Recent Changes to Michigan No-Fault Insurance Law: Better Safe Than Sorry

Michigan’s no-fault auto insurance system has been in place since 1973.  Historically, every auto insurance policy in Michigan provided lifetime medical coverage without limit to an accident victim.  Michigan was one of only 7 states that offered such a rich lifetime benefit amount.

On May 30, 2019, Governor Whitmer signed historic no-fault auto insurance reform legislation (Public Acts 21 and 22 of 2019).  With the goal of lower auto insurance rates, the act eliminates automatic lifetime medical coverage paid by the auto insurance companies. 

It is not clear at this point if the legislation will achieve the desired result of lowering auto insurance premium costs.

More importantly, consumers under the new system will be given the choice to select a coverage level based upon their unique risk tolerance.

If you do nothing and do not make an election, your auto coverage defaults to lifetime uncapped expense coverage. 

The unfortunate consequence of giving consumers the choice to elect lower insurance coverage is many drivers are opting to give up lifetime uncapped medical benefits in exchange for minimal auto insurance monthly premium savings.  

The new 2019 legislation requires all motorists to select a coverage options.  Here are examples of the coverage options available. 

1. LIFETIME, UNCAPPED PIP ALLOWABLE EXPENSE COVERAGE. Under the 2019 law, consumers can elect to purchase lifetime, uncapped PIP allowable expense coverage that has been automatically available to them under the original no-fault law (Option #1).
2. THE $500,000 BENEFIT LEVEL. Under the 2019 law, consumers can elect to purchase $500,000 of lifetime PIP allowable expense coverage. This option is available to any person without limitation (Option #2).
3. THE $250,000 BENEFIT LEVEL. Under the 2019 law, consumers can elect to purchase $250,000 of lifetime PIP allowable expense coverage. This option is available to any person without limitation (Option #3).
4. $50,000 (Only Available if Driver is enrolled in Medicaid)

We recommend that you select a coverage option that is consistent with your risk tolerance.  

However, do not be a “penny wise and a pound foolish”.  Physicians and dentists have significant personal assets at risk and can be a target for litigation. 

In selecting the coverage that is appropriate for your family, in many cases it makes sense to spend more on monthly auto insurance premiums and purchase lifetime uncapped medical benefits as opposed to the $500,000 or $250,000 benefit level now available.  Should you be involved in a significant auto accident, having lifetime uncapped medical expense coverage will matter much more than the premium savings.  

We also recommend you consider purchasing uninsured motorist coverage.  The coverage is important given that a significant number of drivers are on the road without auto insurance.  In Detroit, for example, the number of uninsured drivers has been estimated to be as high as 50%. 

Uninsured motorist coverage can be purchased for minimal cost and provides necessary coverage should you have the misfortune of getting in an accident with an uninsured motorist.