Auto Insurance Reform: Michigan's New Law Explained

On July 2, 2020, Michigan's new auto insurance law came into effect, giving drivers more options for personal injury protection (PIP) coverage. This law, also known as the No-Fault Reform, allows drivers to select from six PIP coverage options that best suit their needs and budget. Previously, Michigan drivers were required to carry unlimited medical coverage, resulting in higher premiums and limited choices. The reform also includes changes to attendant care limits, a fee schedule, and increased bodily injury liability coverage. It is important for drivers to understand these changes to make informed decisions about their coverage and protect their legal rights.

Personal Injury Protection (PIP) coverage options

On June 11, 2019, Michigan's auto insurance reform law came into effect, bringing about significant changes to the state's No-Fault law that impacts all drivers and car accident victims. One of the most notable changes is the introduction of Personal Injury Protection (PIP) coverage options, offering Michigan drivers more choices and lower-cost insurance options.

Personal Injury Protection (PIP), also known as no-fault insurance, is a critical component of automobile insurance. It covers medical expenses and related costs resulting from an accident, regardless of who is at fault. PIP coverage protects the policyholder, their passengers, pedestrians, and even cyclists in the event of an accident. PIP is mandatory in some states, including Michigan, and optional or unavailable in others.

With the new auto insurance law in Michigan, drivers now have four No-Fault PIP medical benefits coverage levels to choose from:

• $50,000 for drivers enrolled in Medicaid
• $250,000
• $500,000
• Unlimited or no limit

These coverage levels became available in policies issued or renewed after July 1, 2020. It is important to note that drivers who have Medicare can opt out of No-Fault PIP medical coverage entirely, but they will not be covered for any accident-related medical bills.

When selecting a PIP coverage option, it is essential to consider your health insurance, health insurance deductible, and whether you have life insurance. Additionally, think about the potential for lost wages if you are unable to work due to injuries sustained in an accident.

Other Important Changes to Michigan's No-Fault Law:

In addition to the PIP coverage options, the Michigan auto insurance reform law introduced several other significant changes:

• Bodily injury liability coverage requirements: Starting on July 2, 2020, drivers are required to carry bodily injury liability insurance with minimum coverage of $250,000 per person and $500,000 per accident.
• Attendant care limits: Auto insurance companies are not obligated to pay for more than 56 hours per week for in-home, family-provided attendant care after July 1, 2021.
• Michigan Catastrophic Claims Association (MCCA) changes: The MCCA will only cover catastrophic medical expenses for policies with "unlimited" No-Fault PIP medical benefits selected, issued, or renewed after July 1, 2020.
• Medicare-based fee schedule: Starting July 1, 2021, medical providers must conform their charges for services to a new Medicare-based fee schedule.
• "Excess" medical expenses: Car accident victims can sue the at-fault driver for payment of present and future "excess" medical bills that exceed their No-Fault PIP medical benefits coverage.
• Michigan Assigned Claims Plan: There is a cap of $250,000 on medical benefits for car accident victims claiming benefits through this plan.
• Mini tort: The maximum recovery amount for vehicle damage under Michigan's mini tort law has increased from $1,000 to $3,000 for accidents after July 1, 2020.

No-Fault PIP medical benefits

Michigan's new auto insurance law, which came into effect on June 11, 2019, offers drivers new choices and lower-cost insurance options. The No-Fault PIP medical benefits are a key part of this reform.

Personal Injury Protection (PIP) benefits, also known as personal protection insurance, are guaranteed to car accident victims under the No-Fault law. These benefits are payable regardless of whether the victim was at fault and are paid by the victim's auto insurance company. PIP benefits cover medical bills and lost wages resulting from a car accident.

Prior to the reforms, all policies provided unlimited medical coverage. However, for policies issued or renewed after July 1, 2020, drivers can choose from several coverage level options:

• A $50,000 limit on accident-related medical expenses for drivers enrolled in Medicaid.
• A $250,000 limit on accident-related medical expenses.
• A $500,000 limit on accident-related medical expenses.
• Unlimited or no dollar-amount limit on accident-related medical expenses.
• Drivers on Medicare can opt out of No-Fault PIP medical benefits altogether.

The extent of personal injury protection benefits will depend on the No-Fault medical benefits coverage level selected in the auto insurance policy. It is important to note that the cost of PIP in Michigan depends on various factors, including the level of medical coverage chosen, driving history, age, and income.

Other No-Fault PIP Benefits

In addition to medical expenses, PIP benefits also cover transportation costs for travelling to and from medical appointments. Wage loss benefits are available for up to three years from the date of the accident and are subject to a monthly maximum. PIP benefits also provide reimbursement for replacement services, such as housekeeping, laundry, and lawn maintenance, for up to $20 per day during the first year after the accident.

Attendant care is another component of PIP benefits, covering the cost of assistance with activities of daily living that the victim can no longer perform independently due to their injuries. After July 1, 2021, auto insurance companies will not be obligated to pay for more than 56 hours per week of in-home, family-provided attendant care.

Bodily injury liability coverage

Michigan's auto insurance reform law, which came into effect on June 11, 2019, has brought about significant changes to the state's No-Fault law, impacting every driver and car accident victim. One of the key changes in the reform relates to Bodily Injury Liability Coverage.

The coverage includes emergency care services, ongoing care costs, and legal fees if the injured party decides to take legal action. Additionally, it can help cover lost wages if the injured person is unable to work due to their injuries. In the unfortunate event of a fatality, BI coverage can also assist with funeral costs.

In Michigan, drivers are now required to carry bodily injury liability insurance with minimum coverage of $250,000 per person and $500,000 per accident. However, drivers have the option to purchase lower limits of $50,000 per person and $100,000 per accident. These limits are crucial as they represent the maximum amounts that insurance companies will pay in the event of a claim.

