Michigan Auto Insurance Reform
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Here at Legacy Partners Insurance Services, we have worked extensively with our insurance carrier partners to learn how changes to Michigan’s automotive insurance laws will impact our customers. We understand that these changes can seem overwhelming, so we have assembled a collection of resources to help pass our knowledge along to you. Please browse through the information below but remember that you are not alone! We are here to answer all of your questions. Call us today at 734.422.7850 and we will help you make these decisions and find the best option to fit your needs.
Legacy Coverage Guides
We have prepared coverage guides to help you understand PIP reform and how it may affect you.
We have already taken many calls from our customers interested in learning about Michigan auto insurance reform. We’ve talked to our agents and put together a collection of the most Frequently Asked Questions we are hearing. See what everyone has been asking us and get answers to these questions to help you understand the changes that are coming to your insurance. If your questions are not answered below, or if you want to discuss your specific situation, call us today at 734.422.7850!
A: Michigan law requires Michigan residents to purchase no-fault auto insurance to be able to drive legally in the state. Each auto insurance policy must have three basic components: (1) Personal Injury Protection (“PIP”), (2) Property Protection (“PPI”), and (3) Residual Liability Insurance – Bodily Injury and Property Damage (“BI/PD”). If you get into an accident, the first two categories provide insurance protection regardless of whether you were at fault for the accident. The third category, BI/PD coverage, only applies if it is determined that you are legally responsible for certain damages. These coverages are required in every no-fault auto insurance policy and provide broad—although not complete—protection for Michigan drivers.
You can—and often should—add other coverages above and beyond the minimum that is required by law. For example, you would need to separately purchase collision coverage to pay for repairs to your car when it is damaged in an accident with another vehicle; comprehensive coverage could be added to insure you against your car being stolen, vandalized, or damaged by fire, flood, or in a collision with an animal. Michigan does not require you to purchase these coverages, but many drivers nonetheless elect to have them to better protect themselves. If you want to discuss these other coverages and how they can impact you, call us today at 734.422.7850.
A: The new law makes significant changes to the no-fault insurance regime in Michigan that you need to understand to make sure you are properly protected. The most significant changes that directly impact your decision making and coverage are to:
- The amount of PIP coverage required in each insurance policy.
- The categories of people that are covered by PIP.
- The minimum BI/PD coverage required in each insurance policy.
It is important to understand how each of these changes impacts you to make sure that you are covered properly. If you have any questions about how you should be insured, call 734.422.7850 today to speak with one of our licensed agents.
A: Personal Injury Protection or PIP is one of the three required portions of a no-fault insurance policy in Michigan. The coverage it provides is defined by Michigan law as “all reasonable charges incurred for reasonably necessary products, services and accommodations for an injured person’s care, recovery or rehabilitation.”
What does that mean? PIP covers more than just your medical bills. PIP covers you for a wide range of other costs that you could incur from an accident. If you need rehabilitation services to get back your range of motion or strengthen a broken arm, or even to learn to walk again, PIP covers that. If you need attendant care to help with the basic activities of daily life like putting clothes on, PIP covers that. PIP also covers modifications to your home or vehicle like wheelchair ramps or lifts. PIP even covers additional costs for activities you can no longer do yourself, like cut your grass or clean your house.
A: PIP coverage is changing in two ways.
Persons Covered. The persons that are eligible for benefits under PIP is changing. Under the old law, the PIP portion of your auto insurance policy would protect the named insured(s) and any resident relatives, as well as anyone else injured in a vehicle you own or a vehicle you were driving at the time of the accident. This meant that persons who did not have auto insurance policies were nonetheless eligible for unlimited PIP coverage through the auto insurance policies of someone else (e.g., the policy of a driver or the owner of a vehicle involved in an accident), regardless of fault. Under the new law, you must be a named insured or a resident relative to qualify for PIP coverage—simply being listed as a driver on a policy is not enough. This could leave a significant gap in coverage.
This means that if you have children who no longer live at home (e.g., children away at school with their own full time residences) they may need their own auto insurance policies to drive a car that you own. It also means that if you live with friends or a significant other, you may not be able to drive a car that they own without having your own insurance policy, or you will not be eligible for PIP coverage at all. If you get into an accident without no-fault PIP coverage, you may have to sue (and collect) to be entitled to any benefits!
Different carriers have different rules and options for how to cover you in specific situations. If you have any questions about your situation, we can help. Call 734.422.7850 today and we can help you understand whether you are properly insured based on your policies rules, and if not, we can help you fix it.
