Michigan's New Auto Insurance Law
  • Auto Insurance Reform FAQ

    On May 30, 2019, Governor Whitmer signed historic bipartisan no-fault auto insurance reform legislation to provide lower rates for Michigan drivers, protect insurance coverage options, and strengthen consumer protections.

    This webpage will be updated with the latest information for insurance companies to provide implementation guidance.

    Disclaimer: The information contained within this website pertains to Public Acts 21 and 22 of 2019. It is advisory in nature, and is not meant to be a substitute for legal advice.

     


FAQ
Rates
  1. Can companies charge the MCCA Deficit Recoupment, even when PIP coverage has been rejected?

    Yes. Insurers can charge for the deficit recoupment, but they must still meet the rollback requirements.
  2. Section 3104(20) was amended to require that if a company “passes on any portion of the premium payable under this section to an insured” the passed-on amount must equal the portion attributable to the car, including any excesses or deficiencies. What is the intent of this amendment?

    Companies will no longer be allowed to file MCCA rates that are more than those charged by MCCA.
  3. Will insurance score filings need to be resubmitted for approval?

    Companies will be required to demonstrate compliance with MCL 500.2111(4) if the insurance score is based solely or in part on a credit score as defined in MCL 500.2151(e).
  4. Will DIFS be mandating geographical territorial definitions since postal zones are now prohibited?

    No. Companies will be required to file their territorial definitions demonstrating they comply with the statute.
  5. Do the prohibited rating factors outlined in Sec. 2111(4) only apply to PIP medical coverage or all auto coverages?

    The rating factor prohibitions apply to automobile insurance not just PIP.
  6. Does the 8-year rate reduction only apply to the PIP premium?

    Yes. The statute requires compliance with the premium reduction requirements for PIP for policies issued or renewed before July 2, 2028.

The following questions were posted on 10/11/19.

  1. What is the appropriate MCCA premium charge for motorcycles?

    The appropriate premium charge for motorcycle insurers remains the full MCCA premium charged for unlimited coverage.
  2. Do multi-policy discounts offered for the purchase automobile insurance coupled with other insurance products(home, tenant, condo, etc.) violate the prohibition on the establishment of rates or rating classifications based on home ownership?

    DIFS will ensure that a multi-policy discount is not used as a surrogate for home ownership by requiring companies to file rules and rates governing multi-policy discounts. If discounts are offered on home insurance policies, the discount cannot be limited to homeowners only and the amount cannot vary by product (home, tenant, condo, etc.).

The following questions were posted on 12/06/19.

ZIP Codes

  1. Can postal codes be grouped together and rated on a territorial basis? If not, how are companies allowed to group geographical locations together (county, city, etc.)?

    Territories may not be based on postal zones (i.e. zip codes). This includes grouping a set of zip codes together and making one or more territories. Companies may set their territories on a method that is not based on zip code or a group of zip codes.


The following questions were posted on 04/02/20.

  1. Do the mandated PIP premium reductions apply to commercial automobile policies?

    No.  As the mandated PIP premium reductions are included in Chapter 21,  they are not applicable to commercial automobile policies.
     
  2. If my company is a member of a rating organization that promulgates loss costs (e.g. ISO), do I still have to demonstrate compliance with the mandated PIP premium reductions?

    Yes.  Companies that are adopting loss costs for private passenger automobile insurance are required to demonstrate compliance with the PIP premium reductions in MCL 500.2111f using the company’s average premiums.  Note that as to companies adopting loss costs for commercial automobile insurance, the PIP premium reductions do not apply.

Limits/Coverage
  1. Section 3107c(8) requires insurers to offer a rider that will provide coverage for attendant care in excess of the $50,000, $250,000 or $500,000 PIP limit.
     
    1. Are there any regulatory requirements for this rider?

      This rider must be offered to any driver that chooses the $50,000, $250,000, or $500,000 PIP limits.
    2. Should the premium for the rider be included in the rate reduction?

