Michigan Auto Insurance: Denial And Your Rights

Michigan's auto insurance law requires non-residents to maintain a valid No-Fault auto insurance policy on their vehicle if they are driving in the state for more than 30 days per year. Non-residents who fail to comply with this law are considered uninsured and may face consequences such as jail time, fines, and denial of benefits and compensation in the event of a car crash.

Michigan's new auto insurance law, effective from July 1, 2020, offers drivers more choices and lower-cost insurance options. Under this law, car crash victims no longer have guaranteed lifetime coverage for medical and rehabilitation expenses unless they specifically purchase that coverage. Additionally, drivers now have the option to choose from different Personal Injury Protection (PIP) coverage levels, ranging from $50,000 to $500,000, or even unlimited coverage.

It is important to note that driving without insurance in Michigan is a crime and can result in fines and jail time. The state requires the purchase of no-fault automobile insurance, which provides financial security in the event of an accident, covering necessary expenses, wage loss benefits, and replacement service benefits.

No-Fault auto insurance for non-residents

No-fault auto insurance laws vary from state to state in the US. In Michigan, non-residents who drive their own vehicles in the state for more than 30 days in a calendar year must purchase and maintain a valid No-Fault auto insurance policy issued by a Michigan-authorised insurer. Non-residents who fail to do so are considered "uninsured" and may face penalties including jail time, fines, and denial of benefits and compensation for injuries.

To obtain the required Michigan No-Fault auto insurance, non-residents must:

• Obtain the necessary form from the insurer.
• Complete it with details about their intended driving.
• Submit the form to the insurer.

Non-residents can maintain their out-of-state car insurance while also having the No-Fault auto insurance required by Michigan law. It is recommended that they speak with an independent insurance agent about using an insurer that writes policies in both states to save money.

No-fault insurance, also known as personal injury protection (PIP) insurance, covers medical expenses and loss of income resulting from a car accident, regardless of who is at fault. It is mandatory in some states, including Michigan, and optional in others. In no-fault states, drivers must file a claim with their own insurance company for medical-related costs, regardless of who is at fault for the accident.

Choosing PIP medical coverage

Understanding PIP and its Benefits:

Personal Injury Protection (PIP) is a mandatory coverage type for all Michigan drivers. It covers the medical costs and lost wages of the insured driver and their passengers in the event of an accident, regardless of who is at fault. PIP benefits also include medical mileage, household services, attendant care, and survivor's benefits. These benefits are guaranteed by Michigan's No-Fault Law and are paid by the insured driver's own auto insurance company.

Knowing the Coverage Levels:

Michigan drivers have the option to choose from six PIP medical coverage levels:

• Unlimited coverage: This option provides lifetime and life-saving care for catastrophic accident victims, ensuring access to the best medical treatment and specialists. It is the only coverage level that provides comprehensive protection for catastrophic injuries.
• Up to $500,000 in coverage: This option offers a high level of protection for accident-related medical expenses.
• Up to $250,000 in coverage: This option provides substantial coverage for medical expenses but has a lower limit compared to the previous option.
• Up to $250,000 in coverage with PIP medical exclusion(s): This option is available if the insured has non-Medicare health coverage that includes auto accident injuries or if household members have health insurance covering such injuries.
• Up to $50,000 in coverage: This option is available if the insured is enrolled in Medicaid, and household members have another auto insurance policy, Medicaid, or health insurance covering auto accident injuries.
• PIP medical opt-out: This option is available if the insured has Medicare Parts A and B, and all household members have qualified health insurance or auto insurance that includes PIP medical benefits.

Weighing Cost vs. Coverage:

While keeping insurance premiums low is essential, it's crucial to balance cost and coverage. Opting for lower premiums may save you money in the short term, but it could lead to long-term financial risks if you're involved in a major accident. More comprehensive PIP coverage can help minimize the impact on your finances and protect you from steep medical debt.

Consulting with Experts:

When choosing PIP medical coverage, it's recommended to discuss your options with professionals. Consult an auto insurance agent, insurance company, or financial advisor to assess your personal auto insurance needs. They can guide you in selecting the coverage level that best suits your circumstances and budget.

Remember, choosing PIP medical coverage is a critical aspect of your auto insurance in Michigan. By considering the available options and seeking expert advice, you can make a well-informed decision that provides you with the necessary protection in case of unforeseen events.

Choosing bodily injury coverage

When choosing bodily injury coverage, it's important to understand what it covers and how it works. Bodily injury coverage comes into play if you injure someone else in a car accident that was your fault. It covers the medical expenses of the injured person/people, including emergency care, hospital fees, follow-up visits, and medical equipment. It also covers their lost income if they are unable to work due to their injuries. In the unfortunate event that the injuries result in death, bodily injury coverage can help with funeral costs. Additionally, it can cover legal expenses if the injured party decides to take legal action against you.

When choosing bodily injury coverage, it's essential to consider the liability limits offered by the insurance company. These limits are typically presented as three numbers, such as "100/300/100." The first number represents the maximum amount the insurance company will pay per person for bodily injuries. The second number is the maximum amount they will pay per accident, regardless of the number of people injured. The third number pertains to property damage liability coverage, which is separate from bodily injury coverage.

