Alyssa Lane
Michigan's auto insurance law has undergone significant changes, with the Michigan House of Representatives passing an auto insurance reform bill in 2020. The new law introduces several options for Personal Injury Protection (PIP) coverage levels, including $50,000 for those enrolled in Medicaid, $250,000, $500,000, or unlimited coverage. These changes aim to lower auto insurance costs in the state, address issues of uninsured drivers, and impact all drivers and accident victims. The reform also allows drivers with Medicare to opt out of No-Fault PIP medical benefits. The Michigan Department of Insurance and Financial Services (DIFS) is responsible for reviewing and approving rate filings to ensure compliance with the new law.
| Characteristics | Values |
|---|---|
| Date of passing | May 9, 2020 |
| Passed by | Michigan House of Representatives |
| Vote | 61 to 49 |
| Previous law | Required all drivers to carry "unlimited" No-Fault medical coverage |
| New law | Requires drivers to choose from one of four No-Fault PIP medical benefits coverage levels: 1) $50,000 for drivers enrolled in Medicaid; 2) $250,000; 3) $500,000; and 4) unlimited or no limit |
| Opt-out | Drivers with Medicare can opt out of No-Fault PIP medical benefits |
| Michigan Catastrophic Claims Association (MCCA) | Will pay for the medical costs of catastrophically injured car accident victims claiming medical benefits through a No-Fault auto insurance policy issued or renewed before July 2, 2020 |
| MCCA (cont.) | For policies issued or renewed after July 1, 2020, MCCA will only pay for a car accident victim's catastrophic medical coverage if "unlimited" was the No-Fault PIP medical benefits coverage level selected |
| Medicare-based fee schedule | Starting July 1, 2021, doctors, hospitals, etc. will have to conform their charges for services to a new Medicare-based fee schedule |
| PIP coverage within 30 days | If an accident occurs within 30 days before the driver has secured PIP coverage, the driver would be eligible for benefits under the Michigan Assigned Claims Plan |
| TNCs | Required to make potential drivers aware of common insurance exclusions and receive their written acknowledgement of these exclusions |
| Motorcyclists | Would be subject to any PIP choice limits on the policy and can claim up to $250,000 in PIP benefits from the Michigan Assigned Claims Plan |
| Motorcyclists without a helmet | Must carry at least $20,000 of medical benefits |
| Premium reductions | Mandated to be "an average of 10% or greater per vehicle" but not guaranteed for each policyholder and may not apply to the entire policy |
| Uninsured Motorist and Underinsured Motorist Coverage | Motorists are advised to purchase as much as they can afford |
| Pedestrians and bicyclists | No-Fault PIP medical benefits will be limited to whatever coverage levels were chosen in the pedestrian's policy or the policies of their spouse and/or resident relative |
| Unintended consequences | Some people claim that PA 21's modifications to eligible medical expenses and reimbursement rates resulted in limited access to care for auto accident survivors and unsustainable reimbursement for providers |
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What You'll Learn
Michigan auto insurance reform
On May 30, 2019, Governor Gretchen Whitmer signed a historic bipartisan no-fault auto insurance reform bill into law. The bill, which was passed by the Michigan Senate on May 7, 2020, and by the Michigan House of Representatives on May 9, 2020, aimed to provide lower rates for Michigan drivers, protect insurance coverage options, and strengthen consumer protections.
The Michigan auto insurance reform has brought about significant changes to the state's No-Fault law, affecting every driver and car accident victim in Michigan. One of the most notable changes is the introduction of Personal Injury Protection (PIP) Choice, which allows drivers to choose from four No-Fault PIP medical benefits coverage levels: $50,000 for drivers enrolled in Medicaid, $250,000, $500,000, or unlimited/no limit. These new coverage options became available for policies issued or renewed after July 1, 2020. Drivers who have Medicare can also choose to opt out of No-Fault PIP medical benefits altogether.
