Michigan auto insurance reform information

Michigan Auto Insurance Reform

May 25, the Michigan House and Senate pass the compromise to change Michigan’s no-fault auto insurance system. On May 30, 2019, Governor Whitmer signed a bipartisan no-fault auto insurance reform bill to provide lower rates for Michigan drivers, protect insurance coverage options, and strengthen consumer protections. These new laws will update the Michigan no-fault, which began in 1973 to cut down on all the auto lawsuits.  The Michigan auto reform Bill will go into effect on July 1, 2020.

What are the changes on the Michigan auto insurance reform bill

  • Introduces provisions for personal injury protection option: 
  • Creates a new Michigan fraud authority that’s part of the DIFS
  • Medical services will have a fee schedule based on 190% – 250% of what Medicare pays.
  • Creates Transparency of the Michigan Catastrophic Claims Association.
  • Places limits on the use of sex, marital status, ZIP codes, credit scores, homeownership, education level, and occupation as factors in setting rates.
  • The bill also creates mandatory rate relief with consumers.

How will my insurance go down from the new auto insurance reform bill?

New PIP choices provided by the Michigan auto insurance reform bill

  • Unlimited PIP coverage (the same coverage as now)
  • Insurance companies will cover up to $500,000
  • Companies will cover up to $250,000
  • PIP coverage of up to $50,000 — the lowest-price option available to people on Medicaid, who cannot opt-out entirely.
  • Opt-out of PIP coverage entirely, if you have separate health insurance that covers collision injuries or Medicare for seniors.

Guaranteed Rate Reductions for eight years

  • Keep unlimited PIP coverage would receive a 10 percent rollback of PIP coverage costs.
  • Choose the $500,000 to get a 20 percent rollback on average.
  • The $250,000 plan, get a 35 percent rollback on average.
  • Those who choose the $50,000 plan, get a 45 percent rollback on average.

New Policy Defaults if you do not make a selection at renewal

The new default BI/PD coverage limits are:

  • $250,000 for a person who is hurt or killed in an accident.
  • $500,000 for each accident if several people are hurt or killed.
  • $10,000 for property damage in another state.

Drivers may have the option of purchasing other BI/PD coverage limits. However, the lowest limit they may purchase is:

  • $50,000 for a person who is hurt or dies in an accident.
  • $100,000 for each accident if several people have injuries or die from the accident.
  • $10,000 for property damage in another state.

If a PIP medical option is not chosen by the insured, the unlimited PIP medical option will be the default selection. 

Michigan Catastrophic Claims Reduction

The auto reform bill also provides some relief from the MCCA $220 fee that insureds pay to the Michigan Catastrophic Claims Association could be reduced depending on the pip choice that you pick. However, if you opt for PIP because you have current medical insurance after July 1, 2020, you will not have to pay the annual fee. For all others, the fee is $100.

Michigan Auto Insurance Reform Quote

Finally, Insurance companies will change your coverages to the highest limits at your first renewal after July 1, 2020. Click to find an agent who can give you a Michigan auto insurance quote effective July 1, 2020, to see how the reform impacts your insurance premium.