What do changes to Michigan’s auto insurance laws mean for you?

Michigan made sweeping changes to its no-fault auto insurance laws effective on policies issued or renewed after July 1, 2021. The bipartisan-backed bill, signed by Governor Gretchen Whitmer in 2019, hopes to lower insurance premiums for Michigan drivers, who currently pay among the highest rates in the country. So what do changes in Michigan’s auto insurance law mean for you?

The new no-fault reform ends four decades of mandatory unlimited medical coverage for accident victims. Michigan drivers may choose from six personal injury protection (PIP) medical options. Some drivers may be able to opt out of the medical insurance requirement. The auto accident law also includes more consumer protections, including a temporary ban on fees for previously uninsured drivers.

You could save money under Michigan’s revised auto insurance law as a consumer. However, if you’re injured in a car accident, the new law could wind up costing you more. In the wake of these new laws, you can get cheap auto insurance in Michigan with our free search tool right now.

How the New Insurance Law Could Save You Money

According to a news story on CBS Detroit, Detroit motorists pay the highest insurance rates for any metropolitan area.

The new PIP options could save you money on your premiums. Instead of the mandatory – and expensive – unlimited medical PIP coverage, you choose the coverage that best fits your budget and needs.

According to the Department of Insurance and Financial Services, Michigan’s reformed insurance law could significantly save drivers money with greater consumer protections, including:

• Rate Reduction – Each insurer must reduce PIP statewide average medical premiums over the next eight years.
• Cost Control – The law includes a new fee schedule between auto insurers and healthcare providers to help make PIP medical more affordable.
• No Penalty for Uninsured – Under the new law, insurance companies cannot charge a reinstatement fee, limit coverage, or increase premiums for drivers solely based on a lapse in coverage. You must apply for insurance before January 1, 2022, to enjoy this protection.
• Ends Potential Rate Discrimination – When determining rates, auto insurance companies can no longer consider gender, marital status, homeownership, credit score, educational level, occupation, and zip codes.
• Fraud Protection & Investigation Unit – The new insurance law establishes a fraud investigation unit for insurance industry crimes.
• State Approval – The state must approve auto insurance premiums before being offered to consumers.

New Choices in PIP Medical Coverage

There are six options for Michigan residents, although some are reserved for individuals receiving Medicaid and Medicare.

1. Unlimited coverage – Although no longer mandatory, you may choose unlimited PIP medical coverage.
2. Up to $500,000
3. Up to $250,000 non-qualifying
4. Up to $250,000 in coverage with PIP medical exclusion(s) – This option is for a named insured or household members with non-Medicare health insurance that covers auto accidents.
5. Up to $50,000 in coverage for Medicaid members – This coverage is for named insured enrolled in Medicaid and household members with another Michigan auto insurance policy or health insurance covering car accidents.
6. PIP medical opt-out for Medicare members – The named insured has Medicare (Parts A and B), and household members have another Michigan auto insurance policy or health insurance covering car accidents.

What does no-fault insurance mean?

Under no-fault auto insurance, your PIP medical coverage pays your accident-related expenses, regardless of who caused the crash.

Instead of filing a claim against the at-fault party, your PIP pays all “reasonable and necessary” medical expenses for your lifetime up to the maximum coverage amount you select. It also pays for lost pay and replacement services for up to three years after the car accident.

The idea of no-fault insurance is to make sure that injured people receive medical treatment without an undue financial burden on policyholders.

The Potential Downside of Michigan’s New Insurance Law

While reduced PIP coverage could save drivers money every month on car insurance, it might not be good news if you get into an accident.

You could likely exceed $50,000, $250,000, and even $500,000 if you suffer extensive, traumatic injuries in a car accident.

There are other limitations and potential adverse effects from the new insurance law.

Changes to Home Health Care Coverage

After July 1, 2021, insurers will only pay for 56 hours per week of home care provided by a relative, household member, friend, or business associate. Under the previous law, coverage included 24-hour home care.

In some cases, insurance companies will agree to cover home care beyond 56 hours if shown to be medically necessary.

Medicare-based Fee Schedule

Insurance companies must now follow the new Medicare-based fee schedule. While this change could protect consumers with private health insurance, it might impose limitations on acute care for Medicare recipients.

Can you sue the other driver under no-fault law?

Although it is called “no-fault,” this type of insurance law does not remove responsibility from the person who caused the accident.

You may sue the at-fault driver if you have accident-related medical bills that exceed your PIP coverage.

A personal injury lawyer can help you understand your rights under the new law. Still, in general, you can pursue compensation for:

• Present medical care
• Future medical care
• Any excess medical bills that exceed your PIP coverage

You can also sue the at-fault driver for non-medical expenses not covered by insurance.

There are certain conditions in which you may take the at-fault driver to court:

• You must have car insurance.
• You must show that you have damages that your insurance won’t cover.
• You must have property damage in addition to bodily injury.

Additional Damages

You may also file a mini-tort lawsuit for up to $3,000 for damages not covered by insurance. However, particular conditions must exist to pursue this type of lawsuit.

• You must have car insurance.
• You have costs your insurance won’t cover.
• Your car must have sustained physical damage.

Comparative negligence applies to any reward you recover. If you are responsible for 25% of the accident, your payout is reduced accordingly.

No-Fault Doesn’t Take Away Your Rights

As car accident lawyers, we receive many questions from people on Michigan’s new insurance laws. It’s important to remember that although the law says “no-fault,” you have rights as an injured person. An attorney can protect those rights and guide you through the complex insurance and legal process.

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