MCCA Surcharge Insurance Alert

[Smit-Dog]

I don't know what you guys are paying for bike insurance, but I haven't been too happy about paying the MCCA surcharge on my dirt bike insurance. All I carry is fire and theft, and the bike is not street legal.

My premium is $137, and of that, $72 (53%!) is for the MCCA surcharge. The kicker is that the surcharge is going up to $100 per vehicle starting July 1, 2003.

After being told over and over again by my agent and Progressive that I must pay the MCCA surcharge, I called the Michigan Office of Financial and Insurance Services. They emphatically stated that in order for an insurance company to charge the MCCA fee, the insured vehicle must be 1) Street legal, and 2) Street licensed. If both of these stipulations are not met, then the insurance company cannot charge the MCCA fee.

So I requested a refund of $144 from Progressive. If they don't honor the request, the legal rep from the Michigan OFIS office said that her office would be more than happy to go after Progressive. "It's what we live for..." she said!

When checking your declarations page, the MCCA surcharge may be listed as a separate line item, or buried in with the premium coverage breakdown. Check with your agent if it is buried or unknown. The same amount is charged for each and every vehicle insured.

About The MCCA Surcharge
http://www.michigan.gov/cis/0,1607,7-154-10555-64138--,00.html

How To File An Insurance Complaint
http://www.michigan.gov/cis/0,1607,7-154-10555_12902_12907---,00.html

If you have a street legal bike AND have it street licensed, then you have to pay the MCCA charge. Otherwise get some money back and buy some new goodies for your bike!

:thumb:

 

[woodsy]

As an interesting side note Bill, I just bought my insurance from Bike-line and the MCCA surcharge is only applied once by them. I have 3 bikes at this time on my policy and only the first one has the surcharge. I couldnt get this same deal thru my Auto Owners that handles Progressive.
Just a thought..
Woodsy

 

[Smit-Dog]

Even more interesting Woodsy is that in my recent quote with Bike-Line, I did not get the MCCA surcharge at all. Offhand I thought great, they are applying the MCCA surcharge correctly (my bike is not street legal/licensed).

In trying to sort this whole thing out though, I called them and asked why. Their explanation was that the MCCA surcharge only applies to certain "territories" within Michigan. I didn't press it with them, but even their policy does not seem quite right.

Also, on the 3 bikes that you have insured with Bike-Line, were any of them designated as "street legal" and "street licensed"? This may be why you only had 1 surcharge as opposed to 3.

Update: Received a 2nd reply from Progressive. This is what they said:

Thank you for your e-mail, Mr. Smith.

I have verified the information you were given.
Unfortunately, the information you were given is
incorrect.

The only vehicles exempt from the MCCA fee for
Progressive's guidelines are:

- ATV's
- Motorcycles with less than 51 CC"s
- Moped's regardless of CC's.

We do not keep records of vehicle registration, if an insured
has an automobile policy wishes to have this fee waived
based on the registration status, we would not be able to
comply with that request either. The status of the vehicle
registration is not relevant to our guidelines in the state of
Michigan.

So I am filing an official complaint with the Michigan OFIS on Monday, and let them run with it.

 

[woodsy]

Stay on top of it Smit-Dog - you'll win! Mine are ALL street legal, when I signed on with Bike-Line I had to call them (they would only allow 2 bikes online quote). I spoke with the Tim at their office and explained to him that I had 2 dirt bikes that were "street legalized" as well as my Royale Venture. He said "so you have a dual sport KX500" - cool. He seemed to know exactly what we "bikers" in MI are up against!!
Anyway, GOOD LUCK with the battle but doen't forget to ride :)
Scott

 

[BigBobT]

Smit-Dog, thanks for working on this. I'm really pissed paying this on the whole fleet. I was thinking about making my XR250 street legal but am holding off a little bit to see how this all works out. I need to dig out my Progressive policies but I believe I've been paying this on all bikes, including when my son had his XR100. Really a screw.

I currently have three policies through Progressive since they can't put everything on one. If I put all my bikes on one policy, I have to have my 15 year old son listed as an operator on my BMW street bike. Therefore I have the XR250 and the 450EXC on a different policy. They also won't put our boat on the same policy as bikes. Real nightmare keeping track of all of this.

Outside of this, I was very happy dealing with Progressive on a claim a couple of years ago.

 

[rickshaw]

hey Woodsy...do ya mind posting the Bike Line contact info???

I have to update my bikes insurance soon.

thanks,
rickshaw

 

[Smit-Dog]

www.bike-line.com

 

[Smit-Dog]

The Michigan OFIS is definitely supporting our position. And since it is a state-mandated surcharge, I would think that the state's position would override / trump Progressive's policy.

