What Has Changed in Michigan’s New No-fault Law?

If you’re a Michigan driver, it’s in your best interest to keep up with the changing laws concerning fault in road accidents. However, sometimes it can be challenging to stay up to date on these issues, especially when changes have recently occurred. This guide will help you break down this new legislation and help you decide whether you need an auto accident attorney.

Background

In late May of 2019, Senate Bill 1 was passed in the Michigan state legislature. This bill dramatically changed Michigan’s auto no-fault insurance legislation when Governor Whitmer signed this law into effect on May 30, 2019.

A couple of weeks afterwards, on June 11, 2019, the governor also signed House Bill 4397, meaning that the law is now in effect.

Here are some of the significant changes that will affect Michigan drivers for the foreseeable future.

Optional No-Fault PIP

Under this new law, drivers in Michigan will not be required to purchase unlimited no-fault Michigan PIP benefits. For auto users with insurance policies that are issued or renewed after July of 2020, drivers can choose to subscribe to the following no-fault benefit coverage levels:

  • $50,000 (only if a driver is enrolled in Medicaid)
  • $250,000
  • $500,00
  • No limit

Drivers who are enrolled in Medicare can “elect to not maintain coverage” for these no-fault PIP medical benefits if their auto insurance policies are issued or renewed after July of 2020.

Savings for Michigan insurance companies

The updated Michigan no-fault law lets insurers avoid reducing any of their premiums if they can demonstrate that the mandatory rate reductions the new law requires could make them risk having too little capital or could violate their Constitutional rights.

However, the profit margins of auto insurance companies are still not made clear to the public, and the passage of this new law has not improved transparency.

Savings for Michigan drivers

One of the reasons many citizens pushed for this bill is because they were enraged over high auto insurance costs. If your insurance policy is effective between July 2020 and July 2028, this new law promises:

  • 45 percent savings if you opt for the $50,000 cap on the no-fault PIP medical benefits
  • 35 percent savings if you choose the $250,000 cap
  • 20 percent savings if you choose the $500,000 cap
  • 10 percent savings if you choose to maintain the previously required “no limit” no-fault medical benefits

If you choose to opt out of these benefits packages entirely, there will be 100 percent savings on the no-fault PIP medical section of your auto insurance bill.

The PIP part of a Michigan driver’s auto insurance bill is approximately 35 to 44% of the total auto insurance premium amount. This means that it’s not unreasonable to make the claim that if you already find auto insurance to be too unaffordable for you, this new law may not help you as much as you would expect.

Premium rate factors

After the passage of this new legislation, auto insurance companies are not permitted to base the rates of auto insurance premiums on factors unrelated to driving such as marital status, sex, home ownership, level of education, address of the driver, occupation, and credit score.

This prohibition will go into effect in July of 2020.

Litigation for excess medical benefits

Under the new law, if you are injured in a car accident, you are allowed to sue for medical expenses that exceed the dollar amount of your no-fault PIP cap amount. This is a similar rule to one that many other states have enacted.

This option of a lawsuit to recoup funds for excess medical expenses goes into effect in July of 2020.

Final thoughts

There are many other aspects to this law, and the new rules it sets for drivers and insurers. If you have any pressing questions, talk to an auto accident attorney near you, and they will be happy to clear up any confusion you may have.

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