Michigan No-Fault Auto Insurance Reform
What is no-fault insurance?
Michigan's no-fault system was signed into effect on October 1, 1973. The system was designed so that accident victims received immediate compensation for their losses rather than having to wait for a lawsuit to be settled. In Michigan, those injured in auto accidents receive unlimited medical benefits for their lifetime and substantial wage loss benefits from their own policy regardless of fault (hence the term no-fault).
Why has their been a push for no-fault reform?
Michigan is the only state in the United States that offers unlimited lifetime medical benefits. This benefit-rich coverage comes at a cost as Michigan over the past several years has ranked as having some of the highest auto insurance rates in the country. With increasing costs of medical care, the average cost per claim has steadily rose over the past 47 years. One result of higher insurance premiums is that an estimated more than 20% of Michigan drivers are uninsured.
What is changing?
Michigan's new no-fault law changes will be implemented in phases with some having started in 2019 and the final ending in 2022.
2019 Changes - Effective 6/19/19
2019 changes are important not to overlook. New law provides coverage ONLY for named insured, spouse and household relatives. Family members that do not live in the household are no longer afforded coverage, even if listed as a driver. Non-family members that live in the household, even if listed as a driver, are no longer afforded coverage.
2020 Changes - Effective 7/2/20
1) Personal Injury Protection (PIP) Choice - Ability to choose PIP coverage level.
2) Bodily Injury minimum limit requirements will be increased.
3) Other drivers will now be able to sue another driver based on percentage of fault for medical and rehabilitation cost in addition to serious injury accidents resulting in death or disability.
2021-2022 Changes - Effective 7/1/21
A fee schedule will be implemented for medical charges related to auto injuries which previously did not exist.
What is Personal Injury Protection?
Personal Injury Protection is the portion of your policy that pays for your medical benefits, rehabilitation, recovery, replacement services, attendant care, some funeral expenses and income replacement. PIP Choice will now give drivers the opportunity to choose a benefit level other than the previously required unlimited medical benefits.
What is bodily injury coverage?
Bodily Injury liability protects you from claims or lawsuits from injuries to others if you are at-fault in an accident. These limits provide coverage for payments to other drivers and passengers for pain and suffering. Michigan's new reform law will now allow for recovery of medical costs as well.