- March 7, 2023
- Car Accidents
- Personal Injury
On May 30, 2019, Governor Whitmer signed historic, bipartisan no-fault auto insurance reform legislation into law, the first part to be 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. However, since the law was introduced, most people have little information on its provisions.One of the questions often asked is: Do I need to have PIP coverage under the new Michigan no-fault law? This blog will answer this question and provide vital information on the new Michigan no-fault law. If you have questions or need legal representation after a car accident, our attorneys at Goodman Acker P.C. are available for a consultation.
Call us at 248-286-8100 to schedule a free initial consultation.
Why You Need the Car Accident Attorneys at Goodman Acker P.C.
Insurance laws are not always easy to understand, and insurance claims aren't as straightforward as you’d expect them to be. Even if you have a valid claim, your insurer might be reluctant to pay compensation and want to pay less than your policy allows. Also, in cases of severe injury, you may be eligible for financial compensation from the negligent party.
Our car accident lawyers at Goodman Acker P.C. can represent your interests in any of these scenarios. We have over 150 years of experience helping Michigan residents and will do what we can to obtain a favorable outcome. Contact us at 248-286-8100 to learn more about how we can help you.
Is Michigan’s Relatively New & Reformed No-Fault Auto Insurance Policy Helping or Hurting?
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 drivers. By 2019, when the new law was signed by Governor Whitmer, Michigan ranked 2nd, with 25.5% of motorists driving without auto insurance. Michigan’s auto insurance website states that there are 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 reducing 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, in January 2022, a report came out stating the same. People have died because of it.
The problem here is counterintuitive: 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 okay to minimize auto insurance benefits? Car accidents happen, and catastrophic injuries are suffered regularly in this state, day after day.
Look at the statistics.
- In 2019, there were 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 fewer than in previous years due in part to the lockdown measures the government took during the start of the COVID-19 Despite fewer cars on the road, there were 1,083 fatalities and 60,986 injuries, with a third being severe or catastrophic.
- In 2021, there were 282,640 crashes, with 1,131 fatalities and 51,666 injuries, while in 2022, there were 293,341 crashes, 1,123 deaths, and 70,281 injuries.
People are people, and if they are given the option to pay less today in the hopes that they never have to worry about it tomorrow, they’ll choose to pay less. However, our neighbors, friends, and family suffer 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 recommend you pay less today and risk paying exponentially more tomorrow. That said, we know each situation is unique. You must consider your options thoroughly, considering 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.
The new PIP insurance options in Michigan are:
- 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
For this option, the following must be met: You must have qualified health coverage (QHC) that is not Medicare; AND a spouse or resident relative who is 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 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:
- 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
- You have other health insurance that does not exclude or limit coverage for auto accident-related injuries; any annual deductible for the coverage is $6,000 or less per individual.
As you can see, you must have qualifying health coverage to opt out or get a reduced rate. So, you are paying for it, whether it’s through auto insurance or health insurance.
You know you have QHC if you:
- Are enrolled in Medicare Parts A and B; or
- 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; or
- Have Medicaid; 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 qualified. That’s about 40 percent of the population not qualifying.
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 the 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).
Can You Still Sue to Get the Benefits You Once Were Able to Get Through Your Michigan Auto Insurance?
A no-fault state aims to minimize or eliminate litigious actions that can overwhelm parties trying to recover from auto accident injuries. Michigan is a no-fault insurance state, but it is also a tort threshold state. This means there is a crash injury threshold when your injuries rise to “serious impairment of body function.”
When damages are more significant 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 bills that exceeded the PIP coverage level of their insurance policy.
Now, accident victims can sue if their no-fault PIP medical benefits provide 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 for less coverage may put you in a situation one day where you must fight to obtain the total compensation owed. This is not everyone’s story, but you may regret your choice if it becomes yours.
How to Navigate Michigan’s New Auto Insurance Law
Now that you know you can opt out of or for less PIP insurance in Michigan, the question is: Should you? Aside from knowing that your 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.
How Much Do You Drive?
You want to consider how much you are in your vehicle. The more you are, the more opportunities there are to be in an accident. You also want to consider where you drive while in your car. More severe accidents occur on interstates and highways, partly because more vehicles are on those roads and more vehicles are going at higher speeds.
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 often have passengers in your vehicle, you also want to consider that factor. You’re not the only one at risk.
What Type of Car Do You Drive?
The type of car matters when considering PIP. Some cars protect occupants better than others due to size, safety features, and other factors. Value Penguin published a blog listing the deadliest vehicles in the United States:
- Ford F-Series (the most toxic)
- Chevrolet Silverado
- Honda Accord
- Toyota Camry
- Ram pickup (all models)
- Honda Civic
- Toyota Corolla
- Ford Explorer
- Nissan Altima
- GMC Sierra
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 the extent of care needed would differ for adults and children, for example.
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
Ultimately, navigating Michigan’s new no-fault law is about considering the above factors and assuming you could be in an auto accident tomorrow. In worst-case scenarios, will you be okay if you opt-out or pay for less? Will you have enough coverage?
Too many people are now finding out the answer the hard way. So, ensure you fully understand what it means to opt out or buy less coverage before purchasing an insurance policy.
Do I Need to Have PIP Coverage Under the New Michigan No-Fault Law FAQs
Having PIP insurance coverage does not mean everything will be smooth sailing. You might still have questions about the coverage and the duration of getting benefits. Below are some of the frequently asked questions:
How Long Does an Insurance Company Have to Settle a Claim in Michigan?
After submitting your claim to your insurance provider, the insurer has 30 days to investigate. If the investigation extends, they will send a notice explaining the reason for the delay. If there’s no delay, the insurer has 60 days to decide on the claim and make payment. Note that the timeline starts when you submit the claims forms to your insurance company.
Can I Be Denied PIP Benefits?
You could be denied PIP benefits if you were in a stolen vehicle when the accident happened or operated a vehicle named as an excluded operator. Non-Michigan residents are also not covered under PIP insurance.
Do I Need an Underinsured Insurance Plan If I Have PIP?
Yes. PIP insurance only pays for reasonable medical bills and some lost wages; it does not pay for pain and suffering. With underinsured coverage, you get pain and suffering benefits, and if you have excess medical expenses that PIP cannot cover, it pays for them.
What Benefits Will I Get From PIP?
Personal injury protection covers allowable expenses for your care, recovery, rehabilitation, wage loss, and replacement services. It also covers some funeral expense benefits and survivor benefits paid to dependents if injuries from an auto accident result in a policyholder’s death.
Get Representation From an Experienced Car Accident Attorney in Michigan
Do you have more questions about car insurance coverage under Michigan’s new no-fault law? We can help. Suppose you or a loved one has suffered a severe impairment of bodily function or someone has died in a crash that was another party’s fault. In that case, 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 at Goodman Acker P.C. has been helping people in the Detroit area for over 30 years. We offer a free consultation to discuss the circumstances of your vehicle accident. Let our combined 150+ years of legal experience, insight, and resources help you through this difficult time. Call our Detroit no-fault lawyers at 248-286-8100 today.