Auto Insights – The New Michigan Auto Insurance Reform Law
Part 2: PIP

Michigan Auto Insurance Reform –
The Basics of Personal Injury Protection (PIP)

Beginning July 2, 2020, when you renew your auto insurance policy, you’ll have some important decisions to make under the new Michigan Auto Insurance Reform Law.

The new law is centered on changes to the Personal Injury Protection (PIP) portion of your auto insurance premium. PIP covers medical and rehabilitation costs if you’re in an auto accident and you’re injured, whether temporarily or permanently.

The state of Michigan currently requires all drivers to carry unlimited PIP coverage. But when the new law takes effect, Michigan drivers will have multiple PIP benefit level options from which to choose. Keep in mind that selecting a different option will reduce this portion of your policy premium. The new PIP benefit levels include:

Option 1: Unlimited Coverage

This is the option you have right now. It provides the most coverage, and will pay for all allowable expenses for your care, recovery and rehabilitation if you’re injured in an auto accident. If you prefer to keep this option, your PIP coverage will continue as it is currently.

Mandatory PIP Premium Rollback (average savings under the new law): 10% PIP Reduction*

Option 2: Limited Coverage of $500,000

Option 3: Limited Coverage of $250,000

Each of the two options above represents the maximum amount your auto insurance company will pay per person, per auto accident.

Mandatory PIP Premium Rollback for Option 2: 20% PIP Reduction*

Mandatory PIP Premium Rollback for Option 3: 35% PIP Reduction*

Option 4: Limited Coverage of $250,000, with some or all persons excluded from PIP medical

Option 4 is only available if you choose the $250,000 PIP medical limit. Additional guidelines include:

  • A named insured who wishes to exclude PIP medical must have qualified health coverage that is not Medicare
  • Any resident relative or spouse who wishes to exclude PIP medical must have qualified health coverage

Any person who is excluded will have no PIP medical coverage. Any person who is not excluded will have $250,000 in PIP medical coverage.

How can this option reduce costs? You’ll pay a reduced premium under the PIP portion of your policy because you will not be charged for PIP medical coverage for anyone who is excluded.

Option 5: Limited Coverage of $50 ,000

If you select this limit, $50, 000 is the most your auto insurance company will pay per person, per accident for an injured person’s expenses under PIP medical coverage.

You may choose this option if:

  • The applicant or named insured is enrolled in Medicaid; AND
  • Any spouse and all resident relatives have one of the following:
    1. Qualified health care coverage;
    2. Medicaid enrollment, or
    3. Coverage under another auto policy with PIP medical coverage

Mandatory PIP Premium Rollback: 45% PIP Reduction*

Option 6: No PIP medical coverage for anyone covered under policy

You may choose this option if:

  • The applicant or named insured has coverage under both Medicare Parts A and B, AND
  • Any spouse and all resident relatives covered by the policy have qualified health care coverage or are covered under another auto policy with PIP medical coverage

Mandatory PIP Premium Rollback: 100% PIP Reduction*

Under this option, the cost of your policy will be reduced because you will not be charged a premium for PIP medical coverage.

That being said, an essential factor to think about when selecting one of the above PIP options is how your health care medical coverage coordinates with your auto insurance. We invite you to check out our blog next week, which will feature an in-depth look at medical coverage along with some important points to consider.

The bottom line? Information is the key. Your insurance carrier will be sending you more details in advance of the July 2, 2020 effective date. Reading and understanding these materials—and taking into account your health care insurance coverage—will help you determine the best option for you and your family. You’ll also find helpful Michigan Auto Insurance Reform Law information by visiting Michigan.gov/autoinsurance. Of course, our VTC agents are ready to answer any questions you might have. Give us a call, or visit vtcins.com.

NEXT WEEK: Part 3 – Michigan Auto Insurance Reform Law—Why Your Health Insurance Matters

*Average reduction per vehicle