No-Fault Auto Reform

How the changes to Michigan’s No-Fault Auto Reform Insurance could affect you.

Up until now, Michigan drivers have been required to carry unlimited Personal Injury Protection (“PIP”) as part of their auto insurance policy. As of July 2020, the Michigan insurance law is changing and you will have the ability to choose your level of PIP Medical coverage, which may save you money on your insurance policy.

We know you have questions, and we’ve done our best to provide the answers. If you’d like one of our experienced, local agents to walk you through the process one-on-one, we’ve got you covered there too, just:

Personal Injury Protection (PIP) FAQ's

What are my coverage options?
Option 1 - Unlimited (this is still an available option but at a reduced price)
Option 2 - $500,000
Option 3 - $250,000
Option 4 - $250,000 excluding all or some person(s) from PIP Medical
Option 5 - $50,000 (Medicaid option)
Option 6- Medicare Opt Out

How will these changes affect my insurance premiums?
It's important to keep in mind that savings may not be as significant as you might think. Personal Injury Protection (PIP) coverage is only a portion of your auto insurance policy.

When can I change my coverage and at what point could I see savings on my insurance premium?
Changes go into effect in July 2020. However, unless your company will allow you to adjust your policy mid term, you may not see any changes until your renewal.

What are the drawbacks of not having unlimited Personal Injury Protection (PIP)?
By selecting a Personal Injury Protection (PIP) limit other than unlimited, you may lose or not have sufficient coverage for certain benefits including, but not limited to – medical expenses and co-pays, medical equipment, work loss, household replacement services, attendant care, travel expenses, home and vehicle modifications, post-acute care/subacute rehabilitation, chiropractic services, and funeral expenses. Know your options.

Are there changes to whom my Personal Injury Protection (PIP) covers?
Yes. PIP benefits from your policy will no longer extend to the named insured’s non-relatives who live in the household, or relatives who do not reside in the household, even if listed as drivers. (See Order of Priority below)

What happens if I exclude someone from my Personal Injury Protection (PIP)?
Anyone you exclude will not have PIP medical coverage. Persons 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 $2,000,000) 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.

If I do not choose unlimited coverage, what paperwork do I need to complete?
You’ll be required to complete a Personal Injury Protection (PIP) Medical Coverage Form provided by your insurance carrier.

If you elect a limited coverage option with exclusions, you may be required to show evidence of Qualified Health Coverage for any person(s) being excluded.

If a form is not completed and returned your coverage will be defaulted to Unlimited Coverage.

Bodily Injury (BI) Liability FAQ's

Are there changes to my Bodily Injury (BI) coverage, as well?
Yes. The minimum BI limit you’re required to carry has increased from $20,000 per person to $50,000 per person, and $40,000 per accident to $100,000 per accident.

New default limits are $250,000 per person, who is hurt or killed in an accident, up to $500,000 for each accident if several people are hurt or killed, and $10,000 for property damage.

What are the drawbacks to carrying lower Bodily Injury (BI) liability limits?
Carrying lower bodily injury liability limits could increase your 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.

If I choose a limit lower than the new Bodily Injury/Property Damage (BI/PD) default coverage of $250,000/$500,000, what do I need to do?

You’ll be required to complete a Bodily Injury Liability Coverage Form provided by your insurance carrier. The lowest limit available will be $50,000/$100,000. If a form is not completed and returned, your coverage will be defaulted to $250,000/$500,000.

What other areas of my coverage are affected?

  • The Michigan Catastrophic Claims Association (MCCA) Fee
    The Michigan Catastrophic Claims Association Fee (MCCA) is a vehicle assessment fee which cannot be reduced by insurance carriers. This is a portion of your Personal Injury Protection (PIP) premium. The fee beginning July 2020 will be $100 per vehicle for policies with unlimited PIP. PIP coverage options other than unlimited will see a fee of $0. The current fee assessed is $220 per vehicle.
  • Mini-Tort
    Also known as “limited property damage liability,” Mini-Tort compensates a driver whose vehicle was damaged by another vehicle. Mini-tort is used to pay for uninsured vehicle damage up to a certain amount. As of July 2020 the amount that can be recovered will be increased from $1000 to $3000.

Order of Priority FAQ's

What do we mean by Order of Priority?
If an auto accident occurs, we look to see what policy or policies have Personal Injury Protection (PIP) coverage that applies for those who have sustained injuries. There is a set priority for which policy has to respond. We don't look to the next policy in the priority order because PIP benefits don't "stack."