Seems to me that this surcharge is not being applied consistently by insurance companies. A quick quote from Bike-Line, Progressive, and State Farm shows this. Insurance companies assess this charge, and can tack on a small administrative processing fee, but otherwise by law they must pass on the full surcharge amount to the MCCA. If the policy of the MCCA explicitly states that the charge should not be applied for certain vehicles, then the MCCA shouldn't be accepting those particular surcharge fees. And are companies like Progressive really passing on all collected MCCA fees on to the MCCA?

I guess this is where the OFIS comes into play. I'm not sure as to the full extent of their jurisdiction or ability to enforce insurance laws, but I would hope as a consumer advocate / oversight agency they'd be able to force Progressive to drop the charges. If Progressive is not applying the policy correctly, and is collecting an MCCA surcharge when it shouldn't, and they are knowingly doing this, that is fraud. Starting 7/1/2003 at $100 per insured vehicle, it adds up quickly.

If for some reason the state cannot force Progressive to start applying the state-mandated fee correctly (I can't imagine the state NOT being able to do this), then I will drop Progressive like a bad infection.

Seeing as how Progressive has significant ties with motorcyclists in general (AMA, race sponsor, Honda Riders Club, bike magazine ads), they would not want a bunch of their clients to get upset about this surcharge. I think regardless I'd write the AMA and CCC on this issue.

Was it the OFIS office that you contacted last year?

 

[Magoo]

Smit Dog, I'm not sure you even got the "right answer" from OFIS!
From the Michigan Insurance Code, I dont think "motorcycles," regardless of liscensing and street legal, are subject to the No-Fault Act (thus MCCA) at all!
As copied from the Act (with my highligting of text from http://www.michiganlegislature.org/mileg.asp?page=getObject&objName=mcl-500-3101&highlight=):

500.3101 Security for payment of benefits required; period security required to be in effect; deletion of coverages; definitions; policy of insurance or other method of providing security; filing proof of security; “insurer” defined.
Sec. 3101.

(1) The owner or registrant of a motor vehicle required to be registered in this state shall maintain security for payment of benefits under personal protection insurance, property protection insurance, and residual liability insurance. Security shall only be required to be in effect during the period the motor vehicle is driven or moved upon a highway. Notwithstanding any other provision in this act, an insurer that has issued an automobile insurance policy on a motor vehicle that is not driven or moved upon a highway may allow the insured owner or registrant of the motor vehicle to delete a portion of the coverages under the policy and maintain the comprehensive coverage portion of the policy in effect.

(2) As used in this chapter:

(a) “Automobile insurance” means that term as defined in section 2102.

(b) “Highway” means that term as defined in section 20 of the Michigan vehicle code, Act No. 300 of the Public Acts of 1949, being section 257.20 of the Michigan Compiled Laws.

(c) “Motorcycle” means a vehicle having a saddle or seat for the use of the rider, designed to travel on not more than 3 wheels in contact with the ground, which is equipped with a motor that exceeds 50 cubic centimeters piston displacement. The wheels on any attachment to the vehicle shall not be considered as wheels in contact with the ground. Motorcycle does not include a moped, as defined in section 32b of the Michigan vehicle code, Act No. 300 of the Public Acts of 1949, being section 257.32b of the Michigan Compiled Laws.

(blah, blah, blah... AND)

(e) “Motor vehicle” means a vehicle, including a trailer, operated or designed for operation upon a public highway by power other than muscular power which has more than 2 wheels. Motor vehicle does not include a motorcycle or a moped, as defined in section 32b of Act No. 300 of the Public Acts of 1949, being section 257.32b of the Michigan Compiled Laws. Motor vehicle does not include a farm tractor or other implement of husbandry which is not subject to the registration requirements of the Michigan vehicle code pursuant to section 216 of the Michigan vehicle code, Act No. 300 of the Public Acts of 1949, being section 257.216 of the Michigan Compiled Laws.

I've argued this quite a bit with companies (not just Progressive), but to no avail. AND, the State is two-faced on this as well; if you have a street-bike, just try to get your plate without your "Evidence of No-Fault Insurance!"
FWIW, as an option, I'd see about adding the bike to your Homeowners... many companies will do this. All you need is Liability and Comprehensive anyway.
I will say Progressive is a GOOD company, they just have a different interpretation of MCCA than we'd like. A vast majority of companies charge MCCA on bikes, so no reason to only pick on Progressive! (Maybe a class action suit...? ;))

 

[Smit-Dog]

Thanks for the info Magoo. Still waiting for the snow to melt? ;)

Should be interesting, but it sounds like a messy issue, with finger pointing and different interpretations. At least there is such a thing as the OFIS to help act as an intermediary, and I've been dealing with Brenda, who appears to have been waiting by her phone for just such a case.