      The rate reduction requirements under Section 2111f apply to specific levels of PIP coverage. Though the rider must be offered for certain PIP options; the rider itself is not PIP coverage and is not included in the rate reduction.
    3. Does the rider or policy pay first?

      The rider pays claims in excess of the coverage limit chosen. The PIP coverage pays first.
    4. What is the required limit on the attendant care rider that companies will have to offer per Sec. 3107c(9)?

      The statute does not place a required limit on the attendant care rider that companies will be required to offer.
  2. Is there a default coverage for PIP medical expenses?

    Section 3107c(3) states that if the applicant or named insured has not made an effective PIP selection, there is a rebuttable presumption that the amount of the premium paid accurately reflects the level of PIP coverage applicable to a policy.
    However, if the applicant or named insured has not made a selection and there is no rebuttable presumption, unlimited PIP coverage applies to the policy.
  3. When does Section 3009 requiring a change in Bodily Injury limits become effective? Does it go in effect for new policies written and existing policies renewing after July 1, 2020, or does it go in effect for all policies on that date?

    The new BI limits do not automatically apply on July 2, 2020. They become effective for policies that are issued or renewed after July 1, 2020.
  4. Must insurers offer all levels of PIP coverage, including unlimited?

    Yes, insurers are required to offer all levels of PIP coverage, including unlimited.

    Additionally, insurers are required to offer a rider that will provide coverage for attendant care in excess of an insured’s PIP limit. This rider must be offered to anyone choosing a policy with a PIP limit ($50,000, $250,000, or $500,000 options).
  5. Section 3107d allows a person to opt out of medical PIP coverage under certain circumstances. It further provides a 30-day period for a named insured to obtain medical PIP coverage if the named insured is no longer covered by qualified health coverage. The statute stipulates that a person injured in a motor vehicle accident during the 30-day period will be covered by the Michigan Assigned Claims Plan. Will an injured person be covered by the Michigan Assigned Claims Plan if they are injured in an accident occurring after the 30-day period?

    No. A person that opts out of medical PIP coverage under Section 3107d will not be covered under the Michigan Assigned Claims Plan for an accident occurring after the 30-day period.
  6. Sec. 3107d(6) says if the insured loses their qualifying health coverage during the term of the policy, the insured must contact the insurer within 30 days to purchase PIP coverage. If the insured secures PIP coverage within the 30 days, but there is a gap between the effective date of health insurance benefits and new PIP benefits, who is responsible for the PIP losses?

    Insureds who lose qualified health coverage have a 30-day period to notify their insurer and secure PIP coverage. If an accident occurs during this 30-day period before the driver has secured PIP coverage, the driver would be eligible for benefits under the Michigan Assigned Claims Plan. However, if the accident occurs outside the 30-day period and the driver has not yet secured PIP coverage, the driver is not entitled to claim PIP benefits from any policy or Michigan Assigned Claims Plan.
  7. How do the changes to Chapter 31 affect Transportation Network Companies (TNCs), TNC drivers, and TNC passengers?

    TNCs and TNC Drivers

    The new law states that an applicant or named insured that is a transportation network company shall only select PIP coverages of $250,000, $500,000 or unlimited.
    There are no requirements regarding what level of PIP coverage a TNC driver must carry.

    The onus to maintain insurance on a TNC vehicle ultimately lies with the TNC. A company could require their drivers to maintain a certain level of coverage, but the company is held responsible up to their chosen level of PIP coverage if the driver does not maintain that coverage.

    Insurers can continue to exclude driving for a TNC from personal auto coverage (MCL 500.3017). TNCs are required to make potential drivers aware of common insurance exclusions and receive their written acknowledgement of these exclusions (MCL 257.2125).

    Passengers

    If a passenger is covered under an auto insurance policy with PIP benefits, they are covered under that policy.

    If a passenger is covered under an auto policy but has opted out of PIP under 3107d or chosen the 3109a(2) exclusion, they are not eligible for PIP reimbursement from the TNC’s policy.