What changed?
The new law changed the order for which policy takes priority and is responsible to pay for claims. The differences are outlined below:

Old Order of Priority
1. Your Policy
2. Your Spouse’s Policy
3. Resident Relative’s Policy
4. Owner of the Vehicles’ Policy
5. Operator of the Vehicle’s Policy
6. Michigan Assigned Claims Plan (MACP)

New Order of Priority
1. Your Policy
2. Your Spouse’s Policy
3. Resident Relative Policy
4. Michigan Assigned Claims Plan (MACP) - $250,000 limit (effective July 2020) 

If the injured person is NOT the named insured on a policy, a spouse or resident relative, they will apply for benefits through the Michigan Assigned Claims Plan (MACP), and will be limited to $250,000 in coverage. They will no longer be covered by the insured vehicle’s policy.

Relatives who do not reside in the household of the named insured will need their own insurance policy, even if they’re driving a car owned by the named insured on the policy. Non-relatives who reside in the household, even if listed as drivers, will need to have their own insurance policies.

Other FAQ's

What do I need to know if I am a motorcyclist?
A motorcyclist who is involved in an accident with a motorized vehicle will obtain Personal Injury Protection (PIP) (medical) coverage from the motor vehicle operator’s policy. However, the motorcyclist would be subject to the PIP limit choice of the motor vehicle operator’s policy. If there is no PIP coverage on the motorized vehicle operator’s policy, a motorcyclist is eligible for up to $250,000 in PIP benefits from the Michigan Assigned Claims Plan. Motorcyclists are not required to purchase PIP benefits, but may purchase first-party medical benefits in increments of $5,000, up to the amount the carrier offers. If a motorcyclist rides without a helmet, they must carry a minimum of $20,000 in medical benefits.

What forms will I need to submit to change my coverage?

  • For Personal Injury Protection (PIP) :
    If you wish to elect a PIP Medical Option other than Unlimited Coverage you will be required to complete a PIP Medical Coverage Form provided by your insurance carrier.

    If you elect a limited coverage option with exclusions (Options 4, 5 and 6) you may be required to show evidence of Qualified Health Coverage for any person(s) being excluded.

    If a form is not completed and returned your coverage will be defaulted to Unlimited Coverage.
  • For Bodily Injury (BI):
    New default limits are $250,000 per person who is hurt or killed in an accident, up to $500,000 for each accident if several people are hurt or killed, and $10,000 for property damage.

    If you choose to elect a limit lower than the new default Bodily Injury/Property Damage (BI/PD) coverage of $250,000/$500,000 you will be required to complete a Bodily Injury Liability Coverage Form provided by your insurance carrier. The lowest limit available will be $50,000/$100,000.

    If a form is not completed and returned your coverage will be defaulted to $250,000/$500,000.

How can I better protect myself in the event of a lawsuit due to an auto accident?
The best way is to increase your liability limits.

You can also add an umbrella liability policy. Coverage amounts start at $1 million. It’s an inexpensive way to protect you and your assets in the event that you are sued, and covers lawsuits that arise in regards to your home or auto. With the Personal Injury Protection (PIP) reform, umbrella policies will become even more valuable. Before the PIP reform, you could be sued for negligence in an auto accident and the payout would come from the bodily injury coverage on your policy. An individual would not need to sue for medical bills since medical coverage is unlimited.

With the upcoming changes, if an individual changed the Personal Injury Protection (PIP) coverage to something other than unlimited, they may not have enough medical benefits if they are injured in an accident. If you are at-fault, under the new law, they will be able to sue you for medical bills, in addition to negligence.

How am I affected if I’m on Medicare?
Michigan Medicare enrollees can choose to “opt out” of Personal Injury Protection (PIP) medical benefits. To do so, they must be enrolled in Parts A and B of Medicare and their spouse or any relative of either who resides in the same household has qualified health coverage (QHC) or automobile insurance coverage that includes PIP medical benefits.

The enrollee will remain financially responsible for coinsurances, copayments, deductibles, and for any services Medicare does not cover, such as transportation to and from medical appointments, vehicle modifications, case management services, residential treatment programs, long-term and custodial care, and replacement services (attendant care costs)

For more information, please consult the following No-Fault PIP Coverage vs. Medicare form.


FOR ADDITIONAL INFORMATION REGARDING THE NEW LAW PLEASE VISIT

https://www.michigan.gov/autoinsurance



Lake Michigan Insurance Agency is owned by Lake Michigan Credit Union.

The information contained herein is provided solely for general informational purposes and is not intended to be a contract, a solicitation or an offer to sell in connection with any product or service, nor is the information a complete description of all terms, conditions and exclusions applicable to the products and services described.

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