Understanding the Michigan No-Fault Auto Insurance Reform
Your Reform Road Map from Iott Insurance
Did you know that your auto insurance is changing? Here at Iott Insurance, we are committed to helping you navigate the changes in Michigan’s Auto Insurance Reform. The new law takes effect in July 2020. Whether you are a valued client, or just a neighbor and friend in the communities we serve – we are YOUR local expert to help you understand the information and make an informed decision.
Quick History of the Michigan No-Fault Auto Insurance Law
The Michigan no-fault auto insurance law dates back to 1973. It was designed to help people in an auto accident receive compensation quickly and to fairly cover medical costs and loss of income. While several other states also have no-fault insurance requirements, Michigan’s current no-fault law is unique in that it provides unlimited allowable expenses, including medical benefits for the lifetime of the injured insured.
The current Michigan law requires us to have unlimited personal injury protection allowable expense coverage as part of your auto policy, also known as PIP coverage. Personal injury protection helps pay for things like medical expenses, attendant care, and lost wages.
Bottom Line: What’s Changing in July 2020?
In July 2020, the first phase of the new no-fault law will take effect. The BIGGEST change will be to PIP. This change will give Michigan drivers more choices in their PIP allowable expenses coverage. Each insured person or insured family may be eligible for up to six (6) options of PIP coverage under the new law. Keep in mind, every situation is different! Before you select any PIP allowable expenses coverage, make sure you are eligible and the coverage fits your needs.
Michigan No-Fault Auto Insurance Reform Highlights:
- New personal injury protection (PIP) allowable expense options, including the option to exclude completely if you meet the requirements.
- Changes to auto state minimum liability limits (now 50,000/100,000) and a state requirement to sign off on your liability selection if you choose lower than a 250,000/500,000 liability limit.
- The Michigan Catastrophic Claims Association (MCCA) assessment has been reduced from $220 per vehicle to $100 per vehicle from July 2, 2020 to June 30, 2021.
- Policyholders who retain unlimited PIP coverage will experience this reduction. Those who choose any PIP Medical Expenses option other than unlimited will not have to pay an MCCA assessment at all, as long as the MCCA is not in a deficit position.
- Order of Priority changes: The new law changes the order for which policy takes priority and is responsible to pay for claims.
- Insurance companies are no longer allowed to rate base on gender, marital status, homeownership, education, occupation, credit score, or zip code.
Start Thinking About the Michigan Auto Insurance Reform Now
As a Michigan driver, here are the things you should start thinking about now to prepare for the coming changes.
- Watch for your insurance renewal packet from your carrier. It should arrive 90 days prior to your renewal and will contain auto insurance reform information. Review the entire renewal.
- Call your health care provider to see if they limit or exclude auto accidents, and what your annual individual deductible is. This will help inform you on which PIP options will be available to you.
- Call us or come in to go over any questions you may have. We are here to help whether you are insured with us or not!
We Are Here to Help
Iott Insurance is your go-to insurance provider to answer questions about the Michigan No-Fault Auto Insurance Reform. Whether you have a policy with us or not, we have worked diligently since the law was passed in order to educate ourselves, our clients, and our communities. We are ready to explain the options available to you and help you decide on the best choice for your personal situation.
If you have questions or would like to talk to us, call or visit our office in Blissfield, Lambertville, or Petersburg.
Michigan Auto Insurance Reform Frequently Asked Questions
July 2, 2020
It depends on the coverage you choose. We will all see some savings from the MCAA reduction of $224 per vehicle to $100 per vehicle, but the total savings will depend on many things. Insurance companies’ rates, the PIP limit and limit of liability that you select, and each individual’s unique situation all play a part in the savings.
While savings are important to everyone, our main goal is to make sure you and your family are properly covered in the event of a loss.
Personal injury protection, also known as PIP, is medical and rehabilitation benefits if you’re in an auto accident and you are injured, whether temporarily or permanently. Starting July 2, 2020, you’ll choose your coverage amount, ranging from unlimited coverage (the current Michigan law) to lower levels, or even waiving PIP coverage altogether if you qualify. You’ll see PIP as a line of coverage on your insurance declaration page.
It’s also important to point out that PIP medical covers additional expenses that your health insurance does not such as: rehabilitation, attendant care or new home/vehicle modifications.