    A passenger who is not required to maintain auto insurance can claim benefits under the TNC policy but is subject to whatever PIP choice the TNC has elected, which cannot be a coverage of less than $250,000 per person per accident.
  8. Under the new law, because some motor vehicle owner/registrants may have opted out of PIP or chosen a reduced limit, will motorcyclists be limited to recovering for their injuries from that policy?

    Under the new law, a motorcyclist involved in an accident with a motor vehicle would continue to seek PIP from the insurer of the motor vehicle but would be subject to any PIP choice limits on the policy. If no PIP coverage is available in the order of priority, a motorcyclist is eligible for up to $250,000 in PIP benefits from the Michigan Assigned Claims Plan.
  9. Is PIP now mandated for motorcycles?

    No. Motorcycle riders are not entitled to purchase PIP benefits for their motorcycle policy, but they may purchase first-party medical benefits in increments of $5,000-- up to the limit of coverage offered by the insurer. A motorcycle operator must carry at least $20,000 of medical benefits if they ride without a helmet.
  10. Are insurers still allowed to offer historic/normal coordination of benefits and/or deductibles with related discounts?

    Yes. Insurers may continue to offer coordinated benefits and deductibles if actuarially supported.
  11. Will the Medicare fee schedule apply to existing claims?

    Yes. When use of the Medicare fee schedule becomes effective after July 1, 2021, it will apply to new and existing claims.
  12. The Act allows for the development and use of managed care networks. With respect to that:
     
    1. Does DIFS have an expectation relative to the amount of discount?

      An insurer will be required to demonstrate that the discount is appropriate for the coverage provided.
    2. Would the new fee schedule and utilization language also apply?

      Yes, the fee schedule (Section 3157) and utilization review (Section 3157a) will apply to managed care networks.

The following question was posted on 10/11/19.

  1. Do the order of priority changes in Section 3114 have immediate effect?

    Yes; however, filings must be submitted prior to changing claims practices. See DIFS Order 19-048-M.

The following question was posted on 12/03/19.

  1. What coverage and premium is reduced when someone elects the $250,000 limit with exclusions for certain individuals?

    An excluded person will not receive PIP medical coverage and the PIP medical premium must be reduced by 100%. Companies can only charge the portion of MCCA premium that is from a deficiency, if applicable.

The following question was posted on 12/06/19.

Premium Reductions

  1. What coverage and premium is reduced when someone selects a PIP option of $50,000, $250,000 or $500,000?

    All PIP limits apply to PIP medical. The full PIP premium must be reduced by the amount required in MCL 500.2111f(2). Companies can only charge the portion of MCCA premium that is from a deficiency, if applicable.

  2. What coverage and premium is reduced when someone elects to not have PIP coverage?

    A policy that does not include PIP coverage under the opt-out in MCL 500.3107d, will not receive PIP medical coverage and the PIP medical premium must be reduced by 100%. Companies can only charge the portion of MCCA premium that is from a deficiency, if applicable.

Forms
  1. When are insurers required to obtain a signed BI selection form?

    Section 3009(6) states that insurers are required to do all of the following at new business or renewal:
     
    • Provide the applicant/named insured the liability options available.
    • Provide the applicant/named insured a price for each option.
    • Offer the applicant/named insured the options and BI Selection form.

    New Business – At the time of application, if the applicant does not provide a signed and completed BI selection form, the insurer shall issue the policy with $250,000/$500,000 limits.

    First Renewal Effective on or after July 2, 2020 – If the insured does not provide a signed and completed BI selection form, the insurer shall issue the policy with $250,000/$500,000 limits.

    Subsequent Renewals – If the insured does not request the BI selection form or a change in coverage, the insurer shall renew the policy with the existing BI limits.

The following questions were posted on 10/11/19.

  1. When are carriers required to obtain a signed PIP Selection/Rejection form?

    Carriers are required to provide a PIP Selection/Rejection form:

    1. at the time of new business; and
    2. at renewal.

