On July 1, 2020, Michigan’s no-fault auto insurance system changed significantly. This Michigan auto insurance reform gave drivers new choices for their insurance, which could lower monthly premiums. However, these choices also created serious risks. The changes limit the medical care many accident victims can receive from their own policy and open the door for more lawsuits directly against the at-fault driver.
At The Joseph Dedvukaj Firm, P.C., we want to help you understand what this reform means for you. If you are injured in a car accident, these new rules will directly affect your ability to recover.
The Two Key Parts of Your Michigan Auto Insurance
Since 1974, Michigan’s no-fault system has been built on two main types of coverage. Understanding them is key to understanding the Michigan auto insurance reform.
- Personal Injury Protection (PIP): This is your coverage that pays for your injuries if you are hurt in a car accident, regardless of who was at fault. It pays for your medical bills, physical therapy, a portion of your lost wages, and essential help you might need at home while recovering.
- Bodily Injury Liability Coverage: This coverage protects you and your assets if you cause an accident that injures someone else. If the injured person sues you, your liability insurance pays for their damages up to your policy limit.
The Big Change: Your New PIP Coverage Choices
Before the Michigan auto insurance reform, all drivers had unlimited lifetime PIP coverage for their medical needs. Now, you must choose a specific coverage level. The options typically include:
- Unlimited Coverage (The same as the old system)
- $500,000 in PIP coverage
- $250,000 in PIP coverage
- $50,000 in PIP coverage (only for those on Medicaid)
- Opting Out (only for those with qualifying health insurance like Medicare)
How These Changes Increase Your Risk
Choosing a lower PIP level to save money comes with a major risk. If you are seriously injured in a crash, your medical bills could easily exceed your PIP coverage limit. While the new law gives you the right to sue the at-fault driver for excess medical costs, this creates a risky situation for both parties.
For the at-fault driver, this means you can be held personally responsible for hundreds of thousands of dollars in medical bills that the victim’s own insurance won’t cover. This makes having high Bodily Injury Liability coverage more important than ever.
However, the risk for victims is also enormous. Even if you sue the at-fault driver and win, their liability insurance coverage may be limited. If your medical bills exceed their coverage, you will have a hard time collecting the rest of the money. The at-fault driver may not have assets to pay, or they could file for bankruptcy, leaving you responsible for paying the remaining bills.
Carrying Unlimited PIP medical coverage significantly reduces your financial risk by ensuring your own policy can cover your care, regardless of the at-fault driver’s financial situation.
The Michigan auto insurance reform has made the aftermath of an accident far more complicated. Navigating insurance claims and potential lawsuits requires a clear understanding of these new rules.
Frequently Asked Questions About Michigan’s Auto Insurance Reform
Q: What happens if my medical bills are more than my PIP coverage?
A: If another driver was at fault for your accident, your Michigan auto accident attorney can file a lawsuit against them to recover the “excess” medical costs. However, collecting this money is often challenging. If the at-fault driver’s liability coverage is too low to cover your bills, they may not have the personal assets to pay the difference and could file for bankruptcy, leaving you with unpaid medical debt. This is why having adequate PIP coverage on your own policy is your best protection. If you were at fault, you are responsible for your own bills beyond your PIP limit.
Q: Do I still need to wear a helmet if I ride a motorcycle in Michigan?
A: Michigan’s helmet law is separate from this reform. However, if you are injured in a motorcycle accident involving a car, your ability to claim No-Fault PIP benefits from the car’s insurance is still a key part of your recovery, and these new PIP limits can affect you. An attorney can help clarify your rights.
Q: Why is having more liability coverage so important now?
A: Because you can now be sued for an accident victim’s medical bills that exceed their chosen PIP limit. If you only carry the state minimum for liability coverage (e.g., $250,000) but cause an accident that results in $750,000 in medical bills for the other person, you could be held personally responsible for the $500,000 difference. Your personal assets, like your home and savings, could be at risk.
Q: What should I do after a car accident under the new law?
A: First, seek medical attention. Then, report the crash to your insurance company. Because the new law creates complex legal questions about fault and payment for medical bills, it is critical to speak with an experienced personal injury attorney who understands the Michigan auto insurance reform. They can protect your rights and help you get the full compensation you are owed.
Confused About the New Law? Injured in a Crash? Contact Us.
The Joseph Dedvukaj Firm, P.C. helps Michigan accident victims navigate the complexities of the new auto insurance law. If you’ve been injured, call us at 248-352-2110 or toll free 866-HIRE-JOE or contact us online to schedule a free consultation to understand your rights.