05/22/2020 Update: The State of Michigan has made the biggest change to automobile insurance, since creating no-fault, in 1973, and it begins when your auto insurance renews on and after July 2nd, 2020. Your decisions on your auto insurance renewals starting in July will be the most significant decisions you will have had to make for your family’s protection in decades.
What is changing? Personal injury protection, (PIP) is the biggest change. The PIP changes who is eligible to qualify for the benefit, attendant care coverage, and the new optional limits. Your family’s additional exposure to Bodily Injury (BI) Liability due to at fault accidents is another key change to the auto reform along with the new BI liability limits you will now be able to select.
We can help you understand the various coverage options so you can select the best coverages to protect you and your family.
Your Account Manager will be calling you approximately 45 days prior to your auto renewal to assist you with completing the renewal questionnaires that are required with next auto renewal. In the meantime, please contact us once with any questions you might have.
We at The Crawford Insurance Group want to help our clients, friends, and community to be well informed about the Michigan No Fault Reform. This reform contains some of the most significant changes in Michigan’s auto insurance laws in decades. Most of these revisions will take effect on July 2, 2020.
Why the Change?
Michigan has had the nation’s highest priced auto insurance for decades; therefore, this has also caused Michigan to have the nation’s largest number of uninsured drivers. Our legislators are attempting to fix these serious issues with this reform, and although it’s not perfect, it will offer everyone new choices and help lower auto premium costs!
What Are the Key Changes With this Reform?
- The most significant change is that you will now be able to choose your Personal Injury Protection (PIP) limit from a few options. Before July 2, 2020, Michigan law has required drivers to have the unlimited lifetime PIP benefit.
- PIP covers you and your family for:
- Unlimited medical benefits
- Survivor benefits
- Lost wages – annual cap of $68,616, adjusted annually
- Extensive in-home care
- Door to door medical transportation
- Home and vehicle modifications
- Long-term cognitive and speech therapy
- Custodial care in some residential rehab centers
- Second, you will inherit SIGNIFICANTLY INCREASED FINANCIAL EXPOSURE FROM BODILY INJURY DAMAGE that you or a driver in your household would do to another party. Those individuals who choose lower PIP benefits that get injured in an accident will now be able to sue the at-fault driver for their injures, wage loss, pain and suffering, and needed dependent care.
- Please take notice of another change in the law (effective July 2, 2020), which only effects two groups of people:
- Children/adults using a vehicle insured in your name but have established residency elsewhere (other than college students), OR
- Living with someone who is not a relative who does not have their own insurance, but drives a vehicle titled or insured in your name.
- Note: Please refrain from purchasing or leasing autos titled to the named insured if the intent is to provide the vehicle to someone who will either be living outside the home of the named insured or have plans to move away in the immediate future (with the exception of attending college). The intent of the new law is to make sure that everyone is being charged for the exposure in the area they reside.
THIS IS CRITICAL. PLEASE CALL OUR OFFICE IMMEDIATELY IF YOU FALL INTO ONE OF THESE CATEGORIES!!
What Are the New PIP Options?
Starting July 2, 2020, you will no longer be required by law to have your PIP benefits set to Unlimited and will now have more coverage options to choose from. The chart below also shows you the PIP coverage levels, as well as the savings associated with each option. These savings are not from your current PIP premium on your own auto policy, but is based on your insurance company’s average PIP
rate that was in force on May 1, 2019. We believe that this will include the savings from the Michigan Catastrophic Claims Association (MCCA) reduction, which is going into effect on July 2, 2020. The MCCA will be reducing the annual charge of $220 per vehicle that is used towards catastrophic losses, which is bodily injury in excess of $580,000. If you elect to maintain the unlimited PIP benefits that you currently have, your MCCA charge will drop from $220 per vehicle to $100. If you choose any of the other options of the new PIP coverages, the MCCA charge will go away entirely.
For most people, maintaining the unlimited PIP benefit will more than likely make the most sense, due to the broad protection that this limit provides for you and your family.
What Else Should I Know?
The No Fault Reform will also be limiting future rating factors currently being used by carriers to provide discounts when calculating premiums.
Carriers will no longer be able to use discounts such as:
- Groups (i.e., college graduates, certain places of employment, good student, etc.)
- Marital Status
- College Education
This is an on-going legislative issue, so please call your legislator and let them know that you are opposed to this change. There is still time that this can be fixed before the new auto reform is active on July 2, 2020.
With these changes, your exposure to financial loss has significantly increased. We strongly suggest that you carry adequate bodily injury limits and consider a personal umbrella policy to protect your family’s assets and future earnings. Please call our team to discuss!
The legislation will require new forms to be signed for Bodily Injury & Personal Injury Protection coverage. You will be receiving questionnaires from the carriers that will pertain to your auto renewals after July 2, 2020 and thereafter. Failure to complete these questionnaires could cause automatic changes to your coverages, which might not fit your individual needs.
We will continue to keep you updated on the auto reform in upcoming newsletters. If you have any questions, please feel free to call our experienced team at 248-402-5005!
*This is not intended to provide you the entire change of the law.