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What is Changing?
The reform allows drivers the ability to choose their level of protection relating to medical coverage for catastrophic claims. It also mandates a reduction in PIP (personal injury protection) rates, an increase in state minimum bodily injury limits, and prohibits rating based on gender, marital status, education, occupation, credit score, or zip code. For more on the specific changes, see below.
Under the current no-fault law, drivers only had the option to choose Unlimited Personal Injury Protection (PIP) benefits. However, following July 2, 2020, Michigan drivers will have the ability to choose from various levels of benefits. Those levels are:
- Unlimited PIP Coverage
- $500,000 limit
- $250,000 limit
- $50,000 limit – This is the lowest limit available and is only for drivers who are on Medicaid. (Your spouse and other relatives who live with you may be on Medicaid or have other qualified health coverage.)
- PIP Exclusion/Opt out – Either a qualified health plan or Medicare A&B is required for all household members (your spouse and other relatives who live with you) in order to be eligible for opting out of PIP coverage.
Insurance companies are required to reduce the PIP portion of the premium, which is a small portion of your total policy premium. Overall the amount of savings an insured will see is based on the level of PIP coverage they select. The estimated rate reductions by level:
- Unlimited coverage would receive on average a 10% reduction
- $500,000 in coverage would reduce on average by 20%
- $250,000 in coverage would reduce on average by 35%
- $50,000 in coverage would reduce on average by 45%
- Individuals with Medicare or qualified health insurance could opt out and receive a 100% rate reduction on certain portions of PIP, depending on their individual circumstances. MCCA deficit fee would still apply.
The default minimum and Kapnick’s standard recommendation is the Unlimited PIP Coverage option. A signed acknowledgement form is required for any lower options selected.
The Michigan Catastrophic Claims Association (MCCA) fee will reduce to $100 per vehicle for unlimited PIP coverage. For all other PIP selections, the MCCA fee is not applicable at this time.
To learn more about the MCCA visit michigancatastrophic.com
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.
State minimum liability coverage limits will be increased from $20,000 per person and $40,000 per accident to $50,000/$100,000.
- The policy will default to $250,000/$500,000 if you do not make a choice. Drivers must sign a selection form to choose limits lower than $250,000/$500,000.
- The default minimum and Kapnick’s standard recommendation is $500,000/$500,000. A signed acknowledgement form is required for lower limits.
- Kapnick Insurance also highly recommends purchasing a personal umbrella policy for further protection.
Limited Property Damage or tort damages will now cover excess expenses and work loss benefits. The mini-tort cap will increase from $1,000 to $3,000 following July 2, 2020.
Insureds will have the option to modify their PIP coverage selection annually, at their renewal. All policies will renew default with unlimited PIP coverage. Kapnick requires a signed acknowledgement form on annual basis for policyholders selecting less than Unlimited PIP Coverage and less than $500,000/$500,000 in liability limits.
Order of priority has all changed in some situations. Relatives who do not live in the named insured’s household and non-relatives who do reside in the named insured’s home must purchase their own auto insurance policy, even if they are driving a car you own and listed as drivers on your policy.
- Unless they are a student away at school.
What Kapnick Recommends
Kapnick Insurance advises all clients to select the broadest options available to best protect themselves and their assets. Relating to the personal auto policy, Kapnick recommends the following minimum coverages:
- Unlimited PIP (Personal Injury Protection) Coverage
- Bodily Injury Limits of $500,000 per accident/$500,000 per occurrence
- Uninsured Motorists Limits of $500,000 per accident/$500,000 per occurrence
- Underinsured Motorists Limits of $500,000 per accident/$500,000 per occurrence
- Property Damage Coverage of $500,000
- Personal Umbrella Minimum Limit of $1,000,000
Updates and Resources
Looking for more information regarding Michigan No-Fault Reform? View the content below:
Learn more about the legislation. View the content below:
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