Michigan’s new no-fault auto insurance reform gives drivers new coverage options. Beginning July 2nd, 2020, Michigan drivers will be able to choose their preferred level of Personal Injury Protection (PIP) medical coverage. You’ll be able to select from multiple coverage options.

PIP pays medical expenses for your care, recovery, rehabilitation, wage loss and replacement services. PIP coverage also includes some funeral expense benefits and survivor’s benefits which are paid to your dependents if injuries from an auto accident result in your death. PIP will cover costs that may not be covered by health insurance, such as rehabilitation and attendant care.

You must choose the level of PIP coverage you wish to have. If you do not make a selection from the available options, your policy will be issued with unlimited PIP.

There are six PIP options available under the new law, but the law does impose some restrictions that may limit your options.

The unlimited option provides the most coverage. It will pay for all allowable expenses for your care, recovery, and rehabilitation if you are injured in an auto accident. If you choose one of the reduced limits, the limit you choose is the maximum the insurance company will pay per person per accident for an injured person’s expenses under PIP. Limited PIP coverage may not be enough to cover your medical expenses. If your PIP limit is reached, you may need to rely on other health coverage, which may not cover all medical, rehabilitation or attendant care costs. You may be personally responsible for paying these expenses out-of-pocket.

If you exclude a driver under the $250,000 option or choose to opt-out of PIP coverage if eligible, no PIP coverage will be provided and you will have to rely on other health coverage to pay for medical expenses which may not cover all medical expenses and you may be personally responsible for paying these expenses out-of-pocket. You should also 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 insurance company within 30 days of loss of coverage. A person who has not obtained new qualified health coverage within 30 days of the loss of coverage will not be entitled to any PIP benefits.

Bodily injury liability insurance covers claims made against you for injuries to others if you are at fault in an auto accident. Michigan auto insurance policies are required to provide a minimum of $50,000 per person and $100,000 per accident. If you do not make a selection, your policy will be issued with limits of $250,000/$500,000.

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 PIP 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. Selecting lower bodily injury liability insurance coverage limits may also affect your eligibility for an umbrella policy.

The order of priority is used to determine who is responsible to pay for a no-fault claim. Under the new law, the following order of priority is used:

[+] Vehicle occupant injured in an accident:

[+] Non-occupant injured in an accident:

[+] Motorcyclist injured in an accident with an automobile:

It is important to note that the new law does not allow “stacking” coverages. Only the first applicable policy in the order of priority will provide coverage. Once that policy limit has been exhausted, you will have to rely on other health coverage. No other auto insurance policy coverage will apply.

This new order of priority poses unique concerns for non-resident relatives and non-relative residents:

• Relatives who do not reside in the household of the named insured (unless they are away at school) would need to have their own insurance policy, even if they are driving a car you own.
• Non-relatives who reside in the household, even if they are listed drivers, would need to have their own insurance policy.

If one of these situations apply to you, contact us to discuss your options and how to appropriately structure your household’s insurance coverage.

• Attendant care coverage is included up to the PIP limit you choose. No attendant care coverage is included for drivers that opt-out of PIP.
• For the reduced PIP limit options, there is an additional attendant care rider you can purchase to add an additional $100,000 in attendant care coverage per person per accident. This rider is not available for the Unlimited and Medicare Opt-Out options.
• There is an attendant care cap of 56 hours per week
• Mini-tort coverage is increasing from $1,000 to $3,000
• Non-driving rating factors are being removed including gender, marital status, home ownership, credit, occupation, education, no prior coverage and zip code
• There is a temporary 18-month prohibition on re-entry penalties
• The Michigan Catastrophic Claims Authority fee is reduced from $220 per vehicle per year to $100 per vehicle per year
• Mandatory PIP rate rollback which includes the $120 MCCA fee reduction in the calculation of the rollback