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 6, we’ll move beyond Personal Injury Protection (PIP) and Bodily Injury (BI) liability to explain how the reform has affected other aspects of Michigan auto insurance.
How Reform Impacts Motorcyclists
PIP applies to motorcyclists in a unique way and this has not changed with the reform, however there are some things motorcyclists should be aware of.
When a motorcycle operator or passenger is injured in an accident with a motor vehicle, they receive PIP benefits from the auto insurance covering that vehicle. This applies regardless of who is at fault in the accident.
If a motorcyclist is involved in an accident with a motor vehicle and the owner of that motor vehicle chose the $250,000 PIP limit, the motorcyclist is now subject to that limit. Prior to July 2, 2020, since every auto policy in Michigan had unlimited PIP, the motorcyclist would have received unlimited PIP benefits.
In other words, motorcyclists now face more risk, since not all vehicle owners will have unlimited PIP coverage in Michigan.
Keep in mind that if the same accident involved an uninsured motor vehicle, or if the motor vehicle owner opted-out of PIP coverage, the motorcyclist’s personal auto policy PIP limit would then apply (if they have one). For this reason, maintaining unlimited PIP benefits on their personal auto policy is still something for motorcyclists to consider.
If a motorcycle accident does not involve a motor vehicle, coverage for medical expenses is subject to the medical payments limit from the motorcycle policy (most policies offer a maximum limit of $50,000).
Michigan Catastrophic Claims Association (MCCA) Fees
The MCCA was established to help pay for catastrophic PIP claims. Prior to July 2, 2020, each vehicle on an auto insurance policy was assessed a fee to help fund the MCCA. This fee is evaluated annually and adjusted each July.
Now MCCA fees are dependent on the PIP limit you select. Below is a chart that shows the changes to the MCCA fee when you renew or purchase a new policy between July 2020 and July 2021. If you maintain unlimited PIP benefits, the new MCCA fee will decrease from $220 (the 2019-2020 fee) to $100 for each insured vehicle. If you select a limit other than unlimited, there will not be an MCCA fee.
New Medical Fee Schedule
The new Michigan auto insurance law introduces a medical fee schedule in July 2021. A medical fee schedule is a pre-negotiated schedule that specifies what medical providers can charge for care and treatment. It is anticipated that the introduction of this fee schedule will reduce the cost of medical treatment paid under PIP in the case of auto accidents.
Because there is no medical fee schedule in place between July 2020 and July 2021, you may want to consider maintaining unlimited PIP coverage and higher BI liability limits:
Changes in Mini-Tort (Physical Damage) Coverage
Mini-tort covers the physical damage you cause to another vehicle when the not-at-fault party:
Effective July 2, 2020, the maximum amount a not-at-fault party can claim increased from $1,000 to $3,000. If you currently have this coverage, many auto insurance companies are automatically increasing your coverage limit.
Making the Complex Simple
Michigan auto insurance reform is a very important topic, but it can also be confusing.
In Part 7, we’ll provide some key takeaways and conclude our “Navigating Auto Insurance Reform” series.
For more information now, see “Michigan Auto Insurance Reform FAQ.”
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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.