No-Fault Reform Deal Struck

May 24, 2019

Governor Gretchen Whitmer, Speaker Lee Chatfield, and Senate Majority Leader Mike Shirkey announced they have reached a compromise on reforming Michigan’s auto no-fault law. After days of closed-door negotiations, the leaders rolled out Michigan’s first major changes to no-fault in decades. Votes are expected later today in both chambers to send the compromise version of Senate Bill 1 to Governor Whitmer’s desk for her expected signature.

Here are the highlights for today:

  • Allows an insured person to select an Unlimited, $500,000, or $250,000 Personal Injury Protection (PIP) option.
  • Allows seniors on Medicare to opt out of purchasing PIP coverage entirely, and allows Medicaid recipients to purchase a PIP policy of $50,000.
  • Permits enhanced coordination with health insurance. For insureds who select the $250,000 PIP option, the bill will allow for 100% PIP reduction with health coverage that covers injuries related to an auto accident.
  • Includes a mandatory rate rollback on the PIP line of the auto policy. The rollbacks are: 10% for Unlimited coverage, 20% for $500,000, 35% for $250,000, 45% for $50,000, and 100% PIP reduction for Medicare or Enhanced opt-outs.
  • Increases current minimum coverage of residual liability insurance from $20,000/$40,000 to $50,000/$100,000.
  • Increases the mini-tort provision from $1,000 to $3,000.
  • Prohibits the use of most non-driving rating factors. Insurers will still be allowed to use credit information and territory as a rating factor.
  • Requires a statutory form be created by Department of Insurance and Financial Services (DIFS) that requires the insured’s signature acknowledging coverage level. This is a consumer protection issue since the current no-fault system has been in place for over 40 years and has been advocated for by the Michigan Association of Insurance Agents (MAIA).
  • Puts in statute the current auto insurance fraud task force within DIFS to investigate insurers, health providers, drivers or anyone who is defrauding the system for personal benefit.

It’s important to note that while the legislation is happening now, it will take some time for these changes to take effect. We will be watching for further details and will keep you informed as we learn more.

*Information provided by the Michigan Association of Insurance Agents.