UPDATE: Michigan Car Insurance Options Under the New No Fault Laws

Drivers should consider resisting the temptation to choose lower medical limits to chase the promise of “savings” that the politicians promised would result from changing No-Fault. Unfortunately, these savings won’t add up to very much for most drivers.

UPDATE: 

The Michigan Court of Appeals heard oral arguments Tuesday, June 7,  in a lawsuit that could validate or scrap portions of Michigan’s recent no-fault auto insurance overhaul. Below is a statement from Steven Gursten, president and attorney, Michigan Auto Law, reacting to these events:

“In Michigan, statutory amendments have always been presumed to apply prospectively and the case law is quite clear on this.  But here we have a situation where the insurance companies want to take a new law that was completely silent on the issue of retroactivity and nonetheless say this new law should apply retroactively to take away already vested legal and contractual rights that vested years before the new auto law took effect.  

 

“The real life consequences of this are dire.  Thousands of catastrophically injured auto accident victims are even as we speak being extorted by claims adjusters who are using this current uncertainty to threaten and pressure people to accept drastic changes to attendant care hours and rates as well as providers who care for these people.  Many of these people’s lives quite literally depend on this medical care.  These people are being put under extraordinary duress.   To me, it is unconscionable behavior by the insurance companies and their allies in the Legislature.”

Michigan drivers have an important choice to make now that the new Michigan auto No-Fault insurance law took effect on July 1, 2020. Drivers now must choose among several different options for PIP medical protection and what amount of liability coverage (which is also known as bodily injury liability insurance). For all policies issued or renewed after July 1, 2020, Michigan drivers will have to choose one of the following levels of protection for No-Fault medical benefits: (1) $50,000 if you’re enrolled in Medicaid; (2) $250,000; (3) $500,000; (4) unlimited; or (5) opt-out of No-Fault medical coverage altogether if the driver is on Medicare.

Additionally, drivers will be required to purchase liability coverage with minimum limits of $250,000 and $500,000, but they will also have the option of choosing lower minimum limits of $50,000 and $100,000.

When making selections for No-Fault medical coverage, drivers should use caution as there is a considerable amount of misinformation and very bad advice out there regarding Medicare and what role it may play in providing medical coverage after a car accident. For example, a Detroit Free Press article in June did not address the fact that if Medicare pays for your medical bills after you were injured in an auto accident, then Medicare will come after you seeking full reimbursement. This is a very important thing to know if you have Medicare Parts A and Part B and you are considering dropping No-Fault PIP medical coverage! The article also does not discuss  all of the medical services that Medicare will not pay for after a car accident.

Additionally, even though the article seems to be encouraging people to not buy higher liability limits, it neglects to mention that under the new auto No-Fault law a person who causes a serious injury accident can now be sued for medical bills in Michigan, adding potentially millions of dollars in increased risk if you are found to be liable for a car accident that results in catastrophic injuries to another person. For the few extra dollars it will cost to buy higher liability coverage to better protect you and your family, the expense is well worth it.

What car insurance selections are best for protecting Michigan drivers?

Listed below are suggested car insurance options to purchase along with information on why to choose those options:

1. PIP Medical Coverage:   Select the No-Fault PIP option with unlimited medical benefits (and no managed care option)

Unlike private health insurance or Medicaid or Medicare, unlimited No-Fault PIP medical benefits provide lifetime, and life-saving care for catastrophic accident victims such as survivors of traumatic brain injuries and spinal cord injuries.

There are far too many critically important medical services that are routinely covered by No-Fault PIP medical coverage but that are not available or are limited and will not be provided under health insurance, Medicaid or Medicare.

Those may include:

·        Residential care

·        Attendant care by an agency

·        In-home attendant care by a family member

·        Prescriptions

·        Hospitalization

·        Doctors/lab

·        Rehabilitation services

·        Case management

·        Transportation (possibly including medical mileage)

·        Home purchases/modifications

·        Prosthesis

·        Equipment

·        Vehicle purchases/modifications

2. Liability Protections:   Select limits of at least $500,000 and $1 million

Drivers in Michigan have never faced as much liability risk as they do now with the new laws.  The financial risk from being liable for causing a motor vehicle accident that injures or kills someone is so much greater now because in addition to continuing to be liable for pain and suffering compensation and excess wage loss, all drivers are now potentially liable for all of the current and future medical costs that a crash victim incurs that exceed the No-Fault medical level in the policy through which he or she is claiming benefits.

For example, if you injure someone who only has $50,000 in No-Fault medical because he or she is on Medicaid and if he or she is catastrophically injured – resulting in $100,000’s or $1,000,000’s in medical bills – the person can sue you for any medical expenses over the $50,000 level.

3. Avoid the Managed Care Option when selecting the No-Fault PIP option with unlimited medical benefits

The Managed Care Option that was created by the new No-Fault will allow the insurance company to call the shots concerning your medical care after a car accident. You’ll be forced to see doctors selected and hired by your insurance company. No longer will you be able to get medical care and treatment from the doctors you know and trust. And when you need a certain procedure, surgery, therapy or medication, you won’t be able to get it unless and until you first get your insurance company’s permission. You, not the insurance company, should be in the driver’s seat when it comes to your health and medical care after a car accident. That’s why we recommend that Michigan drivers decline the managed care option when they choose the No-Fault PIP option with unlimited medical benefits in their auto insurance policies.

4. Property Damage Protection:  Select a limit of at least $100,000 (for out-of-state accidents)

5. Limited Property Damage Coverage: Select mini tort or limited property damage coverage with a $3,000 limit

The mini tort maximum recovery amount for vehicle damage has increased from $1,000 to $3,000 for motor vehicle accidents after July 1, 2020.

6. Uninsured and underinsured motorist protection:  Purchase with limits of at least $500,000

These coverages provide an invaluable source for recovery if you’re injured by a driver with no liability coverage (including a hit-and-run driver) or by a driver who has only minimal liability insurance coverage to pay you the compensation and damages that you’re entitled to. In either instance, without “uninsured motorist coverage” and without “underinsured motorist coverage,” you would be unable to recover any of the pain and suffering compensation and “excess” medical benefits and lost wages that you are entitled to.

7. Personal Umbrella Liability coverage: Purchase with limits of at least $1 million

All drivers now face increased liability risk if they cause a serious car accident. The big change is that an “at-fault” driver can now be sued for excess medical expenses. A very serious crash can now add potentially millions of dollars in risk exposure for an at-fault driver and his or her assets.  A Personal Umbrella Liability coverage policy can protect you, your family members and your family’s personal assets.

8.  Collision and comprehensive protection:  Purchase with a maximum deductible of $1,000

Choosing the right options for your policy is a very important decision.   The danger of choosing a lower medical amount on your policy to try to save money is that if a driver selects any medical level other than “unlimited,” then he or she is essentially betting that if they are seriously injured in a future auto accident, that their medical bills will fall within the amount they purchased.

If you are choosing a lower coverage amount of $50,000, $250,000 or even $500,000 for No-Fault PIP medical coverage and if you suffer a serious injury in a car accident, such as a back injury that requires surgery, a brain injury, or a spinal cord injury, then the amount of coverage you will have available under your policy will likely be extinguished long before you will have recovered from your injuries..

Drivers should consider resisting the temptation to choose lower medical limits to chase the promise of “savings” that the politicians promised would result from changing No-Fault. Unfortunately, these savings won’t add up to very much for most drivers.

To learn more about each coverage option and how it may affect someone injured in a Michigan car accident, read Recommended Car Insurance Coverage for New No Fault Law.