I think I tried adding the bike to my homeowners last year. A very good friend of mine runs a State Farm agency, and always gives me the best rates and "low-down" of the insurance ins and outs. He couldn't beat Progressive's rate (by a long shot), and suggested going with them. If I remember right, the homeowners deal couldn't work because the bike has a VIN and title, so needs it's own coverage.

Something needs to get straighted out with this however. Whoever is running the MCCA department can't let insurance companies arbitrarily set their own policy as to either collect or waive the MCCA surcharge. It needs to be applied consistently.

My complaint has been filed with OFIS; I'll post here as the case progresses.

 

[Smit-Dog]

I don't know why some companies like Progressive take such a hard line with assessing this charge. It's not like they make anything off of it, unless they're afraid of getting nabbed/fined for not collecting it when they should have been (and are still left liable for paying into the MCCA).

I too like Progressive (but ask me in a few weeks). They have great rates, easy online quotes, claim processing, and account servicing. They are one of the few insurance companies actually contributing sponsorship money for the sport.

On a side note, the whole reason for the MCCA is the crux of the problem: unlimited claim benefits. Michigan is the ONLY state to offer this. Why?

 

[Magoo]

Smit, snowmobiles, 4wheelers, boats, and many other types of "vehicles" that can be covered by Homeowners policies have titles and VIN numbers. But, not all companies will add recreational vehicles to their policies.
Mweissen, I've no problem with your comments.
It's unfortunate that the companies (and the State of Michigan) can't understand and administrate this in a consistant manner. That was my point.
Sheesh, the Governor is quick to redirect our ORV Funds, but no one can figure out the No-Fault Insurance Law....

 

[UP Magoo]

Smit-Dog, have you gotten anywhere with this "problem?"
Magoo

 

[Smit-Dog]

Magoo,

I'll call OFIS today to get an update. In the initial letter they sent me, they said that it should take about 4-6 weeks to process/resolve before presenting their findings.

I also had lunch with my insurance agent a few weeks ago, and asked him again about State Farm insuring recreational vehicles like dirt bikes, snowmobiles, etc. At least with State Farm, it is not an option; there are clauses that specifically exclude "power toys". He did say that companies like Nationwide do allow toys to be covered under a homeowners policy as an option, however the option does increase the premium.

 

[UP Magoo]

Originally posted by Smit-Dog
He did say that companies like Nationwide do allow toys to be covered under a homeowners policy as an option, however the option does increase the premium.

Usually the premium charge is minimal; at any rate it is most often less than you are charged to cover them on a seperate policy....
Magoo

 

[Smit-Dog]

In my case, the dirt bike insurance is only $137 per year (would only be $65 w/o the MCCA charge!). To switch my homeowners insurance to another company that would cover power toys, I'd miss out on the already good rates (and relationship) I have with my agent/friend.

While the OFIS case is still open, the initial response to them from Progressive is that they are going to stand by their policy of charging the MCCA on non-street legal dirt bikes. The OFIS also has a handful of other complaints against Progressive for this same issue.

Progressive's stand is based on the notion that I could still take my dirt bike out on the street, illegally mind you, get into an accident, get seriously hurt, and therefore have the potential to be covered by the benefits and coverage provided by the MCCA fund. Evidently there is case law in Michigan to support their argument. :think:

Now while the fine folks at the OFIS have been helpful and willing to follow-up on my complaint, they are not fighting the good fight. I now have a call into the MCCA directly to see what they can do about it.

It's not looking promising... See what unlimited claims, benefits, and legal fees/awards gets you?

 

[MWEISSEN]

Smit-Dog, it's sounding like your results are identical to mine from last year. My bill was going to be 5x$65 for my dirt bikes, and I certainly wasn't going to take that hit.

I think it's interesting because that $65 is supposed to come back to the State of Michigan, isn't it? I'll bet it's not being sent to the state! It's lining someone's pocket at Progressive!

 

[Smit-Dog]

MW -

If I can't get the MCCA to intervene with Progressive, I'll drop them and go with Bike-Line (Markel). Markel's cost is more than Progressive's for the actual premium portion, but they don't tack on the MCCA unnecessarily.

Actually, I believe that Progressive is taking a hard line with collecting the MCCA fee to cover their own ass. If I get injured on my dirt bike, and that bike is insured by Progressive, and somehow my injury claim falls under MCCA benefit coverage, either I or MCCA could go after Progressive for that claim coverage.

Maybe Progressive thinks that losing a few customers due to charging MCCA aggressively does not outweigh the potential liability they may be exposed to.

