Michigan Auto Insurance – What Consumers Need to Know

Given, the media coverage and abundance automobiles in Michigan, everybody knows Michigan has overhauled its auto insurance laws. The no-fault reform is impacting every consumer pocketbook and the benefits payable when the risk occurs. As of July 1, 2020, consumers are required to decision about the coverage they purchase. Do not let the insurance agent make these decisions for you because they will sell you cheap insurance, so you buy the policy from the agent.

Michigan auto insurance changes and consumer purchasing options available to you are very important choices you will need to make to protect you and your family.

Decision #1 – Level of auto bodily injury liability coverage. Understanding bodily injury liability coverage, is the basic information you need to know to make the decision about the level of coverage.

Decision #2 - The new consumer PIP options you must choose under the new no-fault law.

Decision #3 - The PIP choices available to consumers who also qualify for Medicare, Medicaid, or private health insurance that covers auto-related injuries.

Decision #4 – If you buy inadequate insurance coverage, you are exposing yourself to financial ruin if you do not buy enough liability insurance coverage, since injured parties can sue you for their excess medical bills now.

Decision #5 – Every driver should purchase uninsured and underinsured motorist coverage to protect themselves for the 20% of those motorists who illegally drive without auto insurance.

Now let’s discuss the decisions you make and the consequences of those decisions.

Decision #1 –Auto No-Fault Liability Coverage Insurance Coverage

Before the July 1, 2020, no-fault insurance coverage took care of medical bills for life. Now the injured person can be capped by the amount of medical coverage they buy, which means some medical bills will go unpaid. If the injured person has medical bills that are not covered by their no-fault insurance, the injured person will sue the at fault driver for the excess economic losses sustained. This exposure did not exist in the old law because PIP no-fault insurance paid all medical bills and the injured person could not sue for medical bills.  

Bodily Injury Liability Coverage

Bodily Injury Liability insurance is the coverage you purchase to protect yourself financially if you hurt someone in a car crash. The new no-fault auto insurance law requires the consumer to choose the level of liability coverage. The liability coverage you choose is extremely important because the victim can sue the at fault driver for the excess medical expenses, which was not possible under the old law. Therefore, you are much more exposed to financial ruin now because of the larger economic claim that can be brought against you.

Decision #2 – PIP Choice Options

You need to know the law about the PIP choice options and the consequences of the choice you make. Don’t gamble with your life and that of your family. For the first time in over 40 years, the Michigan consumers is no longer guaranteed lifetime medical and rehabilitation coverage and must choose the level of coverage they want. Do not pick cheap PIP coverage.

The following levels of levels of PIP coverage are offered to every  Michigan consumer:

• Best - Lifetime (No Cap) PIP Benefits- Consumers can still opt for the same level of coverage that was offered under the old Auto No-Fault Act.
• Second Best - $500,000 PIP Benefits – Caps medical and rehabilitation at $500,000.
• Third Best - $250,000 PIP Benefits – Caps medical and rehabilitation expenses at $250,000.

Decision #3 – Other PIP Choice Options

Under the new law, certain kinds of qualified consumers can purchase this level of PIP coverage:

• Health Insurance Opt-Out – consumers with health insurance that covers auto related injuries can opt-out of no-fault insurance PIP coverage completely.
• Medicare Opt-Out – consumers enrolled in the Medicare program can opt-out of no-fault PIP insurance coverage completely.
• $50,000 Medicaid Option – Consumers with a Medicaid health insurance policy may choose to have $50,000 in PIP coverage and will use Medicaid after they exhaust the PIP limits.

Needless to say, the choices you make in the selection of the above coverage options had consequences that will expose you to higher or lower financial risk based on the option chose. Practically speaking, you chosen option will either protect you or leave you reliant on your form of health insurance coverage, which may not cover the medical services you need. Historically, Michigan PIP no-fault coverage an array of medical service that other forms of health insurance do not. This is what the consumer must understand before selecting the PIP coverage option.

Decision #4 – New No Fault Law Increases Liability and Financial Exposure To Consumer

As you know, tour liability coverage protects you from financial claims by people you have insured in an auto accident. Under the new auto no-fault law, the minimum amount of liability insurance a person is required to carry is $250,000 per person, not to exceed $500,000 per accident. The old law required a minimum $20,000 per person, $40,000 per accident. Unfortunately, a loophole in the new law allows the consumer to opt-out of the default minimum and choose lower liability coverage down to $50,000 per person/$100,000 per accident, which is drastically inadequate due to an increased liability for all drivers under the new no-fault law.

Decision #5 – Uninsured Motorist and Underinsured Motorist Coverage

Over 20% of Michigan drivers have a history of driving without any auto insurance. Therefore, you should purchase uninsured motorist coverage to protect yourself and your family from these drivers. You should also purchase adequate underinsured motorist coverage to protect yourself from drivers that do not have adequate insurance coverage to pay your damages. Unfortunately, some consumers will buy $50,000 in liability coverage.