As we have previously communicated, the new No-Fault Reform laws were signed into law June 11, 2019. The Michigan Department of Insurance and the insurance companies are continuing to try to interpret the law and many of the details are still being sorted out. As your agency we are keeping apprised of the developments and will attempt to keep you updated as we know more. The following information is what we believe to be true as it stands today.
Changes in Effect Already
Personal Injury Protection (PIP) Coverage has historically provided unlimited medical benefits for covered individuals if injured in an auto accident. When the law was signed on June 11, 2019, who your PIP covers changed. The new law states that only Named Insureds and resident relatives are covered under your auto policy’s PIP coverage. Which removes coverage for these people who were previously covered:
- Children who no longer call your home their residence. Adult children who have moved out of the house but are still insured on your policy are not considered a “resident” relative. Therefore, they will not be afforded PIP coverage on your auto policy. It is our understanding that coverage is not removed for those children who are temporarily out of the household to attend college unless they have changed their address on their driver’s license.
- Partners of people who live together but are no married will not be afforded PIP coverage under your auto policy unless both partners are listed as named insureds.
If either of these situations apply, please call our office as soon as possible to make sure coverage is adjusted. These individuals who are no longer covered under your auto policy’s PIP coverage will no be afforded unlimited medical benefits. If injured in an accident they would have to file a claim with the Michigan Assigned Claim Plan (MACP). Benefits through the MACP are capped at $250,000. Each insurance company has filed these changes with the state and are awaiting approval. Some carriers that we work with such as Citizens and Fremont have had their filing’s approved and your coverage is changing as your policy renews this year. This list of carriers with approved changes is changing daily.
These PIP changes will lead to many people no longer having unlimited benefits. The new No-Fault Reform law also has changed in that you can now sue the negligent party for unpaid medical bills which previously was not allowed under the old law. This means everyone has an increased exposure of being sued if involved in an auto accident. This increased exposure has gone into place already. We recommend that you call our office and review your liability limits. We recommend that you should have a minimum of $250,000 per person and $500,000 per accident Bodily Injury Liability Limits. We also recommend most homeowners carry at least a $1 Million Personal Umbrella Liability policy for extra liability protection. Incidentally, the state required minimum will increase to $250,000/$500,000 effective 7/2/2020.
Changes July 2, 2020
These are the more publicized changes. Starting with renewals July 2, 2020, you will be able to select your PIP limit of $250,000, $500,000 or retain your unlimited benefits. You may also opt out of PIP coverage completely if you have a health insurance policy that will cover injuries from automobile accidents. Upon renewal you will be provided a form to make your choices.
These are very important choices and choices that should not be taken lightly they can be life changing decisions. Those that will be considering electing to reduce their unlimited PIP benefits could be severally impacted if they are involved in a serious accident.
Those that are considering opting out and relying on their health insurance should understand that not all health insurance policies cover injuries from auto accidents and secondly PIP coverage includes these following benefits that your health insurance does not:
- Wage Loss Benefits
- Attendant Care (assistance with activities of daily living)
- Replacement Services (household activities you can no longer perform)
- Survivor Benefits
Attendant Care and Replacement Services can add up to hundreds of thousands of dollars if you have permanent injuries.
Our recommendation is going to be for almost everyone that they keep their unlimited PIP benefits. The small savings that will be afforded by taking a lower benefit is not worth the increased risk and exposure of being financially devastated.
The good news is that the Michigan Catastrophic Claim Association (MCCA) recently announced that the per vehicle surcharge will be reduced from $220 to $100 per vehicle annually. This is where we see the most savings with the new law. Any other savings will be at the expense of a reduction of important benefits or shifting of PIP savings to an increase in Bodily Injury Liability premiums.
We hope you find this information educational. We will continue to keep you informed as we learn more.
Please contact our office if you think you may have had a change in exposure as outlined above.