No Fault Reform
Governor Whitmer signed bipartisan no-fault auto legislation known as “PIP reform” or “No Fault Reform”, which went into effect on July 1, 2020. The goal of this legislation is to reduce premiums for Michigan drivers while maintaining the highest coverage options in the country. The legislation was intended to create a better no-fault system for drivers.
While this legislation was intended to benefit Michigan drivers, it has some unintended consequences including increased liability exposures for Michigan drivers. The previous No-Fault system (established in 1978) ensured that nearly every victim involved in an accident would have unlimited Personal Injury Protection (medical coverage). The new legislation does not provide those same guarantees.
The new system will allow drivers to select various options of PIP coverage as follows:
- Unlimited PIP coverage
- $500,000 limit
- $250,000 limit
- $50,000 limit; this is the lowest limit available, but only for drivers who are on Medicaid. (Your spouse and other relatives who live with you may be on Medicaid or have other qualified health coverage.)
- Opt-out of PIP coverage entirely; however, you, your spouse and all relatives who live with you must have Medicare or qualified health insurance to be eligible.
While it might be tempting to choose a reduced PIP limit to save money you will be leaving you and your family at risk in the event of an auto accident. Also, our research indicates that the savings in choosing are not as substantial as you might expect. It is also important to be aware of the numerous situations in which an operator or victim may not be covered by PIP or will not have enough PIP and will end up without sufficient medical coverage. These scenarios include:
- Children or dependents living away from home but operating your vehicle. This could include individuals listed as drivers on your policy.
- Children who live in a split custody situation as a result of divorce or separation.
- Drivers with Medicare that have waived PIP coverage.
- Motorcycle operators
- A live-in partner that doesn’t have an auto policy of their own.
As a result of these potential coverage issues, we believe that more drivers will find themselves without sufficient medical coverage and will be seeking compensation through litigation.
Worgess Agency Inc is providing the following coverage recommendations:
- We strongly recommend every policyholder to elect the “unlimited” option for PIP coverage. Even by maintaining unlimited benefits your PIP premiums will still reduce by 10% and your MCCA fees will decrease from $220 to $100 per vehicle.
- We advise that every policyholder maintain a minimum of at least $500,000 ($510,000?) for the combined single limit of liability coverage. This will provide more protection from underinsured drivers suing you for coverage.
- We strongly encourage every policyholder to carry an umbrella policy of at least $1,000,000
Please contact our agency to discuss your individual needs.