It is worth noting that most states have minimum requirements for Bodily Injury Liability Coverage, and it is a legal requirement in most states. When choosing an insurance policy, it is essential to review the coverage limits and ensure they align with your state's requirements and your personal needs.

The changes to Michigan's auto insurance law have provided new choices and lower-cost insurance options for drivers. These reforms aim to lower costs for Michigan drivers while maintaining comprehensive coverage options and strengthening consumer protections.

Mini tort law change

On June 11, 2019, Gov. Gretchen Whitmer enacted a significant new Michigan mini tort law change when she signed Michigan’s new No-Fault insurance law. The mini tort allows a person whose car has been damaged by another vehicle to collect a portion of that vehicle damage back from the insurance company of the at-fault person who hit them. Mini tort recoveries are typically used either to pay for vehicle damage repair costs or to pay for drivers’ collision coverage deductibles.

The 2019 Version of the Michigan Mini Tort Law

Under the current Michigan mini tort law, a car accident victim can use the mini tort to recover “[d]amages up to $1,000.00 to a motor vehicle . .. ." from the at-fault driver who caused the accident. (MCL 500.3135(3)(e))

Michigan Mini Tort Law Changes

With Michigan’s new No-Fault law came a significant new change to the Michigan mini tort law. The new maximum dollar amount for a mini tort recovery will be increasing from $1,000 to $3,000.

The increase in the mini tort’s maximum recovery limit from $1,000 to $3,000 takes effect on July 2, 2020. The increase applies to all car accidents that result in vehicle damage that happen after July 1, 2020.

Aside from the increased recovery amount – and its effective date – which were brought about by the new No-Fault law, there are other elements to a mini tort claim that people should know about when they’re trying to get their vehicle damage repair costs paid after a crash.

Mini Tort Claim Requirements

Importantly, none of these Michigan mini tort law requirements were changed by the new No-Fault law:

• The person seeking to use the mini tort to recover damages to pay for vehicle damage repair costs must prove that the other driver (or another driver) was at-fault in causing the accident that resulted in damage to the person’s vehicle. (MCL 500.3135(3)(e))
• The mini tort recovery only applies “to the extent that the damages are not covered by insurance.” (MCL 500.3135(3)(e)) That means that if a person’s vehicle damage was fully covered by his or her collision coverage and if his or her deductible was waived, then no mini tort claim can be filed. On the other hand, if the damage wasn’t covered by collision coverage and/or the deductible wasn’t waived, then the person whose vehicle was damaged can file a mini tort claim.
• Mini tort damages are assessed on a “comparative fault” basis which means that a person’s mini tort recovery will be reduced by the extent to which he or she was at-fault in causing the accident that resulted in damage to his or her vehicle. For instance, if a person was 100% not at-fault, then there would be no reduction in his or her mini tort recovery. If a person was 25% at-fault, then 25% is the amount by which his or her recovery would be reduced. Significantly, if the person whose vehicle was damaged (i.e., the person who is seeking to file a mini tort claim) was “more than 50% at fault,” then he or she is barred from recovering under the mini tort. (MCL 500.3135(4)(a))
• Uninsured drivers cannot recover under the mini tort. (MCL 500.3135(4)(e)) However, if it is the at-fault driver who was uninsured at the time of the crash, then the person seeking a mini tort recovery is not restricted by the mini tort recovery limit and, thus, can sue for the full value of the vehicle damage as well as other costs such as car rentals and loss of use of the vehicle.

Consumer protections

On May 30, 2019, Governor Whitmer signed historic bipartisan no-fault auto insurance reform legislation to provide lower rates for Michigan drivers, protect insurance coverage options, and strengthen consumer protections. The new auto insurance law in Michigan offers drivers new choices and lower-cost insurance options. The legislation creates a better no-fault system for drivers, lowering costs for Michigan drivers, maintaining the highest coverage options in the country, and strengthening consumer protections.

The Michigan No-Fault Reform has brought about significant changes to Michigan's No-Fault law, affecting every driver and car accident victim in the state. The changes include:

• PIP Choice: Drivers now have a choice of four No-Fault PIP medical benefits coverage levels, ranging from $50,000 for those enrolled in Medicaid to unlimited coverage.
• Opt-out of No-Fault medical coverage: Drivers with Medicare can choose to opt out of No-Fault PIP medical benefits, but No-Fault will not cover any accident-related medical bills.
• Attendant care limits: Auto insurance companies are not obligated to pay for more than 56 hours per week for in-home, family-provided attendant care.
• Michigan Catastrophic Claims Association: The MCCA will continue to pay for the medical costs of catastrophically injured car accident victims with policies issued or renewed before July 2, 2020. For policies issued or renewed after that date, the MCCA will only pay for unlimited coverage.
• Medicare-based fee schedule: Doctors, hospitals, and other medical providers must conform their charges for services to a new Medicare-based fee schedule.
• "Excess" medical expenses: Car accident victims whose medical bills exceed their No-Fault PIP medical benefits coverage can sue the at-fault driver for payment of present and future "excess" medical bills.
• Michigan Assigned Claims Plan: Car accident victims claiming Michigan No-Fault insurance benefits through the Michigan Assigned Claim Plan will be subject to a $250,000 cap on medical benefits.
• Bodily injury liability coverage: Drivers are required to carry bodily injury liability insurance, with the option to purchase lower limits.
• Mini tort: The maximum recovery amount for car accident-related vehicle damage under Michigan's mini tort law has increased from $1,000 to $3,000 for accidents after July 1, 2020.

It is important for drivers and car accident victims to understand how these reforms may have changed their legal rights and their ability to recover No-Fault PIP benefits after a car crash.

Frequently asked questions