- 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.
- 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.
- 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.
- Does the rider or policy pay first?
The rider pays claims in excess of the coverage limit chosen. The PIP coverage pays first.
- What is the required limit on the attendant care rider that companies will have to offer per Sec. 3107c(8)?
The statute does not place a required limit on the attendant care rider that companies will be required to offer.
- 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.
- 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 did not automatically apply on July 2, 2020. They become effective for policies that are issued or renewed after July 1, 2020.
- 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).
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
The following question was posted on 10/11/19.
- 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.
- 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%. PIP coverages that are separate from PIP medical coverage such as work loss, replacement services, and funeral and burial expenses as described in MCL 500.3107 are still included in the policy. 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
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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.
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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%. PIP coverages that are separate from PIP medical coverage such as work loss, replacement services, and funeral and burial expenses as described in MCL 500.3107 are still included in the policy. Companies can only charge the portion of MCCA premium that is from a deficiency, if applicable.
The following question was posted on 09/25/20.
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Do accident-only indemnity plans, fixed indemnity plans, and hospital indemnity plans constitute Qualified Health Coverage (QHC)?
No. Accident-only indemnity plans, fixed indemnity plans, and hospital indemnity plans are not considered Qualified Health Coverage (QHC).
QHC as defined in MCL 500.3107d(7)(b)(i) is coverage that:
- Does not exclude or limit coverage for motor vehicle accidents; and
- Has an annual deductible of $6,000 or less per covered individual.
The following question was posted on 10/19/20.
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How do the changes in 3135(3)(e) affect the limited property damage liability (Mini-Tort) coverage that insurers offer?
Public Acts 21 and 22 of 2019 increased the maximum amount of damages available for a mini-tort claim to $3,000.00 for accidents occurring after July 1, 2020.
To comply with this change, limited property damage liability coverage must pay up to $3,000.00 on a mini-tort claim for any accident occurring after July 1, 2020. This coverage amount will apply regardless of the date a policy was issued or any conflicting policy language.
The following question was updated on 12/16/20.
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Does Veterans Affairs (VA) coverage, TRICARE, or CHAMPVA constitute Qualified Health Coverage (QHC)?
The U.S. Department of Veterans Affairs has determined that VA coverage is not Qualified Health Coverage (QHC) under Michigan’s new auto insurance law, so consumers may not use VA coverage to exclude or opt out of PIP medical coverage.
DIFS has confirmed with the U.S. Department of Defense that TRICARE and CHAMPVA coverage constitute QHC as defined in section 3107d(7)(b)(i). Therefore, customers may rely on TRICARE or CHAMPVA coverage to be eligible for the PIP medical options described in sections 3107c(1)(a), 3107d, and 3109a.
Please see Bulletin 2020-47-INS for more information.
The following question was posted on 1/19/21.
- Can Qualified Health Coverage (QHC) documentation be required prior to providing a customer with an auto insurance quote?
No. MCL 500.2116 requires an insurance producer to provide each eligible person seeking automobile insurance a premium quotation for the forms or types of insurance coverages that are offered by the insurers. QHC documentation is not a consideration in what constitutes an “eligible person” as defined in MCL 500.2103.
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Will the Qualified Health Coverage (QHC) maximum deductible be adjusted this year?
No. For the period of July 1, 2021 through June 30, 2022, the maximum deductible for determining whether health or accident coverage is QHC remains $6,000.
MCL 500.3107d(7)(b)(i)(B) requires the Director to annually adjust the QHC maximum deductible by the percentage change in the medical component of the Consumer Price Index for the preceding calendar year if the adjustment, or the total of the adjustment and previous unadded adjustments, is $500 or more. The adjustment based on the medical component of the Consumer Price Index would make the new deductible $6,246 and therefore the adjustment has not reached the threshold of $500 needed to adjust the maximum deductible.
Please see Bulletin 2021-05-INS for more information.
The following question was posted on 4/8/21.
- Why must insureds submit proof of Medicare Parts A & B at every renewal?
Insurers should not conclude that an individual meets the criteria for their Personal Injury Protection (PIP) medical coverage choice without collecting documentation regarding Medicare or, if applicable, Qualified Health Coverage or Medicaid (See Bulletin 2020-33-INS). While many people have Medicare benefits for life, some do not. Reasons somebody may lose Medicare coverage may include failing to pay plan premiums, no longer qualifying due to loss of a qualifying disability, or engaging in Medicare fraud. Selecting $250,000 with exclusions, $50,000 in PIP medical coverage, or the PIP medical opt out (Options 4, 5, and 6) can depend on household members having Medicare Parts A & B. Collecting documentation regarding Medicare at every renewal ensures that an insurer can verify and document eligibility for coverages that require Medicare Parts A & B and ensures your customers have coverage if they are injured in an accident.
The following question was posted on 5/14/21.
- What happens if an insured selects PIP coverage of $250,000 with exclusions (Option 4), but does not provide proof of Qualified Health Coverage (QHC)?
When applying for new coverage or renewing existing coverage, if an insured has chosen limited PIP medical coverage of $250,000, with some or all persons excluded from PIP medical (Option 4), they must provide a completed PIP selection form and proof of QHC for all excluded household members. If proof of QHC is not provided, the policy must be issued with limits of $250,000 for all persons without proof of QHC and with no PIP medical coverage for any or all persons that do provide proof of QHC. The insured will be charged the appropriate premium for those not excluded from PIP medical on the policy.
