In May 2019, Michigan’s Governor, Gretchen Whitmer, signed historical no-fault legislation—the first update to the original no-fault law from 1973. Kapnick can provide guidance on the new reform, which intends to provide more affordable auto insurance to Michigan drivers.
We understand the no-fault insurance reform can be confusing, and it’s unclear what coverage you need, or how much it’ll cost. Kapnick can help.

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 Group 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:

Frequently Asked Questions

We understand the no-fault insurance reform can be confusing, and it’s unclear what coverage you need, or how much it’ll cost. We can help.

Michigan’s Current No-Fault Law

Click here to read a Brief Explanation of Michigan’s Current No-Fault Law from the Michigan Department of Insurance and Financial Services.

Brief History of Michigan’s
No-Fault Law

Read a brief history of the current no-fault auto insurance law that’s been in place since 1973.

Michigan Department of Insurance and Financial Services (DIFS)

A directory of information from the Michigan Department of Insurance and Financial Services.

IAM No-Fault Reform articles

Read no-fault reform articles and news from Insurance Alliance of Michigan.

Get your Auto Insurance Quote

Your automobile can be a fairly costly investment – one that is exposed to many potential losses that are out of your control. We’ll make sure you have the protection you need at a price you can afford.

Learn more about the legislation. View the content below:

Senate Bill 001

This senate bill was introduced by Senator Aric Nesbitt on January 15, 2019, passed by the Senate on May 7, 2019, then passed by the House on May 24, 2019 and signed by Governor Whitmer on May 30, 2019. Click to read the full bill.

House Bill 4397

This house bill was a follow-up bill signed on June 11, 2019, by Governor Whitmer. Click to read the full bill.

Find recent news and updates below:

DIFS Launches New Website and Consumer Hotline to Address Auto Insurance Reform Questions and Complaints. Click to read more.

What the No-Fault Auto Reform Deal Means for Michigan Drivers. Click to read more.

10 Things to Know About Michigan’s New Deal on Auto Insurance Premiums. Click to read more.

No-Fault Auto Insurance: What to Expect. Click to read more.

Looking for more information on no-fault reform? Click to visit our Resource Library for more content and information.

Experts

April Wolfe

Client Executive

april.wolfe@kapnick.com
517-366-2741
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Jacob Cooper

Client Executive

jacob.cooper@kapnick.com
517-366-2771
LinkedIn