Insurance Agents and vice president of the Verlinde Insurance Agency in Richmond.

"But the people who are getting lost in the story are the ones who can't afford it," he says.

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