    If the customer does not return a completed form at application, the carrier should issue the policy with unlimited PIP. Under 3107c, if the customer does not return a completed form at renewal, but pays their renewal premium, the statute allows for a “rebuttable presumption” that the insured wants to maintain the current limit and the carrier can renew the policy with the same PIP selection. However, under 3107d, if the insured had previously rejected PIP and does not return a completed form, the renewal should be issued with unlimited PIP.

  2. What form is the company required to use for customers to select their BI limits?

    Companies must use the form issued by the Director. Companies are permitted to add their form number and a logo if desired. Companies are not permitted to make any other changes.


The following questions were posted on 12/06/19.

PIP and BI Forms Bulletin

  1. When will the PIP and BI selection forms be issued by DIFS?

    The Choice of Bodily Injury Liability Coverage Limits Form and Personal Injury Protection (PIP) Choice Forms have been transmitted to companies via Bulletin 2020-03-INS. Word versions have also been emailed to company SERFF contacts.

BI Form

  1. What CSL limit is equivalent to $250,000 per person/$500,000 per occurrence?

    $510,000 CSL is the appropriate CSL equivalent to $250,000/$500,000 as you must add $10,000 for property damage.

  2. Will the BI form be updated to accommodate companies that only offer CLS?

    No, the BI form was created to follow the statute which requires insurers to issue a policy at $250,000/$500,000 if the form is not returned.

  3. Can companies modify the BI form if they only offer CSL?

    Companies must use the BI form issued by the Director. When you provide the applicant/insured the options and price for each option, you may explain that their policy will be issued at $510,000 if you do not offer split limits

  4. Must a company change the limits on a policy with CSL limits greater than or equal to $510,000 if the customer does not return the BI form?

    Customers with a CSL limit greater than or equal to $510,000 will not need to have their limit changed if they do not return the form.

PIP Form

  1. Is the intent of the department that the Commercial form would be the only form used by Commercial Auto customers/applicants?

    If the named insured is an individual, you should use the individual form. If the named insured is a Business/Company, you should use the Commercial/Business form.

  2. The Commercial form does not provide options for the $50,000 Medicaid nor the $250,000 Opt out options when Medicare &/or other qualifying health insurance is carried. Are we correct in interpreting this to mean that these options do not apply to Commercial Auto policies?

    If the named insured is a business/company, they are not eligible for the PIP options of $50,000, $250,000 with exclusions, or no PIP.

Filings
  1. How is DIFS going to protect the privacy of carrier filings?

    Under Chapter 24, filings can remain private until they are effective. Instructions on marking a filing as confidential can be found on page 144 of the SERFF instructions. Companies will be required to make the filing confidential. DIFS will remove the privacy setting on or after July 2, 2020.
  2. What filing type should we use to submit these filings?

    Forms will be filed under a new filings type of PA-21/22 – Forms. Rates and rules will be filed under a new filing type of PA-21/22 – Rate and Rule. Filings that will include Rates, Rules AND Forms will be filed under PA-21/22 – Rates, Rules and Forms
  3. When can companies begin submitting filings?
     

    Companies may now submit filings for compliance with PA 21 and 22 effective July 2, 2020 using the “PA 21/22 – Rates, Rules, and Forms” filing type.  The approved Bodily Injury Selection Form has been issued by the Director and can be found in Bulletin 2020-03-INS.  On November 13, 2019 the MCCA announced a per vehicle assessment of $100 for the period July 2, 2020 through June 30, 2021.  Detailed information on the assessment, including changes in the assessments charged to commercial entities, can be found in the MCCA’s annual Assessment Bulletin.  Further questions regarding the applicability of the assessment should be directed to the MCCA.

    These filings must contain ALL forms, rules, and rates to be revised for the underwriting company in one filing and be effective 7/2/2020. Even if approved, companies may not begin using the updated forms, rules, and rates on new and renewal business prior to 7/2/2020. Any company found using the new forms, rules, and rates on business prior to 7/2/2020 will be subject to administrative action.

