Personal injury protection in Michigan underwent historic change in July 2020 when new legislation went into effect. The reform of the state’s auto insurance requirements offers consumers the chances to save money—or expose themselves to unnecessary risk, depending on your perspective.
For 47 years, dating back to 1973, Michigan had a requirement that drivers purchase unlimited coverage for medical expenses. Michigan was the only state to have this requirement and also had some of the highest auto insurance rates in the nation.
Governor Gretchen Whitmer signed legislation in May 2020 that would allow more flexibility for Michigan residents in choosing their personal injury protection plans. As of July 1, 2020, drivers in Michigan can choose from the following:
- Retain unlimited personal injury protection (PIP)
- Carry up to $500,000 of PIP
- Carry $250,000 of PIP
- Carry $250,000 of PIP, but exclude certain persons from the coverage
- Carry as little as $50,000 in PIP (for those enrolled in the Medicaid program)
- Opt out of PIP altogether
In conjunction with the new requirements, the state has also passed fee schedules for insurance companies. This is an attempt to ensure that the lower coverage limits get passed on to the consumer and are not simply used to strengthen the balance sheet of insurers.
“[The new law] keeps what is good about the old system, but gives some more opportunity for people to have a say in what is most cost-effective for their family,” said Anita Fox, who directs Michigan’s Department of Insurance & Financial Services.
But critics of the new rules have 2 different fears. The first is that people will choose the lower coverage limits in an attempt to save money in the short-term, but then be left dangerously exposed if they’re in a serious accident.
“People don’t get to choose their accident,” said Laura Appel, senior VP of the Michigan Health & Hospital Association (MHHA). “You don’t know…how much coverage you really need depending on what might happen.” Appel and the MHHA have launched a public relations campaign encouraging consumers to keep unlimited PIP.
Another fear is that the regulations on insurance companies to pass lower rates to consumers are not stringent enough. Lawmakers from the Detroit area, including Mayor Mike Duggan, have implored the city’s residents to be informed as to their new rights.
“Act for yourself or it won’t change,” Duggan said. The mayor and nearby state legislations believe that insurers have made a fortune by basing rates on credit history and neighborhood, both of which tend to work against city drivers. Those insurers will be unlikely to provide counsel that leads to drivers choosing lower coverages and lower premiums.