While we don’t deal with insuring vehicles and property at MKD, we’ve been scratching our heads trying to understand all the new regulations that came out around auto insurance in Michigan. The changes are significant, so we asked our friends over at Baker-Hopp & Associates to break it down for us, and here’s what Gretchen Hopp Doyle, their president, put together.
It helped answer a lot of questions for us, and there are a few things here that we think would definitely be relevant to you.
Here are some quick recommendations, but read on to understand better for your situations:
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- Maintain at least $250,000/$500,000 liability coverage.
- Maintain or select unlimited PIP coverage.
- Increase or purchase umbrella insurance.
Things you need to know about the Michigan No-Fault auto insurance reform before your annual renewal
Many consumers (and even insurance professionals) have found the new legislation confusing and much of the application of the law is being figured out as the year unfolds. Below is a summary of information you may find helpful as you consider your options:
Adjustments enacted in June of 2019:
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- Listed drivers on a policy, but not listed as a named insured, cannot make a claim for PIP benefits (medical benefits) under the auto policy they are listed on. They would have to make a claim through the Michigan Assigned Claims Plan. The only way for unrelated, unmarried adults to be covered under the same policy would be for both of them to be listed as named insureds on the policy.
- Drivers of a vehicle that do not live in the household generally cannot make a claim for PIP benefits (medical benefits) under that policy. These drivers would need to be the named insured on their own policy to make a claim. Students away at school are not subject to this change until they move out of the home.
- Out of state drivers can no longer collect PIP benefits (medical benefits) unless they have a vehicle that is registered and insured with a policy in their name in Michigan.
Changes implemented July 1, 2020:
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- In the state of Michigan, if you are found 51% at fault in an accident, the other party can collect money for the damages you caused to their vehicle or the deductible they had to pay. The limit the state allows someone to collect will increase from $1000 – $3000.
- Fault can be determined by a police report, a court of law, or obvious circumstances.
- Minimum limits of liability for Bodily Injury coverage will increase to $50,000 per person and $100,000 per accident. Currently limits are $20,000 per person and $40,000 minimum per accident. Also, unless you choose otherwise and sign the required form, the default limits of liability for Bodily Injury coverage will increase to$250,000 per person and $500,000 per accident.
- Under the new Michigan No-Fault law, a person injured in a car accident can sue for excess medical costs and economic expenses.
- Discounts for PIP (medical benefits) options ONLY affect the cost of the PIP limit. It is NOT a discount off the entire policy. The following are the options and discounts associated:
| Coverage Option | Estimated Savings to PIP (Medical Premium) |
| Unlimited PIP coverage | 10% discount |
| $500,000 PIP coverage limit | 20% discount |
| $250,000 PIP coverage limit | 30% discount |
| $ 50,000 PIP coverage limit (only available with Medicaid) | 40% discount |
| Reject all PIP coverage (only available with Medicare) | 100% discount |
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- When choosing any optional PIP (medical benefits) or bodily injury limits, a state required form must be completed and new signed forms are required at every renewal thereafter or coverage will default back to unlimited PIP (medical benefits) and $250,000/$ 500,000 bodily injury coverage.
Important considerations regarding choosing any option other than unlimited PIP (medical) coverage:
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- Coverage from the Michigan Catastrophic Claims Association only provides coverage to people that continue to carry unlimited
- Health insurance companies can still exclude injuries due to accidents so it is important to know how they would handle auto injury claims and if there is coverage, you will be subject to their deductibles, co-pays and policy limits.
Recommendation for high net worth individuals NOT to reduce liability limits:
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- One important change that you may notice on your policy documents is related to bodily injury The new law requires insurance companies to automatically increase the Bodily Injury coverage to $250,000 per person and $500,000 per accident (if you carry combined single limit liability, it will automatically increase to a limit of $510,000).
- Please note that if you are currently insured with a higher limit than the $250,000/$500,000, nothing will change on your policy and it will renew with the same coverage you currently have.
- You will also have the option to choose a lower However, to do so, you will be required to complete and sign a form with your selection at every renewal. The minimum amount of coverage you can now carry in the state of Michigan has increased to $50,000 per person and $100,000 per accident from the current $20,000 per person and $40,000 per accident.
Recommendation for high net worth individuals purchase or increase personal umbrella liability limits and why:
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- Under the new Michigan No-Fault law, a person injured in a car accident can sue for excess medical costs and economic With this new exposure, purchasing a personal umbrella policy or increasing your current umbrella policy limits is recommended and can become even more significant protection in providing the coverage you need at the time of an accident.
- Under the new law, anyone who is injured in an auto accident in Michigan will be able to sue for medical payment and lost wages. Prior to the No Fault Reform changes, injured parties were only allowed to sue for pain and suffering because medical bills and lost wages were covered under the automobile insurance policy.
- As a result, the anticipated awards on future lawsuits will most likely be much higher than they would have been for the same accident before No Fault reform. Your automobile liability limit could be exceeded quickly and any award above the insurance limit would become your personal responsibility.
- One way to protect yourself from this financial burden is a Personal Umbrella policy. Umbrella policies provide an added layer of liability coverage if there’s ever a time when your home or auto insurance just isn’t enough. Once your automobile or homeowner policy liability limit has been reached, your umbrella policy would “step in” and provide additional funds for the judgement awarded up to the limit you selected.
- Personal umbrella insurance begins at $1,000,000 in coverage and the premium is extremely affordable. Umbrella policies do not only provide coverage for home and auto claims, they also can work the same way for your other underlying policies such as boats or recreational vehicles.
Summary of Recommendations:
- Maintain at least $250,000/$500,000 liability coverage.
- Maintain or select unlimited PIP coverage.
- Increase or purchase umbrella insurance.
DISCLAIMER: The information herein was obtained from Baker-Hopp & Associates. MKD Wealth Coaches does not guarantee the accuracy or completeness of such information provided by third parties. The contents of this article are intended to be informational and not be construed as investment advice.