Changes to Michigan’s Car Insurance Laws: What You Should Know

Changes to Michigan’s Car Insurance Laws: What You Should Know

by / Monday, 10 June 2019 / Published in Michigan Law
Keys and pen on top of insurance claim form

Michigan’s no-fault auto insurance laws have long been a hot topic amongst lawmakers and after years of ongoing debate, Governor Gretchen Whitmer recently officially signed a bill into law that will overhaul the state’s auto insurance laws.

Since 1973, Michigan has had a unique system of no-fault auto insurance that was intended to lower costs and help people who have been injured in car accidents to get reimbursement for medical care in a more timely manner. All Michigan drivers were required to carry unlimited no-fault PIP coverage as part of their auto insurance policy and regardless of who was at fault for an accident, each party involved would make claims for injuries and damage through their own auto insurance policy. If a person was severely injured in the accident and has medical bills that cross the $545,000 threshold, the Michigan Catastrophic Claims Association (MCCA) would step in to cover all of a person’s care related to the accident for as long as it’s needed, even if it’s for the rest of their life.

However, this system was also blamed for Michigan having exceptionally high auto insurance rates. Efforts have been made to reform Michigan’s no-fault laws since the 1980s and now that the laws have officially been changed, what does this mean for drivers?

PIP Coverage Tiers

One of the most significant changes is that drivers are no longer required to carry unlimited PIP coverage. Now there will be different levels of PIP coverage to choose from. If you want to continue having unlimited coverage, you can still do so, but you can also choose from having PIP coverage up to $500,000 or $250,000. For those who are enrolled in Medicaid, there is a $50,000 coverage tier to choose from. Drivers who have a private health insurance policy that covers auto accident injuries could opt out of having PIP coverage all together.

What Happens to the MCCA?

Under Michigan’s old no-fault law, all drivers had to pay an annual, per-vehicle fee that would go to the MCCA, the organization that covers medical expenses for those catastrophically injured in car crashes. When the new laws go into effect in 2020, the MCCA will still exist and if you choose to continue having unlimited PIP coverage as part of your auto insurance, you’ll be able to get benefits if you are catastrophically injured in a car crash. However, there will still be an annual, per-vehicle fee, even if you opt out of unlimited PIP coverage, but it may be a lower fee if you choose a lower level of coverage. If it’s found that the MCCA’s assets exceed their liabilities by more than 120%, the MCCA will have to pay refunds to drivers.

Savings for Drivers

One of the biggest things people want to know is how much money they will be able to save on their insurance premiums. That all largely depends on what level of PIP coverage you choose, but the new law also includes restrictions on insurance companies using non-driving factors such as credit scores, gender, marital status, and occupation when determining insurance rates, which could help reduce costs for some people.

When Does It All Change?

The new laws won’t go into effect all at once. Different aspects of the bill start being phased in beginning July 1, 2020.

The new laws are a significant change from the old system and these are just a few of the ways the changes will impact drivers. If you have any questions about the new laws and what they mean if you’re in a car crash, don’t hesitate to contact a car accident lawyer. At the Law Offices of Goodwin & Scieszka, we have attorneys who are very familiar with Michigan’s car accident and auto insurance laws and can help answer your questions. Contact us today.