Videos about No-Fault Reform
The reformed Michigan no-fault law gives drivers more choices, along with some changes to their auto insurance. While some of these changes will be phased in over time, most will go into effect on July 2, 2020.
We know that many people will want to learn about the reform in a group setting where they can readily ask questions. That’s why we’ve scheduled presentations throughout the community and Town Talks hosted by our agency.
Upcoming Town Talks about No-Fault Reform
Come and learn about the changes to Michigan’s auto insurance law. Town Talks are free and open to the public.
- May 12, 11:30 a.m.
- May 21, 5:30 p.m.
Mid Michigan College
2600 S Summerton Rd.
Mt Pleasant, MI
Pre-registration is encouraged but not required. Please email [email protected] to register.
What Are My Choices?
Prior to the reform, it was mandatory for drivers to carry unlimited Personal Injury Protection (PIP) benefits, but starting July 2, 2020, drivers will be able to choose from five different coverage options:
- Unlimited PIP coverage
- $500,000 limit
- $250,000 limit
- $50,000 limit; this is the lowest limit available, but only for drivers who are on Medicaid. (Your spouse and other relatives who live with you may be on Medicaid or have other qualified health coverage.)
- Opt-out of PIP coverage entirely; however, you, your spouse and all relatives who live with you must have Medicare or qualified health insurance to be eligible.
Policyholders will be given the option to select their PIP coverage at each renewal. If policyholders do not make a specific selection with their new policy or when their current policy renews after July 2, 2020, their policy will be issued or renewed at the default level of Unlimited coverage.
Will I Save Money?
- Insurance companies must reduce PIP premium rates, and guarantee that they will be reduced for eight years. The rate reduction applies only to personal injury protection premiums, which is one line item of your overall auto insurance costs. For policies effective July 2, 2020 and before July 2, 2028, the new No-Fault law promises the following savings:
▪ 45% savings for drivers with the $50,000 PIP cap
▪ 35% savings for drivers with the $250,000 PIP cap
▪ 20% savings for drivers with the $500,000 PIP cap
▪ 10% savings for drivers with the Unlimited benefits
▪ 100% savings for drivers who Opt Out of PIP benefits. Only individuals with Medicare or a qualified health insurance plan are eligible to opt out.
- *Note that the percentage of savings is a company average and is a combination of the PIP premium and Michigan Catastrophic Claims Association (MCCA) per vehicle assessment fee.
What Else Is Changing?
- Non-driving factors can’t be used to set insurance rates. These factors include zip code, credit scores, home ownership, education level, and occupation.
- Minimum liability coverage limits will be increased from $20,000 per person and $40,000 per accident to $50,000/$100,000. The policy will default to $250,000/$500,000 (or $510,000 for commercial auto policies) if you do not make a choice. Drivers must sign a selection form to choose limits lower than $250,000/$500,000.
- Auto insurers are not required to pay for more than 56 hours per week for in-home, family-provided attendant care.
- Anti-Fraud Unit – New law creates an anti-fraud unit to investigate insurers, health providers, drivers, or anyone who is defrauding the system for personal benefit.
- The “Mini-Tort” damage cap will increase from $1,000 to $3,000 for accidents occurring after July 1, 2020.
- The order of determining who will pay for a no-fault claim – called the “order of priority” – has changed in some cases involving:
- Relatives who do not reside in the household of the named insured unless they are away at school. These relatives (such as your children) would need to have their own insurance policy, even if they are driving a car you own.
- Non-relatives who reside in the household, even if they are listed drivers. They would need to have their own insurance policy.
Increased Chance of a Lawsuit
While there are new choices and savings within the reformed No-Fault law, individuals and families have a higher exposure to lawsuit because of the following:
- Injured parties will be able to sue one another for medical bills. This was not possible under the old law.
- The new law changes from Comparative Negligence to Contributory Negligence. This means that you could be sued even if you are NOT-at-fault in an accident or claim. For example, say you were going 5 miles over the speed limit (speeding) and were hit by a drunk driver. The drunk driver was injured in the accident and decided to sue YOU for his medical bills. In court, you are found to be 10% liable for the accident because you were speeding and you would be legally responsible for 10% of any judgement.
These shifts in the new No-Fault Law place more liability and exposure on individuals and families.
Brief history of Michigan’s no-fault law
Michigan’s no-fault auto insurance law has been in place for nearly 50 years. When it originally passed in 1973, the no-fault system was designed to:
- Make the claims process more straightforward for auto accident victims, especially if more than one driver contributed to an accident
- Allow injured persons in auto accidents to collect benefits in a timely manner, so they can recover more quickly – ultimately saving time and money
- Compensate accident victims promptly and equitably for medical costs and lost income
- Limit the number of lawsuits that result from auto accidents, and reduce the burden on the state’s court system. (Before the law was passed, there were about 69,000 auto injury lawsuits per year. Today there are about 29,000.)
Under Michigan’s no-fault law, those who are injured in auto accidents receive unlimited lifetime medical benefits and significant wage loss benefits. Severely injured persons receive these benefits immediately, rather than having to wait for a settlement to be reached in court, like the traditional tort system in other states. And, all drivers are required to carry these coverages: personal injury protection, property protection, and residual liability.
However, there have been challenges with the no-fault system, such as the rising cost of auto insurance for Michigan drivers. The Insurance Alliance of Michigan (IAM) cites that Michigan’s unlimited, lifetime medical benefits, inflation in the cost of health care and auto repair, and lawsuits are driving up the cost of auto insurance. Because of the high cost of auto insurance in Michigan, many drivers opt to not carry insurance at all, which places more stress on the system. It is because of these challenges that lawmakers passed reforms to the Michigan no-fault law in 2019.
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