Michigan Auto Reform: Important Changes to No-Fault

Michigan auto insurance reform has changed Michigan’s No-Fault law in significant and substantial ways that affects every driver and every car accident victim in Michigan. Those changes include:

PIP Choice

For nearly 40 years the State of Michigan has required all drivers to carry “unlimited” No-Fault medical coverage as protection for themselves and their families in case they are injured in a car accident. The law now requires drivers to choose from one of four No-Fault PIP medical benefits coverage limit levels: These include (1) $50,000 for drivers enrolled in Medicaid; (2) $250,000; (3) $500,000; and (4) unlimited or no limit. These new No-Fault medical coverage choices became available in policies issued or renewed after July 1, 2020.

Opt-out of No-Fault medical coverage

Drivers who have Medicare COVERAGE A & B can choose to opt-out of No-Fault PIP medical benefits altogether. However, if they are injured in a car accident, No-Fault will not pay for any accident-related medical bills. The legislative intent behind this change is that these drivers would turn to Medicare for medical coverage for injuries suffered in a car accident. The Medicare/opt-out became available in policies issued or renewed after July 1, 2020.

Attendant care

Auto insurance companies will not be obligated to pay for more than 56 hours per week for in-home, family-provided attendant care provided after July 1, 2021.

Michigan Catastrophic Claims Association

The Michigan Catastrophic Claims Association (MCCA) will continue to pay for the medical costs of catastrophically injured car accident victims who are claiming medical benefits through a No-Fault auto insurance policy that was issued or renewed before July 2, 2020. However, for policies issued or renewed after July 1, 2020, the MCCA will only pay for a car accident victim’s catastrophic medical coverage only if “unlimited” was the No-Fault PIP medical benefits coverage level selected in policy.

Medicare-based fee schedule

Starting July 1, 2021, doctors, hospitals, clinics, medical providers and other persons who treat and care for car accident victims have to conform their charges for services to a new Medicare-based fee schedule.

“Excess” medical expenses

Car accident victims whose accident-related medical bills exceed the No-Fault PIP medical benefits coverage level in the auto insurance policy through which they have made their No-Fault claim will be able to sue the at-fault driver in a third-party tort lawsuit for payment of present and future “excess” medical bills.

Michigan Assigned Claims Plan

Car accident victims who must claim Michigan No-Fault insurance benefits through the Michigan Assigned Claim Plan (which is designed to assign car insurance companies to provide benefits to victims who otherwise has no source of insurance coverage) will be subject to a cap of $250,000 on medical benefits.

Bodily injury liability coverage

Since July 2, 2020, drivers are now required to carry bodily injury liability insurance in the amounts of $250,000 and $500,000 that provides liability coverage in the event they cause a car accident that injures or takes the life of another person. However, drivers will have the option to purchase lower limits of $50,000 and $100,000 for this third party car insurance.

Mini tort

The maximum recovery amount for car accident-related vehicle damage under Michigan’s mini tort law amount will increase from $1,000 to $3,000 for car accidents after July 1, 2020.

The changes brought about by Michigan No-Fault insurance reform are far-reaching and complex. They will present challenges both for drivers when they are purchasing car insurance and for car accident victims when they are seeking the benefits and protections provided by the No-Fault law.

At Aitken & Ormond Insurance, we want you to understand what the changes from Michigan No-Fault insurance reform mean for you and your family. Contact your Agent to make sure you have the coverage you need in this changing world.

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