...And it's going to be $100 per bike surcharge starting July 1, 2003. :think:

 

[Smit-Dog]

Well, I just got off the phone with Jack Tillotson of the MCCA. They have reviewed my complaint and the wording of the MCCA law, and like the rest of us, realize how contradictory and vague the law is regarding the surcharge on non-street legal dirt bikes.

According to Jack, it is the MCCA's official position that insurance companies should not be charging the MCCA fee on dirt bikes that are not licensed for the street. The issue now for the MCCA department, however, is how to enforce their policy/position, and determine what governing body has the authority to enforce correct application of the MCCA according to the law.

An officer from the OFIS sits on the MCCA Board. They are going to meet soon to discuss publishing a ruling from the OFIS that would help clarify the wording of the current law, and possibly get the wording changed/amended so that insurance companies do not have the leeway they currently do in interpreting and applying the MCCA law.

I also found out that the MCCA does not get a detailed breakdown of MCCA fees collected by insurance companies. They merely accept, at face value, whatever fees are sent in. If there are enough complaints, the OFIS does have a group that audits insurance companies to ensure proper reporting of MCCA (among auditing many other things).

Considering the lack of detailed reporting of the MCCA fees, it is conceivable that not all MCCA fees collected by insurance companies are actually passed on. I'm not suggesting outright fraud, but (cough, cough "Enron", cough cough "WorldCom") there isn't any oversight in place to ensure otherwise.

The way it was left with Jack at the MCCA is that they will be getting together with the OFIS to clarify and resolve this issue. Hopefully there will be a positive outcome from all this before my next premium comes due!

 

[rickshaw]

Great job Billy :aj:

but when should i re-new my insurance :)

rickshaw

what time's the pool party next weekend????

 

[Magoo]

Originally posted by Smit-Dog
According to Jack, it is the MCCA's official position that insurance companies should not be charging the MCCA fee on dirt bikes that are not licensed for the street. The issue now for the MCCA department, however, is how to enforce their policy/position, and determine what governing body has the authority to enforce correct application of the MCCA according to the law.

I'm impressed with your progress on this!
I still maintain that NO motorcycles (licensed or not!) are subject to Michigan's No Fault Law and subsequently should not be assesed MCCA charges.
When is the OFIS/MCCA meeting taking place regarding this? I'd like to mark my calendar so I can continue follow up on this with you.
Magoo

 

[Smit-Dog]

Originally posted by rickshaw
...but when should i re-new my insurance :)

Uh.... When it's due?

:confused:

...what time's the pool party next weekend????

Annual summer pool party tentatively scheduled for 6/21.... stay tuned for band announcement and details...

 

[Smit-Dog]

Originally posted by Magoo
...I still maintain that NO motorcycles (licensed or not!) are subject to Michigan's No Fault Law and subsequently should not be accessed MCCA charges.

When is the OFIS/MCCA meeting taking place regarding this?

I'd agree according to the contradictory wording of the current law, but I believe that the intent of the law is to include street bikes under MCCA coverages/fees. And I agree that they should be. I don't have a reference to it at hand, but I think I remember reading that street motorcycle accidents/claims represent a disproportionate percentage of MCCA claims compared to automobiles. That doesn't surprise me, and I don't see any reason why street bikes shouldn't be included in the MCCA.

Believe me, seems like ole Jack & Company at the MCCA are doing a lot of head scratching and pondering over this. Between all the parties that are involved in this, it's not completely clearcut on their end.

Jack didn't indicate an exact meeting date, but has my phone number and e-mail address, and promised to keep me posted - I'll do the same here.

 

[Magoo]

Originally posted by Smit-Dog
I believe that the intent of the law is to include street bikes under MCCA coverages/fees. And I agree that they should be. I don't have a reference to it at hand, but I think I remember reading that street motorcycle accidents/claims represent a disproportionate percentage of MCCA claims compared to automobiles. That doesn't surprise me, and I don't see any reason why street bikes shouldn't be included in the MCCA.

Actually, the MCCA only exists due to the NoFault law. MCCA is a (state run)funding mechanism that pays automobile accident claimants medical bills after they exceed a certain amount (this is the Personal Injury Protection "PIP" part of your Michigan NoFault Insurance coverage which provides unlimited lifetime medical benefits for injuries sustained in a covered automobile accident).
And, as I understand it, motorcycles are not subject to Michigan's NoFault law. Since motorcyclists cannot collect under Michigan's NoFault, I wouldn't think they can collect from MCCA either. I'd like to see the info you have regarding MCCA payments made to motorcyclists. I'm not saying it isn't happening, I'd just like to see the proof.
Magoo

 

[Smit-Dog]

Very good points Magoo.... I'll ask those same questions to Jack Tillotson the next time I follow up with him.