Michigan's new no-fault auto insurance reform law is giving drivers in our great state new coverage options to consider. Meemic's No-Fault Auto Insurance Reform Center is here to help provide up-to-date information that can help Michigan drivers make smarter decisions on the Road to Reform.

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Michigan's Auto Insurance Reform Q & A

Today, Michigan drivers are required by law to have a no-fault automobile insurance policy that includes Personal Injury Protection (PIP) benefits. While several states in the U.S. also have no-fault requirements, Michigan’s no-fault law is unique in that the PIP coverage provides for unlimited medical benefits for the lifetime of the injured person when those injuries result from an auto accident. On July 2, 2020, many changes to the existing no-fault auto insurance law will take effect, including giving Michigan drivers a choice in their level of PIP coverage. Under the new plan, drivers will be able to choose from up to six options for Personal Injury Protection coverage.

Since 1973, all Michigan automobile insurance policies have had to provide unlimited Personal Injury Protection benefits. If you qualified for PIP benefits because you were injured in an automobile accident, you could get lifetime medical benefits for treatment related to your care, recovery or rehabilitation. It sounded like a great idea at the time — but as health care costs and the frequency of lawsuits continued to rise, it meant that auto insurance costs rose significantly, too. Today, Michigan has the 4th most expensive auto insurance in the country.1 Unsurprisingly, it is also ranked 4th in the U.S. with about 20% of drivers uninsured.2
 


1Source: © 2018 National Association of Insurance Commissioners (NAIC).
Note: Data as of 2016. Total written premium/liability car years. A car year is equal to 365 days of insured coverage for a single vehicle. The NAIC does not rank state average expenditures and does not endorse any conclusion drawn from these data.

2Source: Insurance Research Council.
 

While some parts of the law are already active, the parts that impact your selection options for PIP coverage go into effect on July 2, 2020. You don’t have to do anything until you renew your policy, but in order to make the transition easy for you and your family, you can make your new selections in advance of your renewal date.
 

Personal Injury Protection (PIP) helps cover expenses that arise as a result of injuries sustained in an auto accident. In Michigan, PIP covers these expenses regardless of who caused the accident or who is at fault.
 
The main coverage provided by PIP is for “allowable expenses,” also known as PIP AE. Allowable expenses are “reasonable charges incurred for reasonably necessary products, services and accommodations for an injured person’s care, recovery or rehabilitation.”  This includes services like medical expenses, attendant care and nursing. Today in Michigan, your PIP AE coverage is unlimited. That means all of your medical costs are paid for — for as long as they’re necessary for your care, recovery or rehabilitation.
 

Starting July 2, 2020, when you renew your auto insurance policy, you’ll need to make a decision on your PIP AE coverage limit.3 Your choices will be:
 
OPTIONS AVAILABLE TO EVERYONE
  • Unlimited4: This is the level you have right now
  • $500,000 limit
  • $250,000 limit
LOWER COST OPTIONS AVAILABLE IF YOU HAVE QUALIFIED HEALTH COVERAGE, MEDICAID OR MEDICARE
  • $250,000 limit with PIP exclusion5 (Based on Meemic Insurance Company’s intended product offerings, individuals who purchase this option will not be eligible for any PIP allowable expenses.)
  • $50,000 limit: Medicaid only6
  • Allowable Expenses Exclusion: Medicare only7
When the time comes to renew your policy, Meemic and your Meemic agent can help provide you information.
3Please note that certain PIP coverage options have eligibility requirements that apply to the named insured and all resident relatives and may vary depending on the option. Please see the No-Fault Act for complete details. This summary is being provided for general information purposes only. Subject to regulatory approval. Coverage is subject to eligibility, terms, conditions, exclusions and limitations.
 
4Unlimited: Insured may select unlimited PIP AE Coverage with MCCA involvement. This is the coverage required by law in Michigan prior to No-Fault Reform.
 
5$250,000 PIP Exclusion: Individuals who qualify for this option will not be charged a PIP premium by their auto insurer. If an individual chooses this option, and they are injured in an automobile accident, their medical benefits will be covered by their Qualified Health Coverage (QHC) provider. Individuals who purchase this option will not be eligible for PIP Allowable Expenses.  QHC is health or accident insurance that does not exclude or limit coverage for injuries related to auto accidents and has a deductible of $6,000 or less per person.  Insureds who have QHC or their spouse or resident relative(s) in the same household who have QHC, or are enrolled in Medicare Parts A and B are eligible. If not all household residents are eligible, it is still possible to elect this option, with the exclusion applying only to eligible individuals.
 
6Allowable Expenses $50,000 – Medicaid Only: Allowable Expenses coverage option for insureds enrolled in Medicaid.  A spouse and/or resident relative(s) in the same household must also be enrolled in Medicaid, be enrolled in Medicare Parts A and B, have other PIP Allowable Expenses coverage or have QHC.
 