In Michigan, the new auto insurance law has increased the default coverage limits for residual bodily injury. The current default limits are as follows:

• Up to $250,000 for a person who is hurt or killed in an accident.
• Up to $500,000 for each accident if multiple people are hurt or killed.
• Up to $10,000 for property damage in another state.

However, drivers have the option to purchase different coverage limits. The lowest coverage limits available are:

• Up to $50,000 for a person who is hurt or killed in an accident.
• Up to $100,000 for each accident if multiple people are hurt or killed.
• Up to $10,000 for property damage in another state.

When deciding on the appropriate coverage limits, it's recommended to consult with a licensed insurance agent to discuss your personal needs and financial situation. It's important to have sufficient coverage to protect your assets in the event of a lawsuit resulting from an accident.

Consumer rights

Michigan's auto insurance law requires non-residents to maintain a valid No-Fault auto insurance policy on their vehicle if they drive in the state for more than 30 days per year. Non-residents who fail to comply with this law are considered "uninsured" and may face consequences such as jail time, fines, and denial of benefits.

Michigan's auto insurance law offers several consumer protections, including:

• The elimination of certain non-driving factors: Auto insurance companies are prohibited from using sex, marital status, home ownership, credit score, educational level, occupation, and zip codes when setting a driver's auto insurance rates.
• A fraud investigation unit: This unit investigates criminal and fraudulent activity related to insurance and financial markets, working with law enforcement to prosecute these crimes.
• Elimination of penalties for those who have gone without insurance: Insurers can no longer charge a reinstatement fee or increase premiums for eligible drivers due to a lapse in coverage if the driver applies for insurance before January 1, 2022.
• Prior approval: Auto insurance rates and policies must be approved by the Department of Insurance and Financial Services before being offered to consumers.
• Increased fines and penalties: The law allows for increased fines on insurance companies, agencies, and licensed agents for certain violations.

Additionally, under the Michigan Insurance Code, consumers have important rights governing the payment of benefits from their auto insurance company. When a consumer files an auto insurance claim, Michigan law requires the auto insurance company to:

• Inform the consumer within 30 days of being notified of the loss about what information is needed to process the claim.
• Pay any part of the claim for which the company has received proper supporting documentation (proof of loss), and pay the rest of the claim when the remaining documentation is received.
• Pay Personal Injury Protection (PIP) claims, including medical bills, within 30 days of receiving satisfactory supporting documentation. Overdue claims are subject to 12% simple interest.
• Pay claims for damages to a vehicle within 60 days of receiving satisfactory supporting documentation. Overdue claims may be subject to 12% simple interest.

If a consumer believes their auto insurance company is not paying their benefits in a timely fashion or is unfairly delaying or denying their claim, they may file a complaint with the Michigan Department of Insurance and Financial Services (DIFS). DIFS will review the concern, attempt to resolve the complaint, and answer any questions the consumer may have.

Consumer protections

Michigan's new auto insurance law, which came into effect for policies issued or renewed after July 1, 2020, has strengthened consumer protections in the following ways:

Elimination of Certain Non-Driving Factors

The new law prohibits auto insurance companies from using sex, marital status, home ownership, credit score, educational level, occupation, and zip codes when setting a driver's auto insurance rates.

Fraud Investigation Unit

A new unit has been established to investigate criminal and fraudulent activity related to the insurance and financial markets, working with the Attorney General and law enforcement to prosecute these crimes. Auto insurance fraud increases premiums for all drivers.

Elimination of Penalties for Those Who Have Gone Without Insurance

Previously, auto insurance companies could charge a penalty to people who had gone without auto insurance for a period. Under the new law, insurers cannot limit coverage, charge a reinstatement fee, or increase the premium for an eligible driver solely due to a lapse in coverage if the driver applies for insurance before the amnesty period ends on January 1, 2022.

Prior Approval

Auto insurance rates and policies must now be filed with and approved by the Department of Insurance and Financial Services (DIFS) before being offered to consumers.

Fines and Penalties

The new law allows for increased fines on insurance companies, agencies, and licensed agents for certain violations.

Consumer Rights

Upon receipt of an auto insurance claim, Michigan law requires your auto insurance company to:

• Tell you within 30 days of being informed of the loss, what information is needed to handle your claim.
• Pay any part of your claim that they have received proper supporting documentation (proof of loss) for, and pay the rest of your claim when proper supporting documentation is received.

Personal Injury Protection (PIP) claims, including medical bills, are considered overdue if they are not paid within 30 days after the auto insurance company has received satisfactory supporting documentation. Interest is owed on the amount overdue at a rate of 12% simple interest. If your auto insurance claim for damages to a vehicle is not paid within 60 days after your auto insurance company has received satisfactory supporting documentation, the claim may be considered overdue. Interest may be owed on the amount overdue at a rate of 12% simple interest.

Frequently asked questions