Navigating the Changes of Auto Reform
Michigan auto reform went into effect July 2, 2020. You now have more choices when it comes to your coverage selections for your personal injury protection (PIP). Michigan’s new insurance laws allow you to select your insurance coverages according to your needs. We recommend you review your options with an insurance agent to ensure you understand the coverage and your options.
What is PIP?
If you are hurt in an auto accident, PIP will pay all reasonable and necessary medical expenses for your lifetime up to the maximum coverage amount selected in the affected policy. It will also pay wage loss and replacement services for up to three years after the date of the accident.
The new law allows you to choose your PIP medical limit on your auto policy.
The PIP medical coverage options are:
- Unlimited coverage
- $500,000 per person per accident
- $250,000 per person per accident
- $250,000 per person per accident with exclusions
To select this option, one or both of the following must be met:
The named insured who is excluding PIP medical has qualified health coverage that is not Medicare; AND any resident relative or spouse who is excluding PIP medical has qualified health coverage.
- $50,000 per person per accident
To select this option, both of the following must be met:
The applicant or named insured is enrolled in Medicaid; AND any spouse and all resident relatives have qualified health coverage, are enrolled in Medicaid, or are covered under another auto policy with PIP medical coverage.
- No PIP medical coverage
To select this option, both of the following must be met:
The applicant or named insured has coverage under both Medicare Parts A and B; AND any spouse and all resident relatives have qualified health coverage or are covered under another auto policy with PIP medical coverage.
PIP coverages that are separate from PIP medical coverage such as wage loss, replacement services, and funeral and burial expenses are still included in your auto policy, even if you choose no PIP medical coverage (opt out) or the $250,000 per person per accident with exclusions options.
If you don’t make a PIP medical coverage selection, your policy will be issued with unlimited PIP medical coverage.
Bodily injury liability (BI) provides coverage if you are sued as the result of an automobile accident. This coverage will pay up to your coverage limit amounts if you are found legally responsible for damages in these situations.
Under the new law, the default BI coverage limits are $250K/$500K.
- Up to $250,000 for a person who is hurt or killed in an accident.
- Up to $500,000 for each accident if several people are hurt or killed.
If you choose a coverage lower than the default, you’ll have to fill out a form that says you know the risks that come with choosing lower levels of BI coverage.
The lowest coverage limits you may purchase are:
- $50,000 for a person who is hurt or killed in an accident.
- $100,000 for each accident if several people are hurt or killed.
BI coverage protects you up to the limits you choose. If you’re thinking about choosing a lower level of Bodily Injury coverage, it’s important you understand potential financial risks. If you’re responsible for an auto accident that injures someone or results in a person’s death, and the amount awarded by the court is higher than your coverage limit, the you will be responsible to pay the difference.
