Several months ago we shared how the Michigan Legislature had passed sweeping changes to the Michigan No-Fault Insurance Law and the Michigan Insurance Code – known as SB1. A “trailer bill,” HB4397 was passed on by the Michigan House and Senate that included some modifications, which was signed into law on June 11, 2019.

These changes take effect on July 1, 2020. It requires you to consider the level of personal Injury Protection (PIP) coverage should you be in an auto accident. The default amount caps at $250,000.  It also removes lifetime medical benefits, should they be needed.

While on the surface a reduced auto insurance payment sounds great to all of us, but what is the level of risk you are willing to take? Here’s a guide of cost savings to help you make an educated decision:

• $0 personal injury protection (a 100% savings on the PIP coverage but risks having no medical care as a result of an auto accident).
• $50,000 of personal injury protection, plus $200,000 for immediate trauma care (a 45% savings for those who opt out of PIP).
• $250,000 of personal injury protection (a 20% savings for those who opt out of PIP).
• $500,000 of personal injury protection (a 10% savings for those who opt out of PIP).
• Unlimited personal injury protection (Insurers are mandated to offer it).

Also To Consider:

Does the cost of purchasing added PIP coverage outweigh the cost of an ambulance ride which can cost between $500 into the thousands depending on the care rendered? An emergency room visit or surgery could be thousands of dollars depending on the nature of the injury and care provided. If rehabilitation or physical therapy is needed, depending on the type and length of time could be a lifetime financial burden on a family.

With the new cap levels, if you hit someone who has the lowest amount of mandatory liability insurance of $50,000 in Michigan, and you have selected a lower PIP cap amount, medical bills can mount up with no insurance available to pay for it. That leaves Michigan drivers dangerously medically and financially exposed.

If you think your medical insurance will cover the cost of care from an auto accident, you might be wrong! Be sure to talk with your health insurance company or employer representative about how to coordinate medical benefits with your auto insurance PIP coverage.

As of July 1, Michigan becomes a Tort state. What that means is that without additional liability coverage on your auto insurance policy, if you are found to be 51% at fault the other individual in the auto accident has the right to sue you personally for their financial losses related to the accident. What Michiganders have come to think of as a ‘No Fault State’ has changed and put the burden of liability on the auto owner.

Why Are We Sharing This Information?

The changes to the Michigan No-Fault law are many and very complex. This is new territory for insurance companies, and we believe the impact of this change is not clearly understood by legislators, yet it’s now law.

We treat many patients who were injured in an auto accident. We know the physical damage an auto accident can cause. We know how it changes our patient’s lives. Adding a financial burden on top of physical injuries may severely impact those involved in an auto accident.

Under this new legislation, you may be sued and held financially liable for medical expenses, if you are held responsible for the accident and the person (s) involved in the accident should they reach the cap of their medical coverage. It is important to protect your family and financial assets should you or a child be in an auto accident, regardless of who is at fault.

We are physicians, not lawyers or insurance agents. We want our patients to be informed about the potential of health and financial consequences as a result of changes to the Michigan No-Fault Auto Insurance.  We can’t advise what is right option for you, we suggest to at least have a conversation with your auto insurance provider to learn your options.