Michigan Auto Reform: Changes Coming, Are You Ready?

How long will these auto reform changes be?

Michigan’s PIP Reform is on an 8-year freeze (starting July 2020-2028) with a no prior auto insurance freeze until January 1st, 2022.

Quick answer!

If you currently carry liability limits of a minimum of $250,000/$500,000 along with full PIP (Personal Injury Protection), do not change anything with your auto insurance policy! We also recommend adding an Umbrella policy to better protect your family, yourself, and your assets.

Claims will also have a higher impact with rates between insurance companies so make sure you consult with your independent agent before you file a claim. Do not want to get dinged by roadside assistance claims? Ask your independent agent about a AAA membership and avoid having your auto rates go up!

Additional resource for customers:

www.michigan.gov/AutoInsurance

5 major auto insurance changes with Michigan’s PIP reform:

1. State minimum liability limits are raising from 20/40 to 50/100
2. Rating factors that are being excluded:
   • Gender
   • Marital Status
   • Credit Score
   • Home Ownership
   • Education
   • Occupation
   • Zip code (will allow only territories: grouped zip codes)
3. Mini-Tort is raising from $1,000 to $3,000
4. No prior freeze! Insurance companies can NOT rate, cancel, raise premium, or charge a fee solely based on a person’s failure to maintain insurance before January 1st, 2022.
5. PIP AE (Allowable-Expenses) Options: 5 different options (see below)

PIP medical options:

• Unlimited: Don’t change my medical options, leave my policy the way it was! Those that choose this option will be charged the MCCA fee (reduced to $100 annually per vehicle instead of $200+) and can expect to see close to a 10% reduction in PIP
• $500,000 AE (allowable expense). Do NOT need QHC (Qualified Health Coverage) to choose this option. No MCCA fee and can expect to see close to a 20% reduction in PIP
• $250,000 AE (allowable expense). Do NOT need QHC (Qualified Health Coverage) to choose this option. No MCCA fee and can expect to see close to a 35% reduction in PIP
• $250,000 W/Driver Exclusion: AE (allowable expense). No MCCA fee. Can exclude drivers in your household from PIP coverage if, they have QHC
• $50,000 AE, Only available to insureds enrolled in Medicaid. Spouse/resident relatives in the household must also be enrolled in Medicaid, Medicare Parts A and B, have other PIP AE coverage or have QHC. No MCCA fee and can expect to see close to a 45% reduction in PIP
• Medicare Opt-Out: ONLY available to insureds who are enrolled in Medicare Parts A and B. Spouse/resident relatives in the household must also be enrolled in Medicare, have other PIP AE coverage, or have QHC. No MCCA fee and can expect to see a 100% reduction in PIP

*Deductible for QHC can NOT exceed $6,000 per person.

Attendant care rider

Provides up to $5,000 in additional attendant care per individual, per accident for in-home care. It is limited to 56 hours per week.

Not offered with:

• Unlimited PIP AE
• $250K PIP AE Exclusion
• PIP AE Opt-out

Miscellaneous things to know about auto reform

There are a couple of other miscellaneous things you will want to be mindful of:

• Relatives must be Michigan residents to claim PIP under the Named Insureds policy.
• If you fail to maintain bodily injury limits of 250/500+ and do not sign EVERY renewal that you are requesting lower liability limits your policy WILL renew at the 250/500 limits.

Next steps Michiganders can take

Steps you can take to make a smooth transition:

• Keep an eye out for an email from your insurance provider that will explain the reform and will request you to sign off on choosing liability limits
• Call your independent agent if you have any questions
• Make sure your agency has the correct email and cell phone numbers on file
• Be prepared to e-sign with each carrier (it’s coming!)
• Try to get/keep an annual policy
• Get a AAA membership for roadside and towing service to avoid auto claims
• Get an Umbrella to better protect your assets

Order of priority:

Order of priority is going to be part of the largest change that the state of Michigan is creating with the new PIP Reform law. Here is what you need to know:

Drivers or occupants of private passenger automobiles, as well as pedestrians, are no longer provided Personal Injury Protection (PIP) coverage through an existing Michigan Auto policy unless they are one of the following:

• The person is named on the policy
• The spouse of the person named in the policy
• A relative of either the person named in the policy or the spouse of the person named in the policy, who is domiciled in the same household (resident relative).

What if you are not one of these?

Look to the Michigan Assigned Claims Plan (MACP) for payment of PIP Benefits. Commonly the MACP will cover up to $250,000 for anyone qualified, although, it does not extend outside of Michigan.

In certain situations, Non-Michigan residents are precluded from filing MACP