AUTO INSURANCE NO-FAULT REFORM FAQ
For more than 40 years, Michigan drivers have been forced to purchase unlimited, lifetime Personal Injury Protection (PIP) medical benefits with their auto insurance policy. This expensive mandate, coupled with a lack of cost controls over medical charges, caused auto insurance premiums to skyrocket over the years, landing Michigan in the top spot for the most expensive car insurance in the nation five years straight.
Beginning July 2, 2020, all of that will change when the state’s new auto no-fault law takes effect.
The law will give consumers what they have been clamoring for: a choice in their level of medical coverage. The law will also rein in dramatic overcharging by medical providers, who have been charging three to four times as much for medical procedures when treating car accident related injuries. Finally, the law will crack down on fraud and abuse, which costs the average family hundreds of dollars a year in additional premiums.
Here’s what you need to know about the new law and what it means for you:
What kind of savings can consumers expect from the new auto no-fault law?
Under the new law, auto insurance companies are required to lower PIP premiums for eight years depending on the level of coverage purchased:
Drivers who choose to opt-out of PIP coverage will receive a 100% reduction.
Drivers who choose $50,000 in PIP coverage will receive a 45% reduction, on average
Drivers who choose $250,000 in PIP coverage will receive a 35% reduction, on average
Drivers who choose $500,000 in PIP coverage will receive a 20% reduction, on average
Drivers who keep unlimited PIP coverage will receive a 10% reduction, on average
What will my medical coverage options be under the new auto no-fault law?
PIP opt-out for those with Medicare, or separate health insurance, that covers auto accident-related injuries
$50,000 in PIP coverage for those on Medicaid
$250,000 in PIP coverage
$500,000 in PIP coverage
Unlimited lifetime PIP coverage
What happens if I get hurt in a car accident and my medical care costs more than the coverage I chose?
The new auto no-fault law increases the required bodily injury liability coverage to the highest in the nation. What is it and will the increase impact my auto insurance premium?
Can I get a short-term policy if my auto insurance renewal is up before July 2?
If your auto insurance is renewed before July 2, contact your insurance company or local agent on or after July 2 to discuss options for your policy.
The Legislature passed auto no-fault reform last year, so why hasn’t my auto insurance premium gone down yet?
What can I be doing now?
Reach out to your insurance company or local insurance agent to discuss the new coverage options that will soon be available to you.
Review your health insurance plan and ask your employer if they will be covering medical care for car accident injuries as part of your health insurance plan.
For more information, click on any of the logos below to find out what the Department of Insurance and Financial Services and IAM members are saying about the new auto no-fault law: