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Governor Whitmer signed historic bipartisan auto no-fault legislation to lower costs for Michigan drivers, maintain the highest coverage options in the country, and strengthen consumer protections. The legislation creates a better no-fault system for drivers. These changes apply to policies issued or renewed after July 1, 2020.
Drivers’ premiums will depend on the coverages they choose, and factors related to their personal situation, such as driving record and claims history. When shopping for auto insurance, drivers should remember to compare the premiums, limits, and deductibles among insurance companies to ensure that the quotes are comparable.
Personal Injury Protection (PIP) Choice: For the first time, drivers will be able to choose a coverage level appropriate for their needs and budget. PIP medical coverage is coverage under an auto insurance policy issued in Michigan that pays allowable expenses for medical care, recovery, rehabilitation, and some funeral expenses if policyholders are in an auto accident.
The new available limits equal or exceed the highest benefits in the country, and Michigan is the only state where unlimited PIP medical continues to be an option.
Under certain circumstances, drivers may choose to opt out of PIP medical entirely or exclude specific household members. If drivers choose to opt out of PIP medical, the entire PIP medical portion of their premium will be eliminated but excluded members will have no PIP medical coverage under the policy.
Premium Reduction: Each insurance company will be required to reduce statewide average PIP medical premiums for eight years.
Beginning after July 1, 2020, insurance companies are subject to the following overall statewide PIP medical coverage premium reductions:
- An average 45% or greater reduction per vehicle for the $50,000 PIP option
- An average 35% or greater reduction per vehicle for the $250,000 PIP option
- An average 20% or greater reduction per vehicle for the $500,000 PIP option
- An average 10% or greater reduction per vehicle for the unlimited PIP option
Fee Schedule: The new law establishes a fee schedule between auto insurers and medical providers designed to control the costs that medical providers may charge auto insurers for their services. This is similar to cost control provisions used by other types of insurance, such as health insurance. This fee schedule will make PIP medical coverage premiums more affordable for policyholders, but will not affect the services to which existing and future accident victims are entitled.
Utilization Review: Medical care provided to auto accident victims must be reviewed by the auto insurer to make sure it is medically appropriate. Health care providers can appeal if they disagree with the auto insurer’s decision. Consumers may receive a notice that an appeal has been submitted by a health care provider, but no action is necessary. Additional information is available on the Utilization Review webpage.
Michigan Catastrophic Claims Association (MCCA) Assessment: The MCCA is an association of auto insurers that reimburses member companies for PIP medical costs exceeding an identified amount, currently $580,000. The MCCA has already announced that as a direct result of the new law, it is lowering its per vehicle assessment starting July 2, 2020, which will save Michigan drivers at least $120 per car. Drivers choosing less than unlimited PIP medical will not pay any assessment to the MCCA.