Changes in Auto Insurance Laws Could Mean It's Time to Review Your Insurance
As you’ve probably heard, the State of Michigan has overhauled the Automobile no-fault system in an effort to reduce premium costs for consumers. The bulk of those changes took effect in July 2020. These changes should save most people money on their automobile insurance, but there are items all consumers should understand and review. First, it’s important to review the key areas that are affected:
- “PIP” Personal Injury Protection coverage – this is the policy portion covering medical costs, lost wages, attendant care, home modifications, etc for YOU as the insured after an accident.
- “MCCA” Michigan Catastrophic Claims Association – this is the per-vehicle charge that goes into the state fund to pay for very large PIP claims.
- “Liability” or “BI/PD” coverage – this protects you from lawsuits from bodily injury or property damage to others that you might be liable for but is only covered up to the limit on your policy.
One thing to clarify is that the new law does not get rid of Michigan’s no-fault auto insurance system—it is still very much intact. But there are several changes that everyone should be aware of with our system going forward. The table at the end of the article goes through some of the main changes that resulted from the changes in the law. However, below is a summary of three main tips that nearly everyone should consider:
1. Notify your agent of unrelated household members, OR family members who do not live with you but are drivers on your policy, as they are likely no longer covered by PIP coverage. They likely will have to obtain their own insurance in order to have PIP coverage going forward.
2. Unlimited PIP is the best option to make sure you and your household family members have adequate coverage for medical costs, lost wages, attendant care and other services after an auto accident—benefits that go beyond traditional health insurance or Medicare/Medicaid coverages. But you do now have lower options to help save premium if that’s a priority.
3. Increase your liability limits and strongly consider an Umbrella policy, because the new law creates new ways for all of us to be sued in more situations and for more damages than in the past. Umbrella policy limits start at $1 million and add on to the limits of your auto and home insurance policies. You’ll want to have liability limits that meet or exceed your total personal assets to make sure you don’t have to pay out of your personal funds if sued after a car accident.
No matter who your automobile insurer is, if you haven’t already, you will likely receive a packet of paperwork directly from your insurance company a month or more prior to your renewal date. This paperwork is required to be sent to you by law. If you do not return the paperwork, most insurance companies will issue your renewal with Unlimited PIP and often with liability limits of at least $250k/$500k, unless you already have higher limits. Or, if you want to change these selections, you’ll be able to return that paperwork to have your policy adjusted. But plan on reviewing a lot of new state-required paperwork in connection with your auto insurance!
If you have questions about automobile insurance or want to explore quotes for coverage, please contact our office online or at 269-637-1181.
|
Category
|
Old System Prior to July 2020
|
New System Starting July 2020
|
|
PIP – Who is Covered
|
Broad coverage included owners, drivers, passengers of vehicles
|
Only related people who also reside in your household will be covered going forward
|
|
PIP – Limits
|
Unlimited – no choice in limits
|
Choices of Unlimited, $500,000 or $250,000 limit with or without a Qualified Health Insurance opt out option.
Medicare A&B – can choose to opt out entirely.
Medicaid - $50,000 limit option available.
|
|
Liability Limits – Bodily Injury & Property Damage
|
State Bodily Injury Minimums required are $20,000 per person / $40,000 per accident
|
State Bodily Injury Minimums required are $50,000 per person / $100,000 per accident BUT all are required to take $250,000 per person / $500,000 per accident unless signing to choose lower. Also, the new laws make it easier to be sued and for more damages than before.
|
|
MCCA Premiums
|
$220 per car per year
|
$100 per car per year
|
|
Mini-Tort Coverage
|
Can collect up to $1,000 for vehicle damages from at-fault party if you do not have full coverage
|
Can collect up to $3,000 for vehicle damages from at-fault party if you do not have full coverage
|
This is intended to be a general broad summary. Be sure to read your policy & all paperwork from your insurer for complete details.