Important Things to Know About Michigan Auto No-Fault Reform
On July 2, 2020, Michigan Auto Insurance Changed
The changes relate to:
This coverage is payable without regard to fault (“no-fault”) to you or on behalf of you or a household relative for auto injuries. PIP only covers you and relatives who live with you. There are three categories of PIP coverage: Medical Expenses, Work Loss, and Replacement Services.
- Medical Expenses (PIP Medical): This PIP category will pay up to your policy limit for claims covering reasonably necessary medical expenses. Reasonable funeral and burial expenses are also covered.
- Work Loss: This category pays for your loss of income due to an auto accident up to 85% of your current salary for a maximum of three years. This category has a limit that is separate from the PIP Medical limit, and unlike the PIP Medical limit you choose, the Work Loss limit is set by law.
- Replacement Services: If an auto accident causes you to have to pay someone to perform “chores” like mowing the lawn that you would have done yourself, Replacement Services covers that cost up to $20 per day for up to three years. This limit is also set by law and is separate from the PIP Medical limit you choose.
So…what changed? The limit and people covered…
a. The Limit
Before the law changed, you could only carry Unlimited PIP Medical coverage. Today, these are options for your PIP Medical limit:
- Option 1 - Unlimited
- Option 2 - $500,000
- Option 3 - $250,000
- Option 4* - $250,000 excluding some or all household relatives from PIP Medical
- Option 5* - $50,000 (Medicaid option)
- Option 6* - Medicare Opt Out
Selecting your PIP Medical option involves completing, signing and returning the F-2012 Michigan Selection of Personal Injury Protection (PIP) Medical Coverage Form which explains the risks and benefits of each option.
*Insurance Applicants who consider Options 4, 5 and 6 have the following additional requirements to meet in order to select them:
- Option 4 - $250,000 excluding some or all household relatives from PIP Medical
This Option is for Applicants who are not on Medicare but have Qualified Health Coverage (QHC). With this option, the Applicant may exclude themselves entirely from PIP Medical coverage. Household relatives may also be excluded if they have QHC, which for the household relative can include Medicare. Other household relatives who do not have QHC will have $250,000 of coverage.
- Option 5 - $50,000
This Option is for an Applicant that is on Medicaid. All other household relatives must also be enrolled in Medicaid or have Qualified Health Coverage or be covered under another auto policy with PIP Medical coverage.
- Option 6 – Medicare Opt-Out
This Option is for Applicants enrolled in Medicare Parts A & B. All other household relatives must have Qualified Health Coverage, which can include Medicare, or be covered under another auto policy with PIP Medical Coverage.
Why the change? Why not give you a choice? With the other forms of healthcare, requiring unlimited PIP Medical required double coverage. Now you have a choice to buy the extra coverage.
b. People Covered
Before the law changed, pedestrians, bicyclists, out of state residents and unrelated occupants of your insured vehicle could potentially claim PIP Medical benefits from your policy. For accidents on or after July 2, 2020, only relatives living with you can claim PIP from your policy.
What Defines Qualified Health Coverage (QHC)?
QHC includes health coverage that does not exclude or limit coverage for auto accident injuries and has a deductible of $6,000 or less. Some health insurance policies provide coverage that meets the criteria for QHC and some do not.
To determine if your specific health insurance policy qualifies as QHC, you should contact your company HR person or your health insurance agent for clarification.
What Specific Documents are required for PIP Medical Options 4, 5 and 6?
- For Option 4 QHC documentation, the applicant or insured must provide a document from his or her health insurer or employer stating:
- The names and dates of birth of all persons covered under the QHC policy,
- A statement as to whether the coverage provided constitutes “qualified health coverage” as defined in MCL 500.3107d(7)(b)(i) or that the coverage does not exclude coverage for motor vehicle accidents and has an annual deductible of $6,000.00 or less per covered individual.
- For Option 5 (Medicaid) or Option 6 (Medicare) QHC documentation, the applicant or named insured must provide a copy of his or her current Medicare or Medicaid card.
- If any spouse or relative residents are not covered by the Applicant/Named Insured’s QHC or Medicare/Medicaid policy, please provide documentation for these residents such as proof of QHC, proof of other auto insurance coverage, and/or proof of participation in Medicare Parts A&B or Medicaid to verify eligibility for PIP Medical Options 4, 5, and 6.
NOTE: If Options 4, 5 or 6 are selected, Wolverine Mutual requires the documentation listed above and a signed F-2012 Michigan Selection of Personal Injury Protection (PIP) Medical Coverage Form at every renewal. If Wolverine does not receive this information, a policy will automatically change to PIP Medical Option 1 (Unlimited), per the Michigan Insurance Code.
This coverage pays for legal defense costs and what you or the driver of your car may be required to pay to someone else claiming you are responsible for their auto injuries.
What changed? This coverage has certain minimum required limits. Beginning on July 2, 2020, the new law requires limits of $250,000/$500,000 unless you sign and return a form stating that you understand the risks of having lower limits. You may select Bodily Injury limits as low as $50,000/$100,000.
Why? This change was deemed necessary because of an expected increase in the number of lawsuits and Bodily Injury Liability claims that will result from the optional decrease in PIP coverage.
We suggest you contact your Wolverine Mutual agent to discuss the benefits of a Personal Umbrella Liability insurance policy to further protect your family and your assets.
How Much Money Will I Save?
The new law requires carriers to reduce premiums on the PIP Medical portion of your auto policy. The mandated reductions are as follows:
- Unlimited: 10%
- $500,000: 20%
- $250,000: 35%
- $50,000: 45%
These premium reductions are only applicable to the PIP Medical portion of your policy.
So How Does This Process Work?
In late May, Wolverine Mutual began mailing a packet of information to Michigan auto policyholders prior to their next six-month policy renewal term. This process started with policies scheduled to renew on July 2, 2020.
This packet includes two separate selection forms:
- MICHIGAN CHOICE OF BODILY INJURY LIABILITY COVERAGE LIMIT
- MICHIGAN SELECTION OF PERSONAL INJURY PROTECTION (PIP) MEDICAL COVERAGE – INDIVIDUAL(S)
You will be required to make the decisions about the level of coverages discussed above. Failure to communicate your decisions to us or your agent in a timely manner will result in certain coverages defaulting to state-mandated limits.
You need to review these important forms and, if necessary, contact your Wolverine Mutual independent agent if you have any questions or need assistance in completing them properly.
A postage-paid envelope will be included in the packet to return the signed selection forms, and any Qualified Health Care documentation, to Wolverine Mutual for processing prior to when the policy renews.
What if I still have questions?
Your Wolverine Mutual Independent Agent is your best resource for help with understanding your options.
You can also visit the Michigan Department of Insurance and Financial Services (DIFS) website for additional information.