Michigan No Fault Insurance Reform 2020: Everything You Need to Know

If you are an auto owner in Michigan, you better know what just happened that affects your insurance. As of July 1, 2020, the State reformed how claims are covered under it’s no fault system. So, how does the 2020 Michigan no fault insurance reform affect your auto insurance?

Learn everything you need to know about the new Michigan no fault insurance reform. Find out how the reform changes your auto policy. And, see if the new reform is beneficial or detrimental to your insurance plan.

The Auto-Owners Guide to the 2020 Michigan No Fault Insurance Reform

The Michigan no fault insurance reform bill passed into law on May 30th, 2019, by the Governor of Michigan, Gretchen Whitmer. The reform intends to lower the average monthly rate for drivers in the State. It also serves to increase competition amongst Michigan auto insurers while providing stronger protections for consumers and insurers, alike.

Previously, under Michigan’s law, auto insurance providers were required to provide unlimited medical coverage on all insurance plans. The purpose is to ensure total coverage of your medical expenses in the event of an accident. The result, however, has been Michigan auto insurance prices consistently averaging higher than the rest of the Nation. 

The reform, which took effect on July 1, 2020, allows consumers to choose a level of coverage, instead of paying the mandatory maximum coverage rate. This means, if you opt for less coverage, you might be on the hook for more medical expenses in the event of a car accident. So, ultimately, the reform allows drivers to carry more inexpensive policies if they are willing to assume more financial risk.

How Does the Reform Affect Current Policy Payouts and Monthly Dues?

The Michigan no fault insurance reform affects claims made after July 1, 2020. Any benefit payout that existed before July 1, 2020, remains unchanged by the reform. If your benefits are based on a claim process that was approved by July 1, your benefits will not be changed. 

If like most drivers, you hold a policy with unlimited medical coverage, your Michigan insurance company is required to give you options. The reform bill requires your insurer to lower the existing premiums on all auto policies Personal Injury Protection (PIP) coverage options. 

What Should You Expect From Your Insurance Company?

Since your policy is in reform, your insurance company has to provide documentation describing the benefits and risks of the available coverage options. There are several choices for medical coverage under Michigan’s July 1, 2020, no fault reform:

New Medical PIP Coverage Options for Auto Insurance in Michigan

Customers can choose to continue paying for unlimited PIP medical coverage. If you don’t tell your insurance company any different, you will continue to receive unlimited medical coverage, by default. To switch your policies coverage limit, contact your insurance company and ask about your available medical PIP coverage options.

The first option is limited coverage, which is available in two increments. You can opt for limited coverage of $500,000 or $250,000. This dollar figure represents the limit of coverage your insurance policy pays for each person’s medical expenses, per accident. 

You can opt for limited coverage of $250,000, which excludes some or all other individuals from the PIP. This is a helpful option if you are on Medicaid and your resident relative or spouse has coverage under a separate health insurance policy. This option lowers your policy cost, but it also limits your financial protection in the event of a medical emergency caused by an accident. 

You can opt for limited coverage of $50,000 if you meet certain stipulations. The policyholder must be enrolled in Medicaid, as well as their spouse and resident relatives, like children. Or, the policyholder’s spouse and children must be covered under a different policy that provides medical PIP coverage. 

The only way that you can refrain from paying for medical coverage, all-together, is if the primary policyholder is enrolled in Medicare parts A or B. Spouses and any resident relative must also be enrolled in Medicare, or have another form of qualifying health coverage. This is risky, however, because the whole of the medical costs is upon your shoulders in the event of an accident. 

Should You Change Your Auto Policy?

As of July 1, 2020, you no longer have to pay for an overweight auto policy in Michigan. If you haven’t yet, explore your new options under the Michigan no fault insurance reform. And, contact an insurance specialist to see if the new reform means that you can save on your monthly auto insurance cost.