December 23 2019
Categories: P&C Solutions
December 23 2019
Categories: P&C Solutions
Change is coming to auto insurance in Michigan, home of the highest rates in the nation. We promised not to bore you with a bunch of facts and terminology in our blog posts, but this change is historic for the state of Michigan. It is so significant and important that we want you to have all the necessary information to make an informed decision. What does the no-fault auto reform bill mean to Michigan drivers? Let’s first look at the facts regarding the law and how it will bring financial relief to residents.
PIP pays allowable expenses for medical care, recovery, rehabilitation, wage loss, and replacement services. PIP coverage also includes some funeral expense benefits and survivor’s benefits which are paid to the dependents of a covered person if injuries from an auto accident result in their death. The law currently requires you to carry unlimited medical coverage to pay for your expenses if you are injured in an auto accident. The new law allows you to choose from six levels of medical coverage:
It is important to note that qualified health coverage means either of the following:
Medicaid and health sharing ministries are examples of coverages that are NOT considered qualified health coverage.
Resident relative means a relative of either you or your spouse who lives in the same household.
Selections will require certification and should be made carefully because the choice you make will have financial consequences.
Insurance carriers will no longer be allowed to use non-driving factors when calculating premiums such a gender, marital status, zip code, home ownership or occupation. Insurers are still permitted to use some form of “territory” in setting rates to account for higher geographic costs. A driver’s credit score will no longer be able to be used as a rating factor, however credit reports, which contain the data the credit bureau uses to determine credit scores, will be able to be used.
Beginning July 1, 2021, there will be a fee schedule which regulates what medical providers can charge based on the procedure they perform, similar to workers’ compensation and Medicare. This means that limited PIP benefits will go farther, but only after the law has been in effect for a year.
Wow! That is a lot of information to digest! Now that we have looked at the facts, let’s see how this will affect you.
The law currently requires you to carry unlimited medical coverage to pay for your expenses if you are injured in an auto accident. The new law allows you to choose a level of medical coverage when your policy renews after July 1, 2020. If you are already receiving payments from your auto policy due to injuries from an auto accident, you will continue to receive the current unlimited benefit regardless of the choice you make for the future. This is also true if you are injured in an accident between now and July 1, 2020.
Because the law will allow drivers to choose a level of medical coverage, insurance companies are required to reduce the premium for PIP coverage so that there will be an average reduction per vehicle based on the level of coverage chosen. Your premium and savings will depend on the PIP option you select and other coverages you choose. The law will require insurance carriers to implement the required rate savings on PIP for at least eight years.
The new law requires that agents and insurers give you a form that describes the benefits and risks of the coverage options. It would be wise to talk with an insurance advisor to discuss your auto insurance needs.
The choice made regarding PIP medical coverage options is a personal choice and should be made after careful consideration of the risks and benefits of each.
No Coverage (including anyone you exclude):
Now that you have all the information pertinent to the new law and understand how the law will affect you, consider these staggering claim statistics from the Michigan Catastrophic Claims Association when making your choice.
Catastrophic claims involve injury to the brain, and/or spinal cord which results in serious and permanent disability, e.g., paralysis, coma, and reasoning ability.
|MCCA Claim Statistics from 7-1-1978 to 6-30-2018|
|Total Payments Made:||$16,528,990,541.00|