Auto Insurance Reform Comes to Michigan

This month, Michigan drivers, who have paid the highest auto insurance rates in the country, will be able to cut their auto insurance costs. On May 30, 2019, Governor Gretchen Whitmer signed bipartisan no-fault auto insurance reform legislation to provide insurance coverage options, lower rates for Michigan drivers, and strengthen consumer protections. On July 2, 2020, many changes to the state's no-fault auto insurance law took effect.

The new law allows drivers to choose the amount of medical coverage they must buy when their policy is issued or renewed after July 1. This is called personal injury protection, or PIP, and pays for medical care, recovery, and rehabilitation. Drivers can also choose different levels of bodily injury and property damage (BI/PD) coverage. These choices will affect your premium.

There will be six options for PIP coverage under the new law: unlimited coverage; up to $500,000 in coverage; up to $250,000 in coverage; up to $250,000 for those with qualified non-Medicare health insurance; a PIP medical opt-out for those with Medicare Part A and Part B; and up to $50,000 coverage for those on Medicaid. Drivers who choose the lowest option of coverage, $0, will see the largest savings on insurance rates but will also be relying completely on their own health insurance coverage to cover auto accident injuries. If you have health coverage through your employer, plan to discuss your options with your employer or HR manager.

The minimum bodily injury coverage will be $50,000 per person injured or killed, and $100,000 if several people are injured or killed. Drivers must specifically request this minimum amount with their insurer if this is the coverage they want. Otherwise, the new default option for bodily injury will be $250,000 per person and $500,000 if several people are injured or killed, driving your auto insurance premium up.

Drivers are strongly encourage to speak with their insurance representative or financial advisor before choosing policy options, to ensure what they choose is both necessary and within their budget.

The new insurance reform includes consumer protections including elimination of certain non-driving factors previously used in setting auto insurance rates. This means insurers can no longer use your marital status, sex, credit score, home ownership, education level, occupation, or zip code in setting your auto insurance rates. A new fraud investigation unit will now look into criminal and fraudulent activity related to the insurance and financial markets. This investigation unit will work with the Attorney

General and law enforcement to prosecute these crimes as auto insurance fraud drives up premiums for all drivers. In addition, auto insurance rates and polices must now be filed with and approved by the Department of Insurance and Financial Services (DIFS) before being offered to consumers. The new law allows for increased fines on insurance companies, agencies, and licensed agents for certain violations of the law. To find out more about how to navigate the insurance reform, go to http://www.michigan.gov/autoinsurance/ where you can find a link for consumer guides at the top of the main page which also lists upcoming virtual town halls and recordings of previous town halls. Under the heading Michigan's New Auto Insurance Law, you will find tabs which will explain the new law and changes, how to select coverage, and auto insurance shopping tips.