Michigan Auto Insurance Reform (Buyer Beware)

Michigan legislature passed a Michigan Auto Insurance Reform Bill that was signed into law by Democratic Governor Gretchen Whitmer on May 30, 2019. The law is being sold as auto insurance relief for the citizen of Michigan. However, when looking at the bill there are many problems with the law which will hurt consumers in the end.

End of Unlimited Lifetime Medical Benefits

Michigan was a state that required all insured persons to have what was known as Personal injury Protection (PIP). This was admitted by the Michigan Catastrophic Claims Association Fee. This meant that if a person in Michigan was injured in an auto-related accident their medical bills were covered for life. With every insured driver covering this fee while fees were high, the amount of coverage provided was an unlimited medical benefits.

Under the new law, drivers will be able to lower their auto insurance by dropping the amount of PIP coverage. A driver will be able to pick their own PIP coverage. However, by removing everyone from the unlimited lifetime medical benefits, this will cause there to be fewer people paying in the fee which will drive the cost of those who need unlimited PIP coverage to be so high most drivers will not elect it. While it is true because not everyone will have it there will be few claims the high amount of claims and low amount of people selecting unlimited PIP will be a problem.

Five options for Personal Injury Protection (PIP) July of 2020

  • Unlimited PIP coverage (the same coverage as now)
  • Insurance companies will cover up to $500,000
  • Insurance companies will cover up to $250,000
  • Insurance companies will cover up to $50,000 — the lowest-price option available to people on Medicaid, who cannot opt out entirely.
  • Opt-out of PIP coverage entirely, if you have separate health insurance that covers collision injuries.

If you elect some coverage other than the Unlimited PIP and you are injured in an auto accident that is not your fault and your medical cost exceed your elected coverage you will now have to sue the at-fault driver for the amounts not covered.

When you select your PIP Coverages for policies starting in effect for July 1, 2020, the date the new law takes effect. It is going to be critical you understand what insurance benefits you will have in the event of an accident. The lower rate you pay today may be nice, but it may cost you in the long run.