Michigan auto insurance looks very different now than it did before July 2, 2020. Auto insurance reform or “no-fault reform” impacts every driver in the state, including you. However, the topic can also be very confusing.
Saginaw Bay Underwriters created this helpful series of posts entitled “Navigating Auto Insurance Reform” to make what you need to know clear, so you can make informed insurance decisions for you and your family.
In Part 4, we’ll use a claim example to look more closely at Personal Injury Protection (PIP) and some things you may want to consider.
PIP Claim Example
On your way to work, you are seriously injured in a car accident that isn’t your fault. You are rushed by ambulance to the hospital. After X-rays, MRIs, multiple surgeries and a three-month stay at the hospital, you incur medical bills of $1,000,000.
After returning from the hospital, you face even more costs. Due to your injuries, modifications to your home and automobile must be made to make them accessible. These modifications cost $100,000. You also require 24/7 attendant care because of your injuries, at a cost of $250,000.
Maintaining Unlimited PIP
With this unfortunate scenario in mind, it’s easy to see why you may want to consider maintaining unlimited PIP coverage.
1. If you are injured in an auto accident, lower limits may not provide enough coverage.
If you chose the $500,000 PIP limit instead of maintaining unlimited coverage, you can see the outcome in the chart below:
It is possible that you may be able to offset the uncovered medical cost with health insurance. However, if you had maintained unlimited PIP, all of these costs would be covered.
2: PIP also provides broader benefits than other types of health insurance.
Due to your accident, you are unable to work and also now require assistance with household chores such as laundry, cleaning and cooking.
In this scenario, PIP would provide you with wage loss benefits due to not being able to work, and up to $20 per day for services to replace household activities you are unable to perform. (Please note that wage loss and replacement services benefits are available for up to three years. These benefits are paid regardless of the PIP limit you select or if you opt-out.)
For those who consider choosing a lower PIP limit or opting-out of coverage due to having some other type of insurance, remember that these other types of coverage typically only cover medical care, and typically involve deductibles, copays and limits on certain types of treatment, while PIP does not.
The potential savings from choosing a lower PIP limit need to be balanced with the potential cost in the event of a claim.
Reviewing Your Auto Insurance Policy
Keeping this scenario in mind, let’s look at why it is important review your auto insurance policy.
Instead of you being involved in the accident, imagine it is your adult son or daughter who no longer lives with you, but still drives one of your vehicles. As explained in Part 2, auto insurance reform has made substantial changes to how PIP coverage is provided to individuals injured in an accident, meaning that people who used to be covered for PIP by your auto policy may no longer be.
In this scenario, your adult son or daughter would not have PIP coverage on your policy. They would instead be limited to $250,000 in PIP benefits with the Michigan Assigned Claims Plan.
Other examples of people who no longer have PIP coverage under your policy include:
You may want to consider reviewing your policy, as adjustments may need to be made to ensure coverage for everyone in your family. If you think any of these situations or another unique situation might apply to you, please have a conversation with a Risk Advisor at SBU.
Making the Complex Simple
Michigan auto insurance reform is a very important topic, but it can also be confusing.
In Part 5, we’ll use a scenario to look more closely at Bodily Injury (BI) liability and some things you may want to consider.
For more information now, see “Michigan Auto Insurance Reform FAQ.”
Please subscribe to our blog to be notified of future posts. Call Saginaw Bay Underwriters at (989) 752-8600 if you’d like to speak with an advisor about your auto insurance.
Saginaw Bay Underwriters has made every attempt to ensure this information has been obtained from reliable sources. For specific language, please refer to your insurance policy, in addition to state statutes, laws and regulations. Current as of: August 2020.