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You may have heard that Michigan has the highest insurance rates in the country. Why?

Michigan offers better medical protection than any other state in the country, providing unlimited coverage, but it comes with a higher premium.

Our governor recently signed a bill that will give Michigan residents choices to reduce coverage and receive a premium savings. This means for policies that renew July 2nd or later you must select one of the coverage options available.

There are 2 major changes coming:

  • Option to choose Personal Injury Protection (PIP) Medical limits, today it is unlimited and you don’t have a choice, so picking lower limits will lower your costs.
  • Minimum bodily injury limits are increasing

Often times people confuse Health Insurance or Medicare to be the same as PIP Medical which is incorrect. PIP Medical provides additional coverage you do not get with traditional health insurance.

PIP Medical covers:

  • Resident Relatives (relative of either you or your spouse who lives in the same household)
  • Medical bills
  • Rehabilitation costs
  • Attendant Care cost (covers reasonable and necessary services when hiring someone to look after an injured accident victim. These services include but aren’t limited to such things as:
    • Meal Preparations
    • Light cleaning
    • Feeding
    • Transferring
    • Grooming/Personal Hygiene tasks
  • Funeral Expenses
  • Modifications made to your Home and Automobile due to disability after auto injury.

Attendant care costs and modifications to your home and auto are typically limited or not provided with Health Insurance and Medicare. Therefore, if these coverages are important to you, you may want to select one of the options with PIP Medical in order to keep coverage for these important expenses.

Starting July 2nd your choices for PIP are:

  1. Unlimited PIP (this is what you have today)
  2. Limited PIP Benefit of $500,000
  3. Limited PIP Benefit of $250,000
  4. Limited PIP Benefit of $250,000 with some or all persons excluded from PIP medical
    • Anyone who wishes to exclude PIP must have qualified health coverage
  5. Limited PIP Benefit of $50,000
    • Named insured must be enrolled in MEDICAID
    • Spouse and all resident relatives must have one of the following: Medicaid, Qualified Health Coverage, or Coverage under another auto policy with PIP medical coverage
  6. No PIP medical coverage for anyone covered by the policy. You may only select this option if:
    • The named insured has coverage under both Medicare Parts A and B, AND
    • Any spouse and all resident relatives covered by the policy have qualified health coverage or are covered under another auto policy with PIP medical coverage.

Risks to consider:

  • By choosing one of the new limited PIP options the coverage may not be enough to cover your medical expenses. After your PIP limit is reached you will then rely on other health coverage, so if you do not have other health coverage at that time, you will likely be personally responsible for paying these expenses.
  • If you exclude anyone from PIP Medical and they lose their health insurance coverage, it will be important to contact your insurance agent. A person who has not obtained qualified health coverage or PIP medical coverage within 30 days of loss of coverage will not be entitled to any PIP medical benefits. This means all cost will come out of pocket.

Terminology to know:

  • Qualified health coverage is defined as:
    • Health and accident coverage that does not exclude or limit coverage for injuries related to auto accident and has an annual individual deductible of $6,000 or less; OR
    • Coverage under both Medicare Parts A and B
    • Medicaid is an example of coverage NOT considered qualified health coverage.
  • The SECOND big change is:
    • Standard bodily injury limit is increasing to $250,000 per person/$500,000 per accident
    • Must sign a selection form if you want lower limits indicating you understand the risk
    • Minimum limit has increased from $20,000/$40,000 to $50,000/$100,000

What does that mean to you?

Drivers may now choose Limited PIP medical benefits or exclude coverage all together creating increased exposure that an injured driver may not have enough medical coverage to cover their own medical expenses. They may now sue you (the at-fault party) to pay for their expenses that are not covered.

Consider purchasing a Personal Umbrella policy for added protection in the event you are sued. A Personal Umbrella is a policy that sits above your home and auto policies providing an additional $1 million of coverage above the liability limits you carry on your home and auto policy.

This newsletter has provided a general overview of Michigan Auto Reform. In my mission statement I state that, insurance is complicated causing many people to be unaware of the consequences of poor coverage. The new Auto Reform is complicated. Saving money on your auto insurance is a benefit but understand the pros and cons of each option. I invite you to contact my agency and talk with our highly trained team members who can provide guidance in choosing an option that’s right for you and your family. Our goal is to build strong client relationships, product value and peace of mind.

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