As you may be aware, the Michigan Department of Insurance & Financial Services (DIFS) has overhauled the law that has been in place for 45 years requiring UNLIMITED Personal Injury Protection (PIP) as your only coverage choice.
As of July 2, 2020, you will have three other Personal Injury Protection (PIP) limits to choose from in addition to the unlimited coverage option that you currently have.
The objective of this blog is to provide you some important but basic information regarding what you should expect. All in all, the new changes are very complex and too broad to cover everything here.
WHAT YOU NEED TO KNOW!
- 90 Days prior to your renewal, you will receive a packet from your insurance carrier.
- Inside will be a Selection Form that is mandated by DIFS for you to complete and return to your carrier. This form will need to be completed 100% or it will be returned to you for re-submission.
- The packet will provide your various coverage choices and premiums for PIP and Bodily Injury (BI)
- If you do not return the form, then your coverages will automatically default to $250/$500 BI and Unlimited PIP for personal auto policies and $510,000 for commercial auto policies.
- Bodily Injury (BI) Limits: Currently, most of our clients have selected $250/$500 BI limits since the premium increase for the better coverage is minimal.
Personal Injury Protection (PIP) Limits: Currently, everyone in Michigan has what is considered the “Cadillac” of Auto Insurance policies… Unlimited PIP. As of July 2, 2020, you will have a choice to reduce this to:
- $50,000
- $250,000
- $500,000
- Or remain with Unlimited
One thing to consider is that the Michigan Catastrophic Claims Association fees (Or MCAA Fees as listed on your policy), will be decreasing approximately $120/car! Consider the MCAA fee as a state tax added on to the premium the company charges you. So even if you make no changes to your current policy you will be receiving a pretty nice premium discount. This may entice you to consider keeping the ‘Cadillac Unlimited PIP’ coverage.
In the event you select your BI coverage to be changed, make sure to call John Scott Insurance so that we can ensure there is NO gap between your Un/Underinsured coverage and your BI limits. This will NOT be adjusted during the companies’ renewal process.
- Also, this law will change the order of priority for No-Fault Claims. The order of priority for No-Fault claims will be:
- Insurer of the Named Insured, then…
- Insurer of the spouse or resident relative domiciled in the same household, then…
- MACP ($250,000 benefit limit)
The law eliminates the owner, registrant and driver of the accident-involved vehicle from the order of priority for both occupants and non-occupants. Coverage is NO LONGER extended to:
- Non-relatives of the Named Insured who live in the household.
- Relatives who do not reside in the household, even if listed as drivers.
- Out of state residents are no longer entitled to PIP benefits for injuries sustained in a Michigan motor vehicle accident unless the out-of-state resident has a vehicle both registered and insured in Michigan.
III. The need for an Umbrella Liability Policy will now become even more important since the changes to Tort Liability have increased your exposure. If you select to forgo the Unlimited PIP option, your exposure for medical, wage and survivor loss benefits will be increased. Damages may now be assessed to each party based on their percentage of fault.
- IV. Qualified Health Coverage-Exclusions-Medicare
Qualified health coverage is considered a health insurance plan that will pay (without limiting or excluding coverage) for injuries related to motor vehicle accidents and has an annual individual deductible of $6,000 or less. It also includes Medicare parts A and B. Opt out choices are also available.
Again, we hope that this information is helpful. If you would like further assistance or have questions please don’t hesitate to contact our office at 269-782-2123 and any of our Protection Leaders will be more than happy to help you.