DO YOU HAVE QUESTIONS ABOUT THE NEW MICHIGAN NO-FAULT REFORM?

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On May 30, 2019, Governor Whitmer signed the no-fault auto insurance reform bill taking effect in Michigan on July 2, 2020. Whether or not you have your auto(s) insured through Walton Insurance Group, we want to share important information with you regarding the changes set to take place soon. Of those changes, one of the most important is the choice of what limit, if any, you want for Personal Injury Protection (PIP). PIP insurance, which is part of a person’s auto insurance coverage, pays for a person’s auto accident-related medical expenses and more after he or she has been injured in a car accident.

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NEW MICHIGAN.GOV WEBSITE LAUNCHED!

The Department of Insurance and Financial Services (DIFS) recently unveiled educational resources to help Michigan drivers navigate the state's new auto insurance law.
Website: www.michigan.gov/AutoInsurance
Dedicated hotline: 833-ASK-DIFS (275-3437)
Email address: [email protected] (where drivers can ask questions and file complaints related to auto insurance in Michigan).

(FAQs Last Updated: February 13, 2020)

When Does the New Law Take Effect?

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.

What is Personal Injury Protection (PIP)?

There are four components to Personal Injury Protection (PIP):

  1. Allowable Expenses (Medical, Attendant Care, Rehabilitation and Funeral)
  2. Work Loss  (limited coverage)
  3. Survivor’s Benefits (limited coverage)
  4. Replacement Services (limited coverage)

Effective July 2, 2020 there are now multiple PIP options which are only applicable to the Medical portion of Allowable Expenses:

  • Unlimited
  • $500,000
  • $250,000
  • $250,000 with PIP medical exclusions
  • $50,000 – Medicaid required on at least one named insured
  • Opt out – Medicare A&B required on at least one named insured

IMPORTANT TO NOTE

Some Allowable Expense (Medical) options require that the policyholder have Qualified Health Care coverage. Proof of this coverage is mandatory before an option requiring it can even be quoted or issued.

What are the Bodily Injury (BI) changes?

  • Michigan minimum BI Limit has increased from $20,000 per person and $40,000 per accident to $50,000 per person and $100,000 per accident.
  • Default minimum is $250,000 per person and $500,000 per accident.
  • Policyholder (you) must sign an election form to select limits lower than the default limits of $250,000/$500,000. This form must be signed at each renewal. If the signed form is not received by the insurance company, the limits will automatically default to $250,000/$500,000 (unless you already have a higher limit).
  • Carriers will not backdate any limit changes.

Will My Auto Insurance Bill Be Lower When the Law Goes Into Effect?

Because the new law will allow drivers to choose a level of medical coverage, insurance companies are required to reduce the premium for this coverage (known as PIP coverage) so that there may 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.

How Will I Know What Choices I Have and What to Choose?

The new law requires insurers to provide you a form that describes the benefits and risks of the coverage options. Many insurance companies are mailing your options to you when they send out your renewal information. Should you be set up “paperless” with an insurance company, they may be emailing your options to you. You may also want to talk with an insurance agent to discuss your personal auto insurance needs. In addition, DIFS’ website will be updated on an ongoing basis to provide the latest information to Michigan drivers as the effective dates of the new law approach. Please check www.michigan.gov/AutoInsurance for updates and educational materials.

What is the Michigan Catastrophic Claims Association (MCCA)

The Michigan Catastrophic Claims Association (MCCA), a private non-profit unincorporated association, was created by the state Legislature in 1978. The MCCA reimburses auto no-fault insurance companies for each Personal Injury Protection (PIP) medical claim paid in excess of a set amount.

  • There are now two separate MCCA charges.
    • MCCA Deficit – All vehicles will be charged the MCCA Deficit charge if the MCCA is in a deficit.
    • MCCA Unlimited – If you have Unlimited PIP, you will be charged both the MCCA Deficit and the MCCA Unlimited charge. The current charge of $220 is being lowered to $100. This reduction is for the period from July 2, 2020 through June 30, 2021. This is a 55% reduction.
    • Motorcycles will be charged with both MCCA Deficit and Unlimited.

NOTE:  This affects both personal and business auto.

NOTE:  MCCA charges will change at renewal or if you make an “odd-term change”.

What is Special Tort Liability?

What Is “Mini-Tort?” Under no-fault auto insurance, a driver can only be sued under certain circumstances, such as:

  1. If he or she causes an accident in which someone is killed or seriously injured, or
  2. If he or she is involved in an accident in Michigan with a non-resident who is an occupant of a motor vehicle not registered in Michigan, or
  3. If he or she is involved in an accident in another state where lawsuits are permitted.

The limited property damage liability, or “Mini Tort,” provision of the no-fault law creates another situation in which you can sue or be sued. Under Mini Tort if you are 50% or more at fault in an accident, and damages to the other driver’s car are not completely covered by his or her insurance, you may be sued and may have to pay up to $1,000 in damages. This also means that you may sue the other driver for damages to your car which are not covered by your insurance if the other driver is 50% or more at fault.

For example, if you have standard collision insurance with a $100 deductible and are involved in an accident for which you are less than 50% at fault, you can sue the other driver to recover your deductible.

Changes effective 07/2/2020

  • This limit is increasing from $1,000 to $3,000 for claims submitted after July 2, 2020. Note that if this is the only change taking place on a policy, there will NOT be an endorsement generated to show the new limit – but the increase will be applied if there is a claim. Renewal policies will reflect the new $3,000 limit after July 2, 2020.