Michigan No-Fault Reform

Effective July 2, 2020

While savings are important to each of us, our main focus as an agency is ensuring our clients have the appropriate coverage, hence our tagline, “We’ve Got You Covered!” 

The following information outlines important coverage choices that each Michigan resident will have to consider.  At the end of each section, we have provided our recommendation and reasoning, so you can make an informed decision on this important matter.

We look forward to caring for all your insurance needs!

 

Personal Injury Protection (PIP) Coverage

Personal Injury Protection pays allowable expenses for your care, recovery, rehabilitation, wage loss and replacement services.  It also includes some funeral expense benefits and survivor’s benefits which are paid to your dependents if injuries from auto accidents result in your death.

Five options to choose from:

Unlimited   (10% rate reduction of PIP portion only)  Available to all Michigan residents

$500,000   (20% rate reduction of PIP portion only)  Available to all Michigan residents

$250,000   (35% rate reduction of PIP portion only)  Available to all Michigan residents

$50,000     (45% rate reduction of PIP portion only)

Only available if:  

Named insured must be enrolled in Medicaid

And

Everyone else must have proof of Qualified Health Coverage or coverage payable for Medical expenses under another Michigan auto policy

No PIP   (100% rate reduction of PIP portion only)

Only available if:  

Named insured must be enrolled in federal Medicare Part A & B

And

Everyone else must have proof of Qualified Health Coverage or coverage payable for Medical expenses under another Michigan auto policy

 

Our recommendation is Unlimited Personal Injury Protection coverage because the savings do not outweigh the costs.  Unlimited coverage allows for rehabilitation and attendant care as well as medically necessary vehicle and home modification, etc., generally paid without a deductible and generally not covered by health insurance. The inadequacy of the caps on No-Fault PIP medical benefits for seriously injured accident victims, especially those requiring emergency room visits, hospitalizations and surgeries, cannot be overstated. If a person is injured badly, the capped insurance levels could be exhausted in just one weekend at a hospital. At that time, the only potential ways for victims to pay for their accident-related medical expenses is through health insurance, suing the at-fault driver (and hoping they have higher liability limits or a ton of money), relying on Medicaid or Medicare, spending down the family’s assets to pay out-of-pocket or going without necessary medical care and treatment because there’s no way to pay for it.

 

Residual Bodily Injury (Liability Limits)

Bodily injury liability insurance covers claims made against you for injuries to others if you are at fault in an auto accident.

Changes to the state minimum limits:

The state will adopt a new minimum limit of $50,000/$100,000. 

However, anyone wishing to maintain limits below $250,000/$500,000 will be required to sign a waiver form.

 

Although the comparative negligence law has not changed in Michigan, once PIP is no longer unlimited for everyone, lawsuits will come into play more often.  It will cause a shift in our law that allows a person who has been seriously injured in an accident to sue the person who caused the crash for all medical bills and economic loss over the amount of No-Fault PIP medical benefits selected at the time of the crash. That same shift in the law means that drivers who cause accidents that result in serious injury can be sued by injured persons for their “excess” medical costs and economic loss, thereby potentially exhausting the drivers’ liability insurance and requiring them to use family assets to pay out-of-pocket for damages that are owed.

 For example, if the policyholder is 50% at fault, the other party has selected a PIP limit of $250,000 per person and the economic impact of the accident is $1,000,000, the policyholder could be responsible for up to $500,000.

 

For these reasons, our minimum recommendation is $500,000/$500,000 Residual Bodily Injury limits with a $1,000,000 Umbrella Policy. Additionally, $500,000/$500,000 Uninsured/Underinsured Liability limits with an Umbrella Policy that will cover Uninsured/Underinsured related accidents.

 

***Special Consideration for Seniors***

 

 

***Special Consideration for those on Medicaid***