7Allowable Expenses Exclusion – Medicare Only: In order to choose a $0 limit, an insured must be enrolled in Medicare Parts A and B. However, a spouse and any resident relative(s) in the same household must also be enrolled in Medicare Parts A and B, have other PIP Allowable Expenses coverage, or have QHC. Insureds will be required to provide documentation showing that they, their spouse, and any resident relative(s) are eligible in order to elect this option.

 

Today, every driver in Michigan is required to have unlimited Personal Injury Protection Allowable Expenses (PIP AE) coverage on their policy. When part of Michigan’s new auto insurance reform law takes effect on July 2, 2020, you’ll be able to choose from different levels of PIP AE coverage.3 Depending on the specific coverage levels you choose, you may pay less for PIP AE coverage.
 
OPTIONS AVAILABLE TO EVERYONE

  • Unlimited4: 10% average savings
  • $500,000 limit: 20% average savings
  • $250,000 limit: 35% average savings
LOWER COST OPTIONS AVAILABLE IF YOU HAVE QUALIFIED HEALTH COVERAGE, MEDICAID OR MEDICARE
  • $250,000 limit with PIP exclusion5 – Based  on Meemic Insurance Company’s intended product offerings, individuals who purchase this option will not be eligible for any PIP allowable expenses: 100% average savings
  • $50,000 limit (Medicaid only6): 45% average savings
  • Allowable Expenses Exclusion (Medicare only7): up to 100% average savings
If you decide to reduce your PIP AE coverage, you may want to weigh other coverage levels on your policy, like your Bodily Injury coverage limits, so you select limits to help meet your needs.
 
3Please note that certain PIP coverage options have eligibility requirements that apply to the named insured and all resident relatives and may vary depending on the option. Please see the No-Fault Act for complete details. This summary is being provided for general information purposes only. Subject to regulatory approval. Coverage is subject to eligibility, terms, conditions, exclusions and limitations.
 
4Unlimited: Insured may select unlimited PIP AE Coverage with MCCA involvement. This is the coverage required by law in Michigan prior to No-Fault Reform.
 
5$250,000 PIP Exclusion: Individuals who qualify for this option will not be charged a PIP premium by their auto insurer. If an individual chooses this option, and they are injured in an automobile accident, their medical benefits will be covered by their Qualified Health Coverage (QHC) provider. Individuals who purchase this option will not be eligible for PIP Allowable Expenses.  QHC is health or accident insurance that does not exclude or limit coverage for injuries related to auto accidents and has a deductible of $6,000 or less per person.  Insureds who have QHC or their spouse or resident relative(s) in the same household who have QHC, or are enrolled in Medicare Parts A and B are eligible. If not all household residents are eligible, it is still possible to elect this option, with the exclusion applying only to eligible individuals.
 
6Allowable Expenses $50,000 – Medicaid Only: Allowable Expenses coverage option for insureds enrolled in Medicaid.  A spouse and/or resident relative(s) in the same household must also be enrolled in Medicaid, be enrolled in Medicare Parts A and B, have other PIP Allowable Expenses coverage or have QHC.
 
7Allowable Expenses Exclusion – Medicare Only: In order to choose a $0 limit, an insured must be enrolled in Medicare Parts A and B. However, a spouse and any resident relative(s) in the same household must also be enrolled in Medicare Parts A and B, have other PIP Allowable Expenses coverage, or have QHC. Insureds will be required to provide documentation showing that they, their spouse, and any resident relative(s) are eligible in order to elect this option.
 

The short answer is that it means you have a choice to make. When you renew your policy after July 2, 2020, you can keep your unlimited Personal Injury Protection Allowable Expenses (PIP AE) coverage limit, which is the same coverage you have today.   
 
But if you choose a PIP AE option with less than unlimited coverage — or the $250,000 PIP Exclusion6  — you may want to factor in your own personal risk tolerance and financial situation. For example, what happens if you’re severely injured in an accident and your medical bills exceed your new coverage limit? Do you have enough health insurance to cover those bills? If you can’t work, do you have disability coverage available? If you get sued for the accident, do you have savings or other assets that could be at risk?
 
These are all things you’ll need to think about. The good news is our agents are here to help provide you information.
 

Once the new coverage options go into effect on July 2, 2020, you won’t need to take any action until it’s time to renew your policy. In the meantime, here are some steps you can take to prepare:
 

  • Review your policy: The new law impacts your Personal Injury Protection Allowable Expenses (PIP AE) coverage, but that’s just one of the coverages included in your auto insurance policy. Make sure you’re familiar with all your coverages and your current limits. That’ll help when it comes time to renew and choose your PIP AE limit.
  • Consider your assets: When you make changes to your policy limits, there’s more to think about than how much it costs. Lower coverage limits could expose you to medical bills or lawsuits. If you have savings accounts, a 401k, a home or other valuable assets, they could be at risk.
  • Talk to your family: If you have a spouse or children, you’re not the only one impacted by these changes. Discuss your plans with your family so everyone understands your coverage moving forward.
  • Reach out to your agent: If you still have questions, your agent will be more than happy to help.
  • Register for our Online Member Account Center: When it comes time to renew your policy, the Account Center will have a reform guide to help educate you before you make your final choices. So, if you’re not already registered, do it now. It only takes a few minutes, and it’s a simple, fast way to view your bill, make a payment, file a claim, review your policy, request a change, print policy documents and more.

