LANSING – In a move that will strengthen consumer protections and help ratepayers that are struggling in the nationwide economic downturn, House Democrats today backed a plan that will prevent insurance companies from raising their auto or home insurance rates during the term of a policy.
"With families across Michigan struggling to make ends meet in this economy, we cannot have greedy insurance companies raising their rates immediately after a customer purchases a policy," said State Representative Bert Johnson (D-Detroit). "This bait-and-switch tactic only serves to line the pockets of those who seek to profit on the backs of hardworking men and women. This issue is a simple matter of fairness – when a consumer agrees to a specific rate with an insurance company, that's the rate they should pay. End of story."
Under the plan, insurance companies would be prohibited from raising rates on home or auto insurance for the term of the policy once the premium has been billed by the insurance company and paid by the consumer. The only exception would be for customers who provide incorrect information in the process of determining the rate.
"This plan will protect consumers from insurance agents who are willing to mislead customers in order to make a quick buck," said State Representative Fred Durhal (D-Detroit). "Insurance companies should honor the rate hammered out by the consumer and the sales agent, and not put residents under the financial strain of having to shop around for a new policy after learning their rates are going up."
Under Michigan law, residents who own a car or finance a home are required to purchase some form of insurance. The Michigan insurance code requires agents to provide consumers with the lowest available premium quote, but there is currently nothing in statute that prevents insurance companies from increasing the premium mid-term.