Amount of PIP Coverage. For many years, Michigan motorists have been required to obtain unlimited PIP coverage. This meant that even in the case of a severe accident where lifetime medical costs ran into the tens of millions of dollars, these costs were still covered. Unlimited PIP coverage is great if you are ever in a severe accident, but that level of insurance comes at a higher cost which led Michigan to have some of the most expensive auto insurance in the country.
The new law lets you opt out of unlimited coverage by selecting a lower level of PIP coverage. By lowering the amount of PIP coverage you have, you may be able to save money on your auto insurance. The table below illustrates the options you may have available to you depending on your circumstances.
|PIP Coverage Level||Who Can Select This Option?|
|$50,000||Medicaid recipients whose spouse and all relatives that live with them are also covered by Medicaid, other qualified health coverage, or a separate auto insurance policy providing PIP medical coverage.|
|No Coverage||Medicare Part A and B Enrollees, and those with other qualified health coverage for themselves and, if applicable, their spouse or any relatives that live with them.|
You can save money by choosing less PIP coverage, but your benefits could be significantly limited in the event of a severe accident. Call 734.422.7850 today for help weighing the benefits and detriments to lowering your PIP coverage level.
A: The good news is auto insurance rates should be lower for almost everyone! The new law requires insurance companies to lower the cost for the PIP portion of auto insurance policies by an average percentage depending on which PIP coverage level you ultimately select, and these reductions have to stay in place for at least the next eight years. How much you save will depend on details specific to your situation. For example, if you have been paying $300 per year for unlimited PIP coverage, here’s how the different coverage options would (on average) affect your costs for the PIP coverage.
|PIP Coverage Level||Required Premium Decrease||Projected Yearly Savings|
The expected savings amount includes savings due to costs associated with the Michigan Catastrophic Claims Association (“MCCA”). The MCCA was designed to help insurance companies split the risk of extremely expensive claims coverage by stepping in to reimburse your insurance carrier once damages exceed a certain amount. Prior to the change in the law, as a part of the no-fault PIP coverage, every policy included an annual fee to support the MCCA. For example, the assessment between July 1, 2019 and June 30, 2020 is $220 per vehicle.
The MCCA has announced that the assessment fee for 2020-2021 will be decreased from $220 down to only $100 per vehicle AND if you opt out of unlimited PIP coverage, you will not have to pay any assessment at all. This should further decrease the costs of auto insurance for all Michiganders. Reviews of the publicly filed rates for 2020-2021 with the Michigan Department of Insurance and Financial Services actually show that, on average, the cost decreases you will see are even greater than those required by law.
Call us today at 734.422.7850 and we will help you figure out how much you can save under the new law to see what option is best for you.
A: With unlimited PIP coverage, you never need to worry. Your allowable medical expenses from an auto accident are going to be paid by your insurer. No matter how expensive the costs you incur are, they will be covered, and there will be no cost to you.
If you opt for $250,000 PIP coverage instead, your insurance company will only pay up to $250,000 of medical costs (including rehabilitation, modifications to houses or vehicles, and other related expenses). Once the carrier reaches this limit, any additional costs could be paid by your separate medical insurance (assuming it coordinates with your auto insurance policy) subject to your deductibles and co-pays. If you have no other medical insurance or your medical insurance does not coordinate with your auto insurance policy, then you will be responsible for paying any medical bills or related expenses beyond the limit.
We are happy to help you weigh the costs and benefits of making changes to your PIP coverage level. Give us a call at 734.422.7850 to speak to one of our trained agents today!
A: Probably not. There are a number of costs that PIP will cover that Medicare and most health insurance plans will not cover. For example, PIP pays for 100% of rehabilitation costs, attendant care services, home and vehicle modifications, as well as up to $20/day for 3 years of certain services like house cleaning or lawn mowing if you cannot perform those functions yourself, and it even covers 85% of your wages (up to the state maximum) for 3 years as well. While PIP would cover all of those things, it is unlikely that your health insurance policy would cover any of them. You should speak to one of our trained insurance professionals by calling 734.422.7850 for help comparing your coverages and figuring out what gaps would be left if you choose to opt out of PIP coverage.
