Parts of the Michigan Auto Insurance Reform Law are already taking effect. One change impacts your current coverage if you have a vehicle titled in your name, but It is used by someone who is not a related to you but lives in your household It is used by someone related to you but who…
The Law Takes Effect July 2, 2020
- We will keep you updated on preparations for change, and be in touch individually prior to that date to discuss your policy.
- We won’t know the full impact of rates on any individual policies until May/June 2020.
- PIP Choice. We all currently receive unlimited medical and long-term care benefits from our policies. You will be able to choose to continue unlimited benefits, or select a lower limit of $500,000 or $250,000 or $50,000 or even $0 (if you qualify). This change will lower the PIP premium line on your policy as well as hopefully reduce the MCCA charge per vehicle.
- Automatic Rollback on PIP Premiums. There will be a mandated 10% rollback if you keep unlimited, and higher rollbacks on lower choice levels. But note this only impacts the PIP premium, not the total policy premium!
- Medical Fee Schedule. Fees for medical care under your auto policy will be limited to 190-200% of current Medicare fee schedules. Fees are currently not regulated.
- Rating Factors Reduced. No longer can policy rates be based on gender, marital status, home ownership, occupation and zip codes. Insurance scores can still be a factor, and rates can be based on “territories” yet to be defined.
- Lawsuits. Because people can choose lower medical limits, they may now be able to sue at-fault drivers for medical or long-term care costs not covered by their own auto insurance policies.
What to Expect:
60-90 days prior to your renewal, your insurance company will send you a packet with forms, asking you to make your selection of coverage for Bodily Injury and PIP Medical limits. If your policy renews in July, start looking for your packet in April, renews in August, look for your packet in May and so forth. We can help you with understanding the benefits and risk of your selections. We may call you if there is something specific to your account that may need to be addressed before your renewal. Feel free to reach out to us if you have any questions.
What does the law change mean for you?
Choice of Bodily Injury Liability Limits
Under the new law, there will be an increased risk that you may be sued if you are at fault in an auto collision. Because other people may choose low medical limits, they may not have the coverage to take care of themselves if injured as a result of an auto collision. If you or a driver covered on your policy is at-fault, you may be impacted.
Recognizing this, the State of Michigan has set the new default BI/PD coverage limits are:
- Up to $250,000 for a person who is hurt or killed in an accident.
- Up to $500,000 for each accident if several people are hurt or killed.
- Up to $10,000 for property damage in another state.
You will also have the option of purchasing lower Bodily Injury Liability coverage limits. There is a savings in premium along with additional risk. If you are responsible for injuries to another person, you may be liable for damages for their pain and suffering, as well as the costs of their medical and other care that exceed their coverage under their auto insurance policy. The bodily injury liability limit of your policy will pay for such damages, but only up to the amount of the limit you choose.
You will be required to pay any amount over the limit you choose. This amount could be substantial and may lead to severe financial consequences, such as:
- Your assets may be seized, or a lien may be placed on your home;
- Your wages may be garnished; or
- Your driver’s license may be suspended
1) Choose a high limit of liability, at least the default limits of $250,000 / $500,000
2) Add an Umbrella Liability policy to protect your family’s assets and future income.
PIP Benefit Coverage Levels
Mandatory PIP Premium Rollback (from May 1, 2019 PIP rates)
The benefit of choosing a lower medical limit is a savings in the premium.
The risks with choosing a lower limit are:
1) medical coverages may not be enough to cover your medical expenses.
2) If your medical limit is reached, you may need to rely on other health coverage, which may not cover all medical, rehabilitation, long-term care or attendant care costs.
3) If you do not have other health coverage, you may be personally responsible for paying these expenses.
4) Persons opting out of auto PIP medical and relying on qualified health coverage to pay for auto accident injuries should be aware that, unlike auto insurance, health insurance stops paying when the policy ends or is canceled.
- If any excluded person loses qualified health coverage, you must notify your insurer within 30 days of loss of coverage.
- Within 30 days of losing qualified health coverage, if an excluded person is injured in an auto accident, coverage will be provided by the Michigan Assigned Claims Plan up to $250,000 if they have no other qualified health coverage or PIP medical coverage.
- A person who has not obtained qualified health coverage or PIP medical coverage within 30 days of the loss of coverage will not be entitled to any PIP medical benefits.
1) Find out if your current health insurance plan will pay for injuries from an auto accident.
2) Find out if your current health insurance plan requires that your auto policy pay first (Primary) for injuries from an auto accident.