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Today, Michigan drivers are required by law to have a No-Fault automobile insurance policy that includes Personal Injury Protection (PIP) benefits. While several states in the U.S. also have No-Fault requirements, Michigan's No-Fault law is unique in that the PIP coverage provides for unlimited medical benefits for the lifetime of the injured person when those injuries result from an auto accident. On July 2, 2020, many changes to the existing no-fault auto insurance law will take effect, including giving Michigan drivers a choice in their level of PIP coverage. Under the new plan, drivers will be able to choose from up to six options for Personal Injury Protection coverage.
Since 1973, all Michigan automobile insurance policies have had to provide unlimited Personal Injury Protection benefits. If you qualified for PIP benefits because you were injured in an automobile accident, you could get lifetime medical benefits for treatment related to your care, recovery or rehabilitation. It sounded like a great idea at the time — but as health care costs and the frequency of lawsuits continued to rise, it meant that auto insurance costs rose significantly, too. Today, Michigan has the 4th most expensive auto insurance in the country. Unsurprisingly, it is also ranked 4th in the U.S. with about 20% of drivers uninsured.
While some parts of the law are already active, the parts that impact your selection options for PIP coverage go into effect on July 2, 2020. You don't have to do anything until you renew your policy, but in order to make the transition easy for you and your family, you can make your new selections in advance of your renewal date.
Personal Injury Protection (PIP) helps cover expenses that arise as a result of injuries sustained in an auto accident. In Michigan, PIP covers these expenses regardless of who caused the accident or who is at fault.
The main coverage provided by PIP is for "allowable expenses," also known as PIP AE. Allowable expenses are "reasonable charges incurred for reasonably necessary products, services and accommodations for an injured person’s care, recovery or rehabilitation." This includes services like medical expenses, attendant care and nursing. Today in Michigan, your PIP AE coverage is unlimited. That means all of your medical costs are paid for — for as long as they're necessary for your care, recovery or rehabilitation.
Starting July 2, 2020, when you renew your auto insurance policy, you'll need to make a decision on your PIP AE coverage limit.3 Your choices will be:
When the time comes to renew your policy, we can help provide you information.
Today, every driver in Michigan is required to have unlimited Personal Injury Protection Allowable Expenses (PIP AE) coverage on their policy. When part of Michigan's new auto insurance reform law takes effect on July 2, 2020, you'll be able to choose from different levels of PIP AE coverage.3 Depending on the specific coverage levels you choose, you may pay less for PIP AE coverage.
If you decide to reduce your PIP AE coverage, you may want to weigh other coverage levels on your policy, like your Bodily Injury coverage limits, so you select limits to help meet your needs.
The short answer is that it means you have a choice to make. When you renew your policy after July 2, 2020, you can keep your unlimited Personal Injury Protection Allowable Expenses (PIP AE) coverage limit, which is the same coverage you have today.
But if you choose a PIP AE option with less than unlimited coverage — or the $250,000 PIP Exclusion6 — you may want to factor in your own personal risk tolerance and financial situation. For example, what happens if you're severely injured in an accident and your medical bills exceed your new coverage limit? Do you have enough health insurance to cover those bills? If you can't work, do you have disability coverage available? If you get sued for the accident, do you have savings or other assets that could be at risk?
These are all things you'll need to think about. The good news is our agents are here to help provide you information.
Once the new coverage options go into effect on July 2, 2020, you won't need to take any action until it's time to renew your policy. In the meantime, here are some steps you can take to prepare:
