Auto Reform’s Next Problem – Property Protection Insurance (PPI) - Koppinger & Associates

Due to MI No-Fault Reform, Property Protection Insurance (PPI) Coverage has been impacted on policies renewed after July 2nd.

• Under the new statute, insurers have the option of excluding personal and property protection benefits to out-of-state residents.

• PPI coverage pays up to $1M for damage your auto does in Michigan to other people’s property, such as buildings and fences.  This coverage will also pay for damage your auto does to other people’s properly parked vehicles.

• Some insurers are adding the following exclusion to the Michigan Property Protection Coverage Form (CA 22 24):
  • An Exclusion is added for “property damage” resulting from an accident involving a covered “auto” used by anyone who is not a resident of Michigan. (Paragraph B.11.)

• The exclusion applies to both personal auto policies and business auto policies.

• Not all insurers are applying the exclusion.

Here’s how the exclusion could affect you

Personal Auto Policy:
My daughter, who is a resident of Pennsylvania and does not own an auto as she lives in Philadelphia and does not have the need to, comes to visit.  While here, I give her permission to operate my personal auto, insured on a Michigan personal auto policy with the exclusionary language.  While operating my auto here in Michigan, she loses control and drives into the side of a building doing damage in excess of $150,000 to the building.  Based on the exclusionary language, I have no coverage for “property damage” resulting from an accident involving a covered “auto” used by anyone who is not a resident of Michigan.  No coverage is provided under my personal auto policy.*

Business Auto Policy:
I own and operate a large resort, camp and golf course.  Many of the summer employees of this resort are young people from all over the United States and Canada.  Few, if any, own a vehicle.  One of my non-resident employees is sent on an errand with one of the vehicles owned by the resort.  They lose control of the vehicle and drive into the side of a building causing damage in excess of $150,000.  Assuming my policy includes the exclusionary language, I have no coverage for “property damage” resulting from an accident involving a covered “auto” used by anyone who is not a resident of Michigan.*

* David Walker, MAIA, 6-17-20

What Action Should You Take?

Personal Auto Policy:

• Contact your personal auto agent to confirm your insurer has not adopted the exclusion.

Business Auto Policy:

• Koppinger & Associates, Inc. is working with our insurers to determine if any have adopted the exclusion.  Most have either not adopted it or are reviewing and determining how to remove the exclusion leaving coverage as it was prior to no-fault reform taking effect.

Contact us with any questions.

#teamkoppinger is here to guide you through these changes.