The reform also includes other changes, such as the establishment of a Fraud Investigation Unit to investigate criminal and fraudulent activity related to insurance and financial markets, increased transparency requirements for the Michigan Catastrophic Claims Association (MCCA), and the elimination of some non-driving factors in setting auto insurance rates, such as sex, marital status, and credit score.
The Michigan auto insurance reform also has implications for motorcyclists, pedestrians, and bicyclists. Motorcyclists involved in accidents with motor vehicles will seek PIP from the insurer of the motor vehicle but will be subject to any PIP choice limits on the policy. If no PIP coverage is available, they may be eligible for up to $250,000 in PIP benefits from the Michigan Assigned Claims Plan. Pedestrians and bicyclists' No-Fault PIP medical benefits will now be limited to the coverage levels chosen in their policy or their spouse's/resident relative's policy.
While the Michigan auto insurance reform aims to provide lower rates and protect coverage options, it is important for drivers and accident victims to understand how these changes may affect their legal rights and ability to recover No-Fault PIP benefits after a crash.
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No-Fault PIP medical benefits
Personal injury protection (PIP) is a feature of auto insurance that covers medical expenses related to a car accident. It is also known as "no-fault insurance" because it covers medical bills and related costs resulting from an accident, regardless of who caused it. PIP covers medical expenses for both injured policyholders and passengers, even if they don't have health insurance.
In Michigan, drivers are required to have PIP benefits insurance on their vehicles. The No-Fault PIP medical benefits coverage levels in Michigan are:
- $50,000 for drivers enrolled in Medicaid
- $250,000
- $500,000
- Unlimited or no limit
The level of coverage selected will determine the extent of personal injury protection benefits that will cover accident-related medical bills. Prior to July 1, 2020, all policies provided unlimited medical coverage. However, for policies issued or renewed after that date, unlimited coverage is just one of several coverage level options that drivers may select from.
In addition to medical expenses, PIP benefits in Michigan can also cover attendant care for car accident victims who require assistance with activities of daily living due to their injuries. This can include services provided by a family member or a nurse hired from a commercial agency, as well as attendant care in a residential facility.
It's important to note that PIP is mandatory in some states under "no-fault auto insurance" laws, while in other states, it may be optional. The main goal of PIP is to provide prompt payment for auto accident injuries, regardless of who is at fault.
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Personal Injury Protection (PIP)
In Michigan, the new auto insurance law gives drivers the option to choose from four No-Fault PIP medical benefits coverage levels: $50,000 for drivers enrolled in Medicaid, $250,000, $500,000, or unlimited/no limit. This change took effect for policies issued or renewed after July 1, 2020. Previously, Michigan required all drivers to carry "unlimited" No-Fault medical coverage. The new law also allows drivers with Medicare to opt out of No-Fault PIP medical benefits, but they will not be covered for any accident-related medical bills if they opt out.
The Michigan Catastrophic Claims Association (MCCA) will pay for the medical costs of catastrophically injured car accident victims claiming medical benefits through a No-Fault auto insurance policy issued or renewed before July 2, 2020. For policies issued or renewed after July 1, 2020, the MCCA will only provide coverage if "unlimited" was selected as the No-Fault PIP medical benefits coverage level.
The new law also affects Transportation Network Companies (TNCs) and their drivers and passengers. TNCs must inform potential drivers of common insurance exclusions and receive their written acknowledgment. Passengers covered under a TNC's auto insurance policy with PIP benefits are covered under that policy, but those who have opted out of PIP or chosen certain exclusions are not eligible for PIP reimbursement from the TNC's policy. Passengers who are not required to maintain auto insurance can claim benefits under the TNC policy but are subject to the TNC's chosen PIP coverage level, which must be at least $250,000 per person per accident.
The new auto insurance law in Michigan gives drivers more choices regarding PIP coverage levels, allowing them to balance their desired level of protection with the cost of insurance premiums.
