Do I Have to Have PIP Coverage under the New Michigan No-Fault Law?

Is Michigan’s Relatively New & Reformed No-Fault Auto Insurance Policy Helping or Hurting?

On May 30, 2019, Governor Whitmer signed historic, bipartisan no-fault auto insurance reform legislation into law, the first part of which was effective July 1, 2020, and the second part effective July 1, 2021. The purpose behind this new legislation was simple: make auto insurance more affordable. Michigan had been home to the most expensive auto insurance in the country up until recently when Louisiana took that title, according to The Zebra, an organization collecting data on insurance. Michigan is also home to one of the highest rates of uninsured drivers. Over the years, the percentage of uninsured drivers has steadily increased. According to Insurance Information Institute, in 2007, Michigan ranked 9th in the country as the state with the highest percentage of uninsured. By 2019, when this legislation was signed by Governor Whitmer, Michigan ranked 2nd with 25.5% of motorists driving without auto insurance.

Michigan’s auto insurance website states that we have high uninsured rates because the cost of auto insurance is so high. Unlimited Personal Injury Protection (PIP) coverage was scapegoated as the cause of high auto insurance premiums — thus, the reason for this new legislation where drivers can now choose to lower their premiums by lowering their protection.

We alluded to potential problems with Michigan’s new PIP options before the law became effective, warning that some people may not get the care they need now. Indeed, just this January, a report came out stating the same. In fact, people have died because of it.

The problem here is a counterintuitive one: you can’t think that lowering premiums by reducing protection will prevent accidents. Not that the latter was an intended result, but why else would we think it’s ok to reduce auto insurance benefits? Car accidents happen. Catastrophic injuries are suffered regularly in this state, day after day. Look at the statistics.

• In 2018, there were a total of 312,798 car crashes throughout Michigan; 974 persons were killed and 75,838 were injured, with a third of those injuries described as severe or catastrophic.
• In 2019, there were a total of 314,377 car crashes, with 985 fatalities and 74,963 injuries; a third of those injuries were described as severe or catastrophic.
• In 2020, there were a total of 245,432 car crashes––significantly less than in previous years due in part to the lockdown measures the government took during the start of the COVID pandemic. Despite fewer cars on the road, there were 1,083 fatalities and 60,986 injuries with, again, a third of those injuries described as severe or catastrophic.

But people are people, and if they are given the option to choose to pay less today in the hopes that they never have to worry about it tomorrow, they’ll choose to pay less. Now, our neighbors, friends, and family members are suffering because of it.

So, to answer the question of whether you should have PIP insurance coverage in Michigan, it’s a “yes”! We would not advise that you opt out per MCL 500.3107d if you qualify to do so. We would also not advise that you choose to pay less today and risk paying exponentially more tomorrow. That said, we know each situation is unique. You must consider your options thoroughly in light of your current financial and family situation.

Understanding the Impact of New PIP Insurance Coverage in Michigan

PIP insurance covers medical care, recovery, and rehabilitation up to your auto insurance policy’s limit. You might recall that previously PIP insurance was unlimited, but now you have options.

New PIP Insurance Options in Michigan

• Unlimited coverage, the default option
• $500,000 per person per accident
• $250,000 per person per accident
• $250,000 per person per accident with exclusions. To select this option . . .
  • You must have qualified health coverage (QHC) that is not Medicare; AND
  • A spouse or any resident relative also excluding PIP medical must have QHC.
• $50,000 per person per accident. To select this option . . .
  • The applicant or named insured must be enrolled in Medicaid; AND
  • A spouse and any resident relative must have QHC, be enrolled in Medicaid, or be covered under another auto policy with PIP medical coverage.

• No PIP medical coverage. To select this option . . .
  • You must have coverage under both Medicare Parts A and B; AND
  • A spouse and any resident relative must have QHC or be covered by another auto policy with PIP.

Qualified Health Coverage in Michigan

Where qualified health coverage is required, it means one of two things:

1. You have coverage under parts A and B of the federal Medicare program established under subchapter XVIII of the Social Security Act, 42 USC 1395 to 1395lll; OR
2. You have other health insurance that does not exclude or limit coverage for auto accident-related injuries and any annual deductible for the coverage is $6,000 or less per individual.

As you can see, to opt out or get a reduced rate, you will have to have qualifying health coverage. So, you are paying for it, whether it’s through auto insurance or health insurance.

But there’s more to the story.

You know you have QHC if you:

• Are enrolled in Medicare Parts A and B;
• Have insurance sponsored by an employer; or
• Are an active Armed Services member and have Tricare coverage.

You probably don’t have QHC if you:

• Are a Medigap member;
• Medicaid member; or
• Are a Veteran with VA coverage.

The problem here is this: A large portion of people don’t qualify for QHC. According to Statista’s data for health insurance in Michigan in 2020, only about 50 to 60 percent or a little more qualify. That’s 30 to 40 percent of a population not qualifying. That means, in part, many people who can’t afford or don’t have qualifying health insurance will opt for lower premiums for auto insurance. Now the most vulnerable are the least protected.

