Michigan drivers have always paid higher rates for auto insurance than drivers in many states. In fact, before the Michigan Legislature passed Public Acts 21 and 22 of 2019, Michigan drivers paid the highest costs for insurance anywhere in the United States. Part of the reason for this is that Michigan provided the highest auto insurance benefits to drivers. Under this new law, effective July 1, 2020, Michigan drivers can now choose their levels of Personal Injury Protection (PIP) coverage and other insurance coverages. What does this mean in terms of insurance protection and cost?
Michigan Auto Insurance Reform
Michigan law requires that all drivers purchase no-fault automobile insurance. Driving without insurance can result in the driver being convicted of a misdemeanor with a fine of up to $500 and up to one year in jail as well as the state suspending the driver’s license for 30 days or until proof of insurance is shown.
Every Michigan auto insurance policy must include three basic coverages:
Personal Injury Protection (PIP)
Property Protection (PPI)
Residual Bodily Injury and Property Damage Liability (BI/PD)
Before these reforms took effect, many drivers who could not afford the very high insurance costs resulting from state mandates, especially those involving unlimited PIP medical benefits, were driving uninsured. Now they can choose to reduce their auto insurance premiums by limiting their own coverage, including PIP, and instead rely on their own health insurance if they are in a car accident that results in injuries.
What Is PIP?
Personal Injury Protection (PIP) coverage covers costs incurred because of a car accident - no matter who is at fault. These expenses can include medical bills, lost wages, funeral expenses, and even child care and housekeeping costs if a disability results for the driver or passengers in the insured vehicle.
Unlimited PIP coverage offers the greatest amount of protection for the driver and passengers. Without PIP coverage or with limited PIP coverage, it would be necessary to have health insurance coverage to pay for large medical expenses. However, if the driver is not at fault and is injured in a car accident, he can sue the at-fault driver to cover his medical costs.
Beginning in 2020, drivers were allowed to choose between five tiers of PIP coverage:
Unlimited PIP coverage
Insurance companies will cover up to $500,000
Insurance companies will cover up to $250,000
Insurance companies will cover up to $50,000 — the lowest-price option available to people on Medicaid
Opt-out of PIP coverage entirely, if you have separate health insurance that covers collision injuries
Insurance companies must lower PIP coverage rates depending on the level of coverage purchased and charge their customers less if they opt for lesser coverage.
Drivers may very well have questions about how this new law affects their costs and coverage. In fact, the auto insurance law is still being argued in the courts.
Ultimately, drivers should know that purchasing auto insurance provides financial security for drivers and their families and passengers. The more coverage you elect to buy, the more protection you have for your property and your wellbeing should an accident occur. In terms of personal injury, your auto insurance will pay all reasonably necessary expenses up to the limit of coverage you choose to purchase, as well as wage loss benefits and replacement service benefits. For a serious accident, this could amount to hundreds of thousands of dollars. It’s important to carefully consider the amount of risk you are willing to take by limiting your coverage.
If you have questions about your auto insurance coverage or what amount you should purchase to protect your family, contact us at Navisure Insurance Group. We work with a wide variety of carriers to get you the best value and protection. Call us for more information or get a quote on Michigan auto insurance now.
COREY VANDERMEER | PRESIDENT
Corey started his insurance career in the claims department for a national carrier and learned the basics of insurance coverage and how it’s applied. From there he decided to take the jump into sales and joined an independent insurance agency. Here he learned how to build coverage around the needs of each individual and cater to every client. When Corey decided to start an insurance agency he did so with the intention of simplifying the process of getting insured. With a focus on technology and simplicity; his goal was to create an insurance agency that was different from those currently dominating the market place.
When he’s not working, Corey enjoys golfing, fly fishing and spending time with his wife and kids. Together they enjoy traveling to Northern Michigan and to his wife’s hometown of San Francisco.