A: Motorcycles are not considered to be “motor vehicles” that are subject to the same requirements to purchase PIP coverage as standard automobiles. Bikers are not required to maintain PIP coverage on their motorcycles. Under the no-fault regime, they rely on the no-fault insurance policies of other people for coverage. When a motorcyclist is injured in an accident with a motor vehicle, they are covered by the insurer of the owner of the motor vehicle or the driver of the motor vehicle, the motor vehicle insurer of the operator of the motorcycle, and then the motor vehicle insurer of the owner of the motor vehicle (in that order), and if no coverage exists under any of those sources, then they would seek no-fault insurance coverage up to $250,000 under the Michigan Assigned Claims Plan. The sources of coverage have not changed under the new law. What has changed is that bikers are now subject to the PIP coverage limits of other drivers. If a motorcyclist is hit by a vehicle with only $50,000 in PIP coverage, they are subject to that same limit, and must sue for additional damages. Motorcyclists should contact us at 734.422.7850 to examine other ways to protect themselves in the event of an accident.
A: Bodily Injury & Property Damage (BI/PD) Coverage is one of the required parts of any automotive insurance policy in Michigan. Unlike the other required coverages, BI/PD only applies when it is determined that you are legally responsible for damages. Prior to the change in the law, the minimum BI/PD coverage was $20,000 per person and $40,000 per accident. As of July 2, 2020, the minimum is increased substantially to $50,000 per person and $100,000 per accident; however, if you don’t actively opt out, it defaults to higher coverage limits of $250,000 per person and $500,000 per accident for personal auto insurance policies.
How does that affect you? The changes in PIP coverage mean that more Michigan insureds will now have lower coverage limits under their own policies. If you are at fault for an accident that injures another person, and they exceed their own PIP policy coverage limit, then they may very well sue you for the additional damages. The same issue could occur with respect to non-residents of Michigan who could sue for damages. BI/PD provides liability coverage to help shield your personal assets if you are at fault for an auto accident.
While umbrella policies and other options may exist to help protect your assets, you should carefully consider the risks with decreased BI/PD coverage by consulting with a licensed agent. Call 734.422.7850 today to learn more.
A: Commercial auto policies will now allow businesses to select the PIP coverage level on vehicles driven by their employees. If your employees are injured while driving a company car, they will be forced to accept the limits from the employer’s commercial policy—even if they would have higher limits available through their own auto policy on a separate vehicle.
In addition, commercial policies will default to $510,000 bodily injury coverage. If an employer wants to select less coverage, they will be required to fill out a form and submit it to their carrier.
A: As of May 2020, insurance carriers are beginning to launch programs and materials to allow their insureds to select PIP and BI/PD coverages. As soon as your current carrier is ready, you can make the elections. Some of them appear set to allow changes to be elected immediately, although they will not go into effect until July 2, 2020. Other carriers may not be ready to accept elections until after July 2, 2020. Call us today at 734.422.7850 and we can help you learn more about what your carrier’s procedures are for making these changes.
A: If you do nothing, your insurance company will contact you in advance of your renewal to provide you with copies of election forms (in hard copy or electronically) and will explain how to make your selections. If you want changes made to your policy before that renewal date, you should contact us at 734.422.7850 so we can help you make the election with your carrier. If you choose something other than unlimited PIP or limits below $500,000 in BI coverage, you may be required to fill out paperwork with your carrier on an annual basis to confirm your elections.
A: The short answer is “No.” Your commercial auto policy should provide coverage for a family member if they are injured while driving the company vehicle that is listed in the policy. That coverage will be limited to the PIP limits that you selected for the vehicle in the commercial policy.
The problem arises if your family member gets injured while a passenger in another vehicle or as a pedestrian. Under the old law, your family member would have been eligible for unlimited PIP coverage through the auto insurance of someone else involved in the accident (e.g., the policy of a driver or the owner of another vehicle involved in the accident). This is no longer the case. If they are not covered under a separate policy as a named insured, or under a policy where a resident relative is a named insured, then they do not have any PIP coverage whatsoever. At best, they may be eligible to apply for up to $250,000 of coverage under the Michigan Assigned Claims Plan.
Different insurance carriers offer different options, but you need to address this issue quickly to avoid a significant gap in coverage. Call 734.422.7850 today and we will help make sure you and your loved ones are properly insured.
A: Call us at 734.422.7850 and we will help answer any questions we can. We ask for your patience and understanding because we are all going through this process together. As we get more information from our insurance carrier partners, we will inform our agents and staff of the new information, but there are still many unknowns in terms of how carriers will handle specific policies and issues. If we can answer it, we will. If not, we promise to try to find out an answer and get you the information as soon as possible.
Disclaimer: The information, examples, suggestions and analysis are for informational and illustrative purposes only. All of this information is general in nature, and is not intended and should not be construed as legal or other professional advice. Please consult your specific insurance contracts for more information regarding the terms of your policy. Always consult with a licensed professional for specific advice regarding your situation.
You can also check out content from the Michigan Department of Insurance and Financial Services and some of our valued carrier partners.