Currently, Michigan residents pay the highest car insurance rates in the country. However, that could change with the passage of Michigan’s car insurance reform (effective July 1, 2020). New laws will make major changes, as well as eliminate the state’s requirement for all drivers to purchase unlimited lifetime injury coverage for parties injured in car accidents.
Michigan Car Insurance Changes to Expect
There will soon be 5 Personal Injury Protection (PIP) options for drivers to choose from. PIP covers any driver or passenger injury expenses resulting from an accident. A driver will now be able to either keep their unlimited PIP coverage or choose less coverage (which could result in a larger discount). The 5 insurance options are as follows:
- Unlimited PIP Coverage (10% reduction): This covers unlimited lifetime car accident injury expenses.
- $500,000 of PIP Coverage (20% reduction): This covers any car accident injury expense that does not exceed $500,000.
- $250,000 of PIP Coverage (35% reduction): This covers any car accident injury expense that does not exceed $250,000.
- $50,000 of PIP Coverage (45% reduction): This covers any car accident injury expense that does not exceed $50,000 and the lowest option for Medicaid recipients.
- Opt-Out of PIP Coverage (100% reduction): This option is available only if a driver has Medicare or a qualifying health insurance plan that covers car accident injuries.
Required Liability Coverage Before July 1, 2020
Drivers are required to purchase a minimum of $20,000 in coverage expenses for 1 person injured or killed in an accident. Additionally, drivers must purchase $40,000 in coverage expenses for 2 or more people injured or killed in an accident.
Required Liability Coverage After July 1, 2020
Drivers are expected to be offered a default minimum of $250,000 in coverage expenses for accidents involving 1 person injured or killed in an accident. Drivers will be allowed to request and receive reduced minimums of $50,000 to $100,000.
Certain Personal Information Is Banned from Insurance Pricing
Each state sets regulations detailing what information insurance companies can and cannot use when pricing auto insurance. For example, insurance companies take into account vehicle type, annual mileage, and/or credit history. However, after July 1, 2020, Michigan will ban insurance companies from using the following when determining insurance pricing:
- marital status;
- zip code;
- credit score;
- education; and/or
- residential status.
Stricter Insurance Regulation
Currently, Michigan utilizes a file-and-use system to regulate insurance. This system allows insurers to start using new rates as soon as they have been submitted to the state. Regulators can later reject these rates, but only do so on rare occasions. Beginning July 1, 2020, the state insurance regulator must approve new rates before insurers can start charging their customers.
New Limits on Medical Billing
Michigan law currently requires insurers to pay what is “reasonably necessary” to treat accident victims. Disputes over what is covered and how much it costs often land in the court system. On July 1, 2021, Michigan will institute a new medical fee schedule to cap how much insurers are required to pay for medical services and treatments. These limits will start phasing in at rates of 200% to 250% of what Medicare would pay for a medical procedure. However, the reimbursement rate will drop to 190% to 230%, depending on the type of medical facility (by 2023).
Dependable Auto Accident Attorneys
At Tanis Schultz, you can count on our auto accident lawyers to aggressively and effectively represent you during your case. We can investigate the circumstances surrounding your case and help you construct a sound claim.
Call our firm today at (616) 608-7149 or contact us online for an initial consultation.