  4. What is the last day that companies can file to comply with statute?

    MCL 500.2108(6) was amended to require companies to submit automobile filings no less than 90 days prior to the effective date. Therefore, companies must submit filings demonstrating compliance with PA 21 and PA 22 no later than April 1, 2020. However, we encourage companies to make filings prior to this date to allow for time to resolve any issues found during our review.
  5. Can companies file all underwriting companies under one filing in SERFF?

    Separate filings must be submitted for each underwriting company.
  6. What needs to be submitted with the form filing?

    Companies must submit a filing memorandum. MARKED AND FINAL FORMS must be submitted on the Form Schedule tab in SERFF and list the readability score. Note: Michigan requires a readability score of no less than 45. See MCL 500.2236 for details.
  7. Do companies need to file the BI selection form since the Director prescribed the form?

    Yes. Companies must file the BI selection form with DIFS with their form number.
  8. Do companies need to file the PIP Selection/Rejection form if they use the one provided by the Director?

    Yes. Companies must file the PIP selection form with DIFS with their form number and any other changes they make. Any deviations from or changes made to this form will be subject to prior approval.
  9. My company issues exempt commercial auto policies. Do we have to submit a filing?

    Companies that issue exempt commercial auto policies in accordance with MCL 500.2236(8)(e)(ii) and MCL 500.2401(2)(d)(ii), are not required under the exemption to file forms, rates and rules to demonstrate compliance with the changes in PA 21 and PA 22. However, DIFS will require companies issuing exempt commercial auto policies to submit a filing pursuant to Section 438(3) of the Insurance Code of 1956, MCL 500.438(3).   The filing must include a copy of the disclaimer required under MCL 500.2236(8)(e)(ii) and MCL 500.2401(2)(d)(ii) and the following attestations:
     
    “I attest that the company will make the necessary changes to rates, rules and forms to comply with Michigan Public Act 21 and Public Act 22 of 2019. I understand that the filing exemption does not exempt the company from complying with the requirements of the acts but only exempts the company from filing rates, rules and forms to demonstrate compliance with the acts. I understand that if the company fails to comply with the requirements of the acts, the company will be subject to administrative action.”

    “I attest that the company will display the disclaimer provided with this filing in a predominant location on each exempt policy issued.”

    "I attest that in determining compliance with the changes in Public Acts 21 & 22, the company has reviewed the PA 21/22 – Rate, Rule and Form filing requirements for Commercial Auto business available in SERFF and is taking measures to comply with these requirements."
    Such filings must be submitted under the new filing type of “PA-21/22 – Commercial Exemption”.

The following question was posted on 12/12/19.

  1. Can companies file forms separate from rates and rules?

    Companies must file forms, rates and rules together in one filing per underwriting company.

The following question was posted on 01/08/20.

  1. Do companies that write motorcycle policies need to file changes as a result of Public Acts 21 and 22?

    Yes. SERFF has been updated with detailed filing requirements specific to motorcycle polices. This may be found by searching filing requirements for TOI 19.0 Personal Auto & Sub TOI 19.0002 Motorcycle.
CARF Accreditation

The following question was posted on 05/28/20.

Accreditation FAQs

  1. Do entities that provide ancillary services to injured persons—such as case management, transportation, or guardianship/conservatorship planning—need to be accredited under MCL 500.3157?

    No. These entities do not “provide[] post-acute brain and spinal rehabilitation care” under MCL 500.3157(15)(g) and therefore do not need to be accredited.
  2. Do pharmacies need to be accredited under MCL 500.3157?

    No. These entities do not “provide[] post-acute brain and spinal rehabilitation care” under MCL 500.3157(15)(g) and therefore do not need to be accredited by CARF or an equivalent.
  3. Do providers of durable medical equipment need to be accredited under MCL 500.3157?

    No. These entities do not “provide[] post-acute brain and spinal rehabilitation care” under MCL 500.3157(15)(g) and therefore do not need to be accredited by CARF or an equivalent.

The following question was posted on 06/03/20.

