Understanding Michigan's Auto Insurance Medical Premiums

In Michigan, auto insurance policies are required to include Personal Injury Protection (PIP), which covers medical expenses and lost wages resulting from an auto accident. Prior to July 1, 2020, all drivers were required to carry unlimited PIP coverage. However, due to the high costs, Michigan introduced a new auto insurance law that allows drivers to choose from different PIP coverage levels based on their needs and budget. The PIP medical coverage options in Michigan include up to $500,000, $250,000, $50,000, or an unlimited amount in coverage, as well as an option to opt out for those with Medicare. This change gives drivers more flexibility and helps lower insurance premiums, making auto insurance more affordable for Michigan residents.

Personal Injury Protection (PIP) Choice

Under the new law, Michigan drivers can choose from six PIP medical coverage levels:

• Up to $500,000 in coverage
• Up to $250,000 in coverage
• Up to $250,000 in coverage with PIP medical exclusion(s) for those with non-Medicare health coverage that covers auto accident injuries
• Up to $50,000 in coverage for those enrolled in Medicaid with household members covered by another auto insurance policy, Medicaid, or health insurance
• PIP medical opt-out for those with Medicare (Parts A and B) and household members with another auto insurance policy or health insurance
• Unlimited PIP medical coverage (selected by default if no other option is chosen)

Benefits of Personal Injury Protection (PIP) Choice

The Personal Injury Protection (PIP) Choice law offers several advantages to Michigan drivers:

• Lower Costs: The law mandates insurance companies to reduce PIP medical premiums for eight years, providing more affordable options for drivers.
• Customized Coverage: Drivers can select the level of coverage that best suits their needs and budget, ensuring they are not paying for more coverage than they require.
• Consumer Protections: The law prohibits insurance companies from using factors like sex, marital status, and credit score to set insurance rates, protecting consumers from unfair practices.
• Enhanced Transparency: The Michigan Catastrophic Claims Association (MCCA) is now required to provide annual reports and audits, ensuring transparency in their operations.
• Rate Reduction: Insurance companies are mandated to reduce statewide average PIP medical premiums.
• Fee Schedule: A cost control measure between insurance companies and healthcare providers aims to make PIP medical coverage more affordable.

Considerations

While the Personal Injury Protection (PIP) Choice law offers greater flexibility and affordability, there are a few important considerations:

• Coverage Limits: Selecting a lower coverage limit may result in out-of-pocket expenses if your medical bills exceed the chosen limit.
• Exclusion Requirements: To opt out of PIP medical coverage, specific criteria must be met, including having Medicare Parts A and B and ensuring all household members have alternate insurance coverage.
• Potential Gaps in Coverage: If you exclude PIP medical coverage and later lose your qualified health coverage, you must obtain new coverage within 30 days to avoid gaps in protection.

In conclusion, the Personal Injury Protection (PIP) Choice law in Michigan offers drivers the flexibility to choose coverage levels that suit their needs and budgets. It addresses the issue of high auto insurance costs while still providing important protection for drivers and their families in the event of an accident.

PIP medical coverage options

Personal Injury Protection (PIP) is a type of first-party medical coverage that helps to cover costs associated with car accident injuries. In Michigan, you may need PIP insurance even if you have health insurance.

Since 1973, all Michigan drivers have been required to buy potentially unlimited lifetime PIP coverage. However, in 2019, legislators passed extensive reforms to the existing No-Fault law, which gave drivers the option to select different PIP coverage limits based on their insurance needs and budget.

There are six PIP medical coverage levels available to Michigan drivers. These levels represent the most a driver’s auto insurance company will pay per person, per accident, for an injured person’s expenses under PIP medical coverage. The six options are:

• Up to $500,000 in coverage
• Up to $250,000 in coverage
• Up to $250,000 in coverage with PIP medical exclusion(s) – Exclusion is available for a named insured with non-Medicare health coverage that covers auto accident injuries and/or for household members if they have health insurance that will cover auto accident injuries.
• Up to $50,000 in coverage – Available if the named insured is enrolled in Medicaid and their household members have another auto insurance policy, Medicaid, or other health insurance that will cover auto accident injuries.
• PIP medical opt-out – Available if the named insured has Medicare (Parts A and B). Any household members must have another auto insurance policy or health insurance that will cover auto accident injuries.
• Unlimited coverage – This was previously the default requirement for all drivers.

If a PIP medical option is not chosen by the insured, the unlimited PIP medical option is selected by default.

No-Fault PIP medical benefits

No-Fault Personal Injury Protection (PIP) benefits are mandatory in Michigan and cover medical expenses and lost wages for you and your passengers if you're injured in an accident, regardless of who is at fault. PIP benefits are paid by your insurance company and cover:

• Medical Bills: All reasonable and necessary medical expenses for your lifetime or up to the maximum coverage amount selected in the affected policy.
• Wage Loss: Wage loss benefits are payable at the rate of 85% of gross pay, including overtime, for up to three years after the date of the accident.
• Replacement Services: Reimbursement for expenses incurred in having others perform necessary services that the injured person would have performed, such as housekeeping, lawn work, or snow removal. The benefit is limited to $20 per day.
• Survivor's Loss Benefits: In the event of death, dependents of the decedent are entitled to survivor's loss benefits for three years, funeral and burial expenses, and replacement service expenses.

There are six PIP medical coverage levels available in Michigan, allowing drivers to choose a coverage level appropriate for their needs and budget:

• Up to $500,000 in coverage
• Up to $250,000 in coverage
• Up to $250,000 in coverage with PIP medical exclusion(s) for insured individuals with non-Medicare health coverage that covers auto accident injuries.
• Up to $50,000 in coverage for individuals enrolled in Medicaid with household members covered by another auto insurance policy, Medicaid, or health insurance.
• PIP medical opt-out for insured individuals with Medicare (Parts A and B) and household members with another auto insurance policy or health insurance.
• Unlimited PIP medical coverage (selected by default if no other option is chosen).

The cost of PIP insurance in Michigan

Michigan's new auto insurance law, which came into effect on July 1, 2020, allows drivers to choose from six PIP medical coverage levels:

• Up to $500,000 in coverage
• Up to $250,000 in coverage
• Up to $250,000 in coverage with PIP medical exclusion(s)
• Up to $50,000 in coverage
• PIP medical opt-out
• Unlimited PIP medical coverage (default option if no selection is made)

The 2019 no-fault auto insurance reform bill aimed to reduce the cost of PIP coverage in Michigan. As a result, insurance companies are required to reduce statewide average PIP medical premiums for eight years. For policies issued or renewed after July 1, 2020, insurance companies must implement the following overall statewide PIP coverage premium reductions:

• Average 45% or greater reduction per vehicle for the $50,000 PIP option
• Average 35% or greater reduction per vehicle for the $250,000 PIP option
• Average 20% or greater reduction per vehicle for the $500,000 PIP option
• Average 10% or greater reduction per vehicle for the unlimited PIP option

How to file a PIP claim

To file a PIP claim in Michigan, you should follow these steps:

• Contact your insurance company or agent as soon as possible after the accident. Ask them about their specific procedure for filing a claim, as this can vary between companies.
• Save all medical receipts and documents. Your insurance company may need these when processing your claim.
• File your PIP claim as quickly as possible after the accident. You can do this by either using your insurance company's online portal (if they have one) or by calling them directly.
• If your costs exceed your PIP limits, you may need to file a third-party claim with the at-fault driver's insurance company.

Remember that PIP won't cover certain expenses, such as property damage or pain and suffering. If you're in a serious accident, speak with your insurance agent about what your policy will and won't cover.

Frequently asked questions