But you do not have to be financially marginalized to be impacted by these changes. On the one hand, if you are in a life-changing auto accident and suffer catastrophic injuries, at some point your insurance may stop covering care you need. Plus, the benefits you once received––like long-term specialized rehab, home and vehicle modifications, and 24/7 in-home attendant care––are no longer provided in the no-fault policy (unless you have unlimited PIP insurance).

Suing to Get the Benefits You Once Were Able to Get Through Your Own Michigan Auto Insurance

The purpose of a no-fault state is minimizing or eliminating litigious actions that can overwhelm parties who are trying to recover from auto accident injuries. Michigan is a no-fault insurance state, but it is also a tort threshold state. This means that there is a crash injury threshold when your injuries rise to the level of “serious impairment of body function.” When damages are greater than this threshold, you can file a lawsuit against an at-fault driver for damages, like:

• medical and rehabilitation costs
• lost wages
• pain and suffering
• future economic loss
• vehicle repair costs.

Under Michigan’s auto no-fault insurance law, this threshold test is part of the balance between the state’s first-party no-fault law (that requires your own insurance company to pay PIP medical expenses and lost-wage benefits) and tort law (that allows you to file a lawsuit against the at-fault driver).

Under the old law, an injured crash victim could not file a lawsuit for future medical bills or for medical bills that exceeded the PIP coverage level of their insurance policy. Now, accident victims can sue if their no-fault PIP medical benefits provides less than “unlimited” no-fault medical coverage and the victim’s medical costs exceed their policy’s limit.

As you can see, opting out or opting for less in coverage may put you in a situation one day where you must fight to obtain the full worth of compensation owed to you. Sure, this is not everyone’s story, but if it becomes your story, you may regret your choice.

How to Navigate Michigan’s New Auto Insurance Law

Now that you know you can opt out of or opt for less PIP insurance in Michigan, the question is: should you? Aside from knowing that your own health insurance, if you have it, may not cover the full sum of all the costs associated with a car accident injury, and considering that car collision injuries keep happening and are increasing, there are other factors to consider.

1. How much do you drive?

You want to consider how much you are in your vehicle. Obviously, the more you are, the more opportunities there are for you to be in an accident. You also want to consider where you drive while in your car. More serious accidents occur on interstates and highways, in part because there are more vehicles in total and more vehicles going at higher speeds.

2. What do you use your car for?

Do you use your car to get to work? Take children to school? For long drives on the weekend with friends and family? If you have often passengers in your vehicle, you want to consider that factor as well. You’re not the only one at risk.

3. What type of car do you drive?

The type of car matters with regard to PIP. Some cars protect occupants better than others due to size, safety features, and other factors. ValuePenguin published a blog listing the deadliest vehicles in the United States:

1. Ford F-Series (the most deadly)
2. Chevrolet Silverado
3. Honda Accord
4. Toyota Camry
5. Ram pickup (all models)
6. Honda Civic
7. Toyota Corolla
8. Ford Explorer
9. Nissan Altima
10. GMC Sierra

4. What’s your family situation?

Are you single or married? Do you have children? If children, are they young, older, or adults? This all matters, because if one were to be injured, the severity of the injury and extent of care needed will be different for adults and children, for example.

5. What’s your health situation?

Do you have any pre-existing health conditions that could make an injury more severe than what it would be for another person without the same health issue? Examples of pre-existing conditions include:

• Past surgeries or injuries
• Nerve damage
• Back problems
• Fibromyalgia.

In the end, navigating Michigan’s new no-fault law is really about taking into consideration the above factors and then assuming you could be in an auto accident tomorrow. In worst case scenarios, if you opt out or opt for less, will you be ok? Will you have enough coverage?

For too many people, they are now finding out the answer the hard way.

Final Thoughts from an Experienced Car Accident Attorney in Michigan

The benefit of the new law is that you can now choose which form of coverage you want in terms of PIP insurance, and depending on what you choose, your premium could be less than what it was a year ago. There is, however, a lot to consider. We at Goodman Acker prefer being cautious. We overwhelmingly choose the default option: unlimited.

So, no, you don’t have to have PIP insurance in Michigan, but you should really consider what that means before opting out or opting for less.

Do you have more questions about car insurance coverage under Michigan’s new no-fault law? We can help. If you or a loved one has suffered serious impairment of bodily function or someone has died in a crash that was another party’s fault, our personal injury lawyers will evaluate your case and determine if a lawsuit for personal injury is in your best interests. Our incredibly passionate team has been helping people in the Detroit area for over 25 years.

We offer a free consultation to discuss the circumstances of your vehicle accident. So, let our combined 150+ years of legal experience, insight, and resources help you through this difficult time. Call our Detroit no-fault lawyers at (248) 306-8729 today.