Keeping up with the most current information surrounding the No-Fault Reform can be challenging. Today we will cover exactly how benefits are prioritized in this update.
What is Changing?
PIP – Personal Injury Protection (PIP) will be transitioning to tiered levels of coverage. Drivers will have the ability to choose from various tiers that best fit their individual needs. These offerings include:
- Unlimited (the current level under existing law–all insured drivers currently have this tier)
- $50,000 – Medicaid required
PIP Exclusion/Opt out – Medicare A&B required or qualified health coverage for all household members
BI – Bodily Injury (BI) limits will increase from the current state minimum of $20K/$40K (per household/per accident) to $50K/$100K. All renewals will default to $250K/$500K, and lesser limits will require a signed election form.
Another notable change relating to the increase in Bodily Injury Limits is the change in how an injured party can recoup losses. The no-fault law protects insured persons from being sued as a result of an auto accident except in certain special situations. In general, you can only be sued:
- if you cause an accident in Michigan in which someone is killed, seriously injured, or permanently disfigured;
- if you are involved in an accident in Michigan with a non-resident who is an occupant of a motor vehicle not registered in Michigan;
- if you are involved in an accident in another state; or
- for up to $3,000 if you are 50% or more at fault in an accident which causes damages to another person’s car which are not covered by insurance
Additional Changes – In addition to the restructuring of the PIP benefits and BI, the following changes will take place at your renewal after 7/2/2020:
- The No-Fault Reform also mandates the Michigan Catastrophic Claims Association (MCCA) fee will be reduced to $100 per vehicle for unlimited PIP coverage. For all other PIP selections, the MCCA Fee is waived.
- Insurance companies must prohibit non-driving factors to set insurance rates. Rates cannot be affected by gender, marital status, home ownership status, education level, occupation, credit score, or zip code. Insurance carriers still do have the ability to rate based on territory.
Order of Priority
Order of priority determines which auto insurance policy will pay the injured party’s No-Fault benefits. Under the reform, the State of Michigan has changed the order of priority.
An injured person collected PIP benefits in the following order.
- Insurer of the Named Insured;
- Insurer of a Spouse or Resident-Relative;
- Insurer of the Owner or Registrant of the accident-involved vehicle;
- Insurer of the Driver of the accident-involved vehicle; otherwise
- Injured person applies for benefits through the MACP (unlimited benefits)
An injured person collects PIP benefits in the following order.
- Insurer of the Named Insured;
- Insurer of a Spouse or Resident-Relative; otherwise
- Injured person applies for benefits through the MACP ($250,000 benefits).
To help identify potential coverage gaps, consider these questions:
- Are there drivers listed on a policy that do not reside with the named insured?
- Are there residents in the home that are not family members?
- Are there resident family members of driving age that are not listed on a policy?
- Is any vehicle on the policy owned by someone other than the named insured(s), spouse or resident family member?
- Does any driver not listed on the policy have regular use of one of the vehicles?
- Are any vehicles used for business purposes such as Uber or Lyft?
If the answer to any of these questions is yes, you may have a gap in coverage and should review your policy with a member of our team.