  1. Do family members who provide attendant care need to be accredited under MCL 500.3157?

    No. These persons do not “provide[] post-acute brain and spinal rehabilitation care” under MCL 500.3157(15)(g) and therefore do not need to be accredited by CARF or an equivalent.

The following question was posted on 06/23/20.

  1. Do vocational rehabilitation counselors need to be accredited under MCL 500.3157?

    No. These persons do not “provide[] post-acute brain and spinal rehabilitation care” under MCL 500.3157(15)(g) and therefore do not need to be accredited by CARF or an equivalent.


The following question was posted on 07/23/20.

  1. Do providers of recreational therapy need to be accredited under MCL 500.3157?

    No. These persons do not “provide[] post-acute brain and spinal rehabilitation care” under MCL 500.3157(15)(g) and therefore do not need to be accredited by CARF or an equivalent.


The following question was posted on 08/06/20.

  1. Do entities that provide post-acute brain and spinal rehabilitation care need to be accredited under MCL 500.3157(12) if the entity providing the care has a specialty license issued by the Department of Licensing and Regulatory Affairs (LARA)?

    Yes. Entities that “provide[] post-acute brain and spinal rehabilitation care” under MCL 500.3157(15)(g) need to be accredited by CARF or The Joint Commission. Please see Bulletin 2020-27-INS for further information.


The following question was posted on 09/08/20.

  1. Do providers of psychotherapy need to be accredited under MCL 500.3157?

    No. These persons do not “provide[] post-acute brain and spinal rehabilitation care” under MCL 500.3157(15)(g) and therefore do not need to be accredited by CARF or an equivalent.


The following question was posted on 09/17/20.

  1. Do stand-alone individual providers that provide post-acute brain and spinal rehabilitation care need to be accredited under MCL 500.3157?

    MCL 500.3157(15)(g) defines a neurological rehabilitation clinic as "a person that provides post-acute brain and spinal rehabilitation care." A "person" is defined in MCL 500.114 and includes an individual in addition to an institution, company, association, organization, or any other legal entity. Therefore, an individual provider that "provides post-acute brain and spinal rehabilitation care" must be accredited by CARF or The Joint Commission.

Miscellaneous
  1. Can insurers endorse policies mid-term to add the new limits/coverages?

    If the insurer’s system can accommodate such changes, they are permitted to endorse a policy mid-term with the new limits/coverage if the change is effective on or after July 2, 2020 and if requested by the insured. Please note that any such endorsement must be filed and approved by DIFS and reflect all coverage and rating changes that would otherwise be available on a separately issued policy effective on or after 7/2/2020, including but not limited to the new bodily injury limit options, PIP limit options, attendant care riders, new mini-tort limit, and all rates including the new MCCA assessment. In addition, insurers must use their approved bodily injury and PIP selection forms in the same manner as if the policy were being issued or renewed after 7/2/2020.

    If an insured requests a PA 21/22-compliant policy and the insurer’s system cannot accommodate a mid-term change, the insurer must offer to cancel and reissue a policy. For more information, please see Bulletin 2020-31-INS.  

The following question was posted on 10/11/19.
 

  1. Do the reforms apply to commercial insurance?

    Yes. Commercial Auto risks must comply with the changes outlined in all sections modified (except Chapter 21) to the extent they are applicable to Commercial Auto.

The following question was posted on 10/22/19.
 

  1. If I have questions that haven’t been answered here, who can I send them to?

    When new questions and responses are added to the site, notification will be sent. Should you have questions or comments about the FAQ, such as suggested content, please contact DIFS through our dedicated email address for all PA 21 and PA 22 information: DIFS-PA21-22@michigan.gov.

The following question was posted on 12/06/19.

Attendant Care and the MCCA

  1. DIFS has received many questions about MCCA and Attendant Care reimbursement and reporting. These questions should be directed to the MCCA.

    DIFS has received many questions about MCCA and Attendant Care reimbursement and reporting. These questions should be directed to the MCCA.