Officials warn financial amnesty for uninsured drivers expires soon

State and local officials are urging those who are driving illegally without auto insurance to sign up soon for coverage before Michigan's uninsured motorist financial amnesty period ends Jan. 1.

The amnesty began in July 2020 and shields drivers who let their insurance lapse from facing expensive penalties or higher premiums when they try to purchase auto insurance. The amnesty was part of Michigan's no-fault insurance overhaul aimed at lowering the state's highest-in-the-nation auto insurance rates.

Prior to the overhaul, an estimated 20% of Michiganders and 60% of Detroiters were believed to be driving without insurance. Detroiters paid the highest insurance rates in the state, sometimes more than $3,000 per vehicle per year, making coverage unaffordable to people who otherwise would follow the law and buy it.

“We want all Detroiters to know, all Michiganders to know, that this is an important deadline and it’s going to come up fast," Anita Fox, director of the Michigan Department of Insurance and Financial Services, said Tuesday at a news conference with Detroit Mayor Mike Duggan. "If you wait, you’ll pay more."

More: Under new Michigan no-fault rules, drivers save, accident victims worry

More: How Michigan drivers can get the cheapest no-fault auto insurance rates

Fox said that insurance companies' financial penalties for uninsured drivers who wait too long and miss the amnesty period will vary by circumstance and insurer.

"They can refuse to insure you, maybe push you into a high-risk pool," she said. "It really depends on an individual driving situation … but it can be significant and it’s really kept some people from getting back into the insurance market."

Two Detroit residents spoke at the news conference about how they are saving thousands of dollars a year on their car insurance through the no-fault overhaul's new consumer choices.

Krysten Jones, 35, said she paid $470 a month to insure one vehicle before the new system took effect last year, and at times drove without insurance. Now she has three vehicles on her policy and pays a total $280 per month for all three.

The savings were premised on her choosing the option for $0 personal injury protection or PIP, which requires that she rely on her health insurance if in a car accident.

“I did away with the PIP," she said. "I have health insurance through my employer, so I didn’t feel I needed it."

Evan Fay, 33, a U.S. Air Force veteran, moved to Detroit from Anchorage, Alaska, in 2019 with his wife and their two children.

His auto insurance carrier, USAA, initially quoted him more than $3,000 for a six-month policy to cover his family's two vehicles, he said, and so they kept their Alaska policy until the new Michigan system began last year.

Now they pay $1,092 every six months to insure those two vehicles, he said.

Since July 2020, more than 100,000 previously uninsured Michiganders have bought car insurance, and nearly 66,000 of them had been driving without insurance for three years or more, according to the Insurance Alliance of Michigan, an industry group.

Contact JC Reindl: 313-222-6631 or jcreindl@freepress.com. Follow him on Twitter @jcreindl. Read more on business and sign up for our business newsletter.

This article originally appeared on Detroit Free Press: Officials warn financial amnesty for uninsured drivers expires soon