Understanding Michigan's New Auto Insurance Law
In June 2019, Michigan Governor Gretchen Whitmer signed a sweeping overhaul of the state's auto insurance laws. The new law, which took effect on July 2, 2020, represented the most significant change to Michigan's no-fault insurance system in decades. If you drive in Michigan, understanding these changes is critical to making informed decisions about your coverage and protecting your rights after an accident.
At Logeman & Iafrate, P.C., we've been helping Michigan accident victims navigate the complexities of the state's auto insurance system for over 45 years. Here are answers to the most common questions about the new law.
What Changed Under Michigan's New Auto Insurance Law?
The new law made several significant changes to Michigan's auto insurance system:
- PIP Coverage Choices: Drivers can now select from multiple Personal Injury Protection (PIP) coverage levels instead of being required to carry unlimited coverage.
- Lawsuit Thresholds: Modified the requirements for filing lawsuits against at-fault drivers in serious injury cases.
- Premium Reductions: Required insurance companies to reduce premiums to reflect the new coverage options.
- Rate Filing Changes: Changed how insurance companies file rates with state regulators.
- Medical Fee Schedules: Established fee schedules for medical services provided to accident victims.
PIP Coverage Options Explained
Under the new law, drivers can choose from the following PIP coverage levels:
1. Unlimited PIP Coverage
This is the traditional Michigan no-fault coverage, providing unlimited medical benefits for accident-related injuries. This