What Michigan Drivers Need to Know About the State’s New No-Fault Law

Michigan Governor Gretchen Whitmer recently signed a bill to reform the state’s no-fault auto insurance laws. This new law passed both the state house and senate with a large majority, and was prompted by widespread demand from citizens who were unhappy with the high costs of auto insurance in the state. While this new law attempted to take some positive steps, drivers will really see very little – if any – benefit at the end of the day. This new set of laws is not going to be the end of the needed reforms that will try to balance the important benefits of no-fault auto insurance with affordable prices. There are quite a few changes of which drivers will need to be aware.

Options for No-Fault PIP Coverage

With the passing of this new law, Michigan drivers are not required to purchase unlimited coverage in this area. They can now choose a level that meets their needs based on the following options:

  • $50,000 (Only if the driver is enrolled in Medicaid)
  • $250,000
  • $500,000
  • No-Limit
  • Opt-Out – Certain drivers may elect not to maintain coverage for no-fault PIP medical benefits

Please be aware, however, that less coverage is not always better. If you are seriously injured, $250,000 will go much more quickly than you may realize. You will no longer receive lifetime medical care if you accept policies with these lower limits.

Modest Savings

As noted above, the different options listed above will come with savings on the premiums paid by drivers but with less coverage as a result. While many supporters of the new law are boasting large savings, the reality will be more modest because the insurers are basically charging you less to provide less coverage. In the end, most people are going to end up with reduced coverage, without saving significantly on their monthly premiums. 

Changes to Non-Driving Factors Considered in Premiums

The new law will also make it so that insurance companies cannot use certain non-driving factors when determining the premium prices. The factors that can no longer be considered are: sex, marital status, home ownership, education level attained, occupation, postal code, and credit score.  It remains to be seen if this will actually result in a change in pricing for certain individuals.

Increased Liability Limits

The required liability limits prior to this law were set at $20,000 for one person or $40,000 for two or more people in an accident for what is commonly known as damages for “pain and suffering” if you were hit by an at-fault driver.  With the new law, those minimum limits are bumped up to $50,000 for one person or $100,000 for two or more people. These higher minimums will likely drive up the premium prices at least somewhat, which will further offset the modest reductions mentioned above.   

Complex Legal Changes

This new law, along with the parts of the existing no-fault laws that remain in effect, can be quite complex. While those who are promoting these changes are boasting that it is a major victory for consumers, that is not really the case. Most of the changes are illusory and not really enforceable. 

If you have been in any type of accident, it is important to talk to an attorney to understand your legal rights. Please contact us to schedule a consultation today.