THE NEW NO-FAULT SCHEME: WHAT YOU NEED TO KNOW
On July 1, 2020, Michigan’s new Auto Law will take full effect. While Michigan drivers were previously required to purchase unlimited No-Fault PIP benefits, drivers can now opt for less medical coverage in exchange for reduced premiums. Under the new law, drivers can choose from various coverage levels, including: $50,000 (if a Medicaid recipient); $250,000; $500,000; or unlimited. Further, Medicare recipients will have the option to “opt-out” of maintaining PIP coverage.
While the new law promises PIP savings for all coverage levels (45% for the $50,000 cap; 35% for the $250,000 cap; 20% for the $500,000 cap; and 10% for unlimited benefits), it is uncertain if Michigan drivers will see the substantial reductions that were promised.
In fact, some drivers have seen an increase in premiums. This could be because the only guaranteed rate reduction pertains to PIP coverage. Reductions do not apply to bodily injury or collision coverage. Further, the new law increased the minimum level of bodily injury coverage from $20,000 per person / $40,000 per occurrence to $50,000 per person / $100,000 per occurrence, forcing drivers who maintain the statutory minimum coverage to pay increased rates for the increased coverage level. Lastly, although the law prohibits insurance companies from using discriminatory non-driving factors while setting rates, insurance companies still use non-driving factors such as a driver’s “territory” to justify higher rates. Therefore, drivers must make an important decision – whether a potentially small reduction in rates is worth forfeiting unlimited, life-long medical coverage.
Although the high premiums that go along with unlimited coverage may be unappealing, the unlimited benefits are well-worth the price. For example, drivers who opt for unlimited benefits limit the potential for out-of-pocket expenses and guarantee the availability of several benefits that are not covered by health insurance – such as costs associated with rehabilitation; case management services; transportation; lifetime benefits for catastrophic injuries; and attendant care.
We have seen the devastating effects of car crashes. When you are injured in a car crash, your focus should be your recovery and not your medical bills. Thus, it is crucial to know what benefits you are sacrificing in exchange for potentially lower rates. Insurance companies are required to present clients with forms describing the benefits and risks of the new coverage options. So, consult with an insurance agent immediately if you have not chosen a coverage level.
If you were injured in a car accident and would like more information regarding your rights to recovery, please contact the experienced personal injury attorneys at Dingeman & Dancer, PLC, (231) 929-0500, 100 Park St., Traverse City, MI 49684.