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Uninsured Motorist Coverage
When a driver with UM coverage is in an accident caused by an uninsured driver, they will file a claim with their own insurance company, which will then compensate them for damages that would have been recovered from the at-fault driver's insurance company if they had been insured. This includes compensation for pain and suffering, as well as "excess" No-Fault Personal Protection Insurance (PIP) medical benefits and other economic losses.
For example, if a person with UM coverage is injured in an accident caused by an uninsured driver, their own insurance company will pay for their medical expenses and income loss claims, even if these exceed the capped No-Fault medical expense coverage provided by their own policy.
It is important to note that UM coverage only applies if the uninsured driver is at fault for the accident and does not cover incidents where the insured driver is more than 50% at fault. Additionally, UM coverage is relatively inexpensive and can provide valuable protection for drivers and their families in the event of an accident.
In conclusion, while not mandatory, UM coverage is highly recommended for all drivers in Michigan due to the high number of uninsured drivers and the potential risks and costs associated with an accident involving an uninsured driver.
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Michigan Assigned Claims Plan
The Michigan Assigned Claims Plan (MACP) is a state agency that acts as a safety net for car accident victims who do not have insurance coverage. It assigns car insurance companies to handle claims for uninsured victims, ensuring they receive No-Fault PIP benefits. The MACP is administered by the Michigan Automobile Insurance Placement Facility (MAIPF), considered the insurance company of last resort.
The MACP provides No-Fault PIP benefits coverage, including medical expenses, medical mileage, wage loss replacement, and attendant care. However, medical benefits coverage is capped at $250,000, and the MACP can deny or suspend claims if the victim is deemed ineligible or fails to cooperate with the MAIPF.
The MACP was created in 1973 to address situations where injured individuals had no access to personal protection insurance benefits, a fundamental part of Michigan's no-fault insurance system. It also applies when an accident involves an uninsured vehicle or when there is a dispute between insurers. Originally administered by the Michigan Secretary of State, oversight was transferred to the MAIPF in 2012.
In 2019, Michigan implemented a significant no-fault reform, introducing a maximum limit of $250,000 on medical expenses covered by the MACP. This represented a shift from the previous system, where reasonable and necessary medical expenses were paid in full without caps. The reform aimed to reduce insurance costs and combat fraud but created challenges for severely injured victims facing high medical bills.
The process of securing benefits through the MACP has become increasingly complex, due to intricate eligibility requirements and exclusions under Michigan law. Injured individuals must prove they have no other applicable insurance coverage, often requiring legal analysis of household relationships, vehicle ownership, and insurance priority rules. As a result, seeking legal guidance from a Michigan Assigned Claims Plan lawyer is advisable to navigate the complex process and ensure prompt assignment of a servicing insurer.
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Frequently asked questions
The Michigan Auto Insurance Reform is a change to Michigan's No-Fault law, which will affect every driver and car accident victim in Michigan. The reform introduces four PIP coverage levels that drivers can choose from, including $50,000 for drivers enrolled in Medicaid, $250,000, $500,000, and unlimited or no limit.
The most significant decision that Michigan drivers will now make is selecting a level of PIP coverage. Drivers will now have a choice to reduce their premiums for the medical portion of PIP by relying on their health insurance for medical bills. The new law also lowers premiums while still offering coverage options, including unlimited lifetime PIP medical benefits.
In the past, a pedestrian or bicyclist was entitled to "unlimited" medical benefits. Now, a pedestrian's No-Fault PIP medical benefits will be limited to the coverage levels chosen in their policy or the policies of their spouse or relative. If no coverage is available, the pedestrian must apply for benefits through the Michigan Assigned Claims Plan.
Motorcycle insurance companies are assessed by the MCCA, just like auto insurance companies. While motorcycle policies do not include PIP benefits, motorcyclists are still entitled to them if injured in an accident involving a motor vehicle. A motorcyclist involved in an accident with a motor vehicle will be subject to any PIP choice limits on the policy. If no PIP coverage is available, a motorcyclist is eligible for up to $250,000 in PIP benefits from the Michigan Assigned Claims Plan.