Keep in mind that, unlike auto insurance, health insurance stops paying when the policy ends or is canceled.
- Option 1 - Unlimited
- Option 2 - $500,000
- Option 3 - $250,000
- Option 4 - $250,000 excluding all or some person(s) from PIP Medical
- For an applicant or name insured to be excluded they must have qualified health coverage that is not Medicare
- Applicant/Named Insured’s spouse and any relative of either who resides in the same household must have Qualified Health Coverage (this can include Medicare).
- Option 5 - $50,000 (Medicaid option)
- Applicant/Named Insured: Must be enrolled in Medicaid.
- Applicant/Named Insured’s spouse and any resident relative: Must be enrolled in Medicaid, have Qualified Health Coverage, or be covered under another auto policy with PIP Medical coverage.
- Option 6 - Medicare Opt Out
- Applicant/Named Insured: Must be enrolled in Medicare Parts A & B
- Applicant/Named Insured’s spouse and any resident relative: Must have Qualified Health Coverage (which includes Medicare), or be covered under another auto policy with PIP Medical coverage.
With selecting a PIP option, you will be required to sign a form which explains the risks and benefits of each option. This form must be completed for each renewal (every year or 6-months depending on your policy term).
Bodily injury (BI) is coverage if you get sued because a person covered by your auto policy becomes legally responsible for damages related to the bodily injury of others in an auto accident. This could include drivers, passengers and pedestrians.
Effective July 2, 2020:
- The state minimum BI limit is increased from 20,000 per person/40,000 per accident to 50,000 per person/100,000 per accident
- There is a new default liability limit of 250,000 per person/500,000 per accident (If a policyholder does not sign the bodily injury election form the auto policy will renew with this limit
When an auto accident occurs there is a set order to determine which policy has to respond to pay for those who have been injured in the accident. The insurance company goes through this order to find a policy that has Personal injury protection (PIP) coverage. The new law has changed the order for which policies take priority and are responsible to pay for claims.
Old Order of Priority:
- Your Policy
- Your Spouse’s or Resident Relative's Policy
- Owner of the accident-involved Vehicle's Policy
- Operator of the accident-involved Vehicle's Policy
- Insured person applies for benefits through the Michigan Assigned Claims Plan (MACP)
New Order of Priority:
- Your Policy
- Your Spouse’s or Resident Relative's Policy
- Insured person applies for benefits through the Michigan Assigned Claims Plan (MACP) - $250,000 limit (effective 7-2-20)
The new law has removed the owner and operator of the accident-involved vehicle from the order of priority. So even if the owner or operator of the vehicle involved in the accident has an insurance policy, it will not pay out for your PIP medical claim.
If the claim needs to be submitted to the Michigan Assigned Claims Plan (MACP) for consideration the max benefit is now $250,000, where previously the amount of medical coverage was unlimited.
*How could this affect you?
This means coverages no longer extends to a named insureds non-relatives who live in the same household or to relatives who do not reside in the household even if they are listed as drivers.
An example would be a child/adult who is using a vehicle titled to you but has established residency elsewhere. This could be a college student that has established residency different than yours or a young adult who just moved out due to taking a new job. Another example would be living with someone who is not your spouse or relative who does not have their own insurance but drives a car titled in your name. If any of these situations or something similar apply to you please give our office a call.
Changes can be made to policies effective July 2, 2020 or after. A renewal packet will be sent to you at least 60 days prior to your renewal date providing the forms that need to be filled out. If you do not wish to make immediate changes you can just wait for your renewal packet. If you choose to review these options prior to your renewal, please contact one of our offices.
We are here to help you make a decision that makes the most sense for you and your family. Prior to calling or coming into our office you need to know who your health insurance is through (Medicare, Medicaid, or Private health insurance) and if you have private health insurance is it considered qualified health coverage.
Qualified Health Coverage (QHC) is a health plan that will pay (without limiting or excluding coverage) for injuries related to motor vehicle accidents and has an annual individual deductible of $6000 or less. If you have coverage under both Medicare parts A and B that is also considered QHC.
We are working through this change together. As we continue to receive information, we will update this page. Please feel free to call or email us with any additional questions you may have.
For additional information on the Michigan No-Fault Auto Insurance Reform, you may access the Department of Insurance and Financial Services (DIFS) website at www.michigan.gov/autoinsurance.