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SB 329

Insurance: no-fault; penalties for lapse of insurance policy; eliminate. Amends secs. 2116b, 2118 & 2120 of 1956 PA 218 (MCL 500.2116b et seq.) & repeals sec. 2116a of 1956 PA 218 (MCL 500.2116a).

2025-2026 Regular Session Introduced by Rosemary Bayer and 10 co-sponsors

Michigan bill SB 329 eliminates financial penalties for drivers whose no-fault auto insurance policies lapse, removing state enforcement mechanisms for continuous coverage requirements.

PLACED ON ORDER OF THIRD READING
#insurance:no-fault
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WeVote Research Nonpartisan
Bill Summary · SB 329

Legislative bill overview

SB 329 eliminates penalties that Michigan drivers face when their no-fault auto insurance policy lapses or is terminated. The bill amends Michigan's 1956 Insurance Code by removing provisions in sections 2116a, 2116b, 2118, and 2120 that currently impose these penalties on drivers with lapsed coverage.

Why is this important

No-fault auto insurance is mandatory in Michigan, and lapse penalties are designed to incentivize continuous coverage compliance. Eliminating these penalties could affect how the state enforces insurance requirements and may have implications for accident victims' ability to recover damages and for insurers' collection mechanisms when policy lapses occur.

Potential points of contention

  • Insurance enforcement: Removing penalties may reduce incentives for drivers to maintain continuous coverage, potentially increasing the number of uninsured drivers on Michigan roads
  • Victim compensation: Accident victims injured by uninsured drivers may have fewer avenues for recovery if lapse penalties are eliminated and enforcement weakens
  • Rate implications: Increased uninsured motorist risks could pressure insurance companies to raise rates for compliant customers to offset losses from uninsured accidents
  • Legislative intent: The bill has bipartisan co-sponsors but the specific rationale for elimination (whether penalties are considered ineffective, inequitable, or excessive) is unclear from the bill text alone

Compiled from official sources — confirm details with the bill’s official record.

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