You’ll be able to make changes for policy renewals beginning on July 2, 2020. The easiest way to review your current policy and stay up-to-date on auto reform will be to use our Online Member Account Center. If you’re not already registered, you can do it right now in just a few simple steps. Or, if you prefer, your Meemic agent can help you make any updates you want.

Have Questions? Talk to an Agent
800-362-4030

Michigan auto insurance reform in the past: 1973

In 1973, Michigan instituted no-fault auto insurance.

Previously, Michigan had a tort – or at-fault – auto insurance system under which the driver who caused an accident paid for damages. Because this was often determined in court, auto accident-related lawsuits flooded the Michigan court system, and insurance premiums skyrocketed. Michigan’s no-fault auto insurance was implemented to combat those rising costs, limiting lawsuits to cases of severe injury, disfigurement or death. Over time the opposite occurred, and insurance premiums increased even higher due to lawsuits and the rising medical treatment costs for injuries from auto accidents.

Michigan auto insurance: fourth-most expensive in 2018

By 2018, Michigan auto insurance had become cost-prohibitive for many. Michigan is ranked as the fourth-most expensive auto insurance in the U.S.* Not surprisingly, it is also ranked fourth in the U.S. for the number of uninsured drivers, with an estimated 20% of its drivers having no insurance.**

Michigan auto insurance reform passed in May 2019

May 2019, the Michigan Legislature votes to reform the no-fault system.

We have long supported reform that would make auto insurance in Michigan more affordable. On May 30, 2019, many changes, including mandated regulations to current Personal Injury Protection (PIP) premiums, fee schedules for medical services and the creation of an anti-fraud unit were approved by the legislature and signed into law by the Governor.

Michigan auto insurance reform takes effect in July 2020

Auto insurance reform goes into effect July 2, 2020.

Beginning in 2020, Michigan drivers will be able to select their preferred level of PIP, the coverage that pays for medical coverage if you are injured in an auto accident. Based on your eligibility and individual needs, you'll be able to select from the coverage options available or you may be able to waive PIP medical coverage altogether.

Here is a summary of PIP options under Michigan's new auto insurance law:

OPTIONS AVAILABLE TO EVERYONE
  • Unlimited1: This is the level you have right now. (10% average savings)
  • $500,000 limit (20% average savings)   
  • $250,000 limit (35% average savings)
OPTIONS AVAILABLE TO ELIGIBLE INDIVIDUALS WITH QUALIFIED HEALTH
COVERAGE, MEDICAID OR MEDICARE
  • $250,000 limit with PIP exclusion2** (Excludes All PIP Benefits Including PIP AE) (100% average savings)    
  • $50,000 limit – Medicaid only3 (45% average PIP Premium savings)
  • Allowable Expense Opt-out – Medicare4 Only (up to 100% average savings)
 
Remember, aside from the $250,000 limit with PIP Exclusion that excludes all PIP benefits (including PIP AE as noted above2), these options are only for PIP AE, which is just one of the coverages in your auto policy. You can also make changes to your other coverages, such as Bodily Injury and Collision.
 

Because Michigan’s new auto insurance program will no longer be purely no-fault, it is more important than ever to have adequate Bodily Injury (BI) coverage. This coverage addresses liabilities paid by the driver at fault when an accident causes serious injuries / death. Premiums are expected to rise for this coverage as minimums are increasing, and many policyholders will increase their coverage:

  • The BI minimum limits are increasing from $20,000/$40,000 to $50,000/$100,000
  • A new default BI coverage is established at $250,000/$500,000

How Meemic can help 

Meemic is busy developing an online Auto Insurance Reform Center that will provide a more comprehensive look at the new law and what this means for Michigan drivers, along with other Member tools to help with coverage selections affected by the new law in advance of your renewal starting with policies renewing on or after July 2, 2020. Sign up here to be among the first to access this content.

Michigan auto insurance reform in the future: 2021

Cost control of medical services begins.

In July 2021, the fee schedule for medical services will become active, regulating what health care providers charge for auto insurance-related injuries. Recent data shows that health care providers typically bill insurers more than Medicare for the same test – a reason why insurance premiums keep rising. The fee schedule is intended to help control these claim costs.

 

Please note that this information is being provided for general informational purposes. Please see the new no-fault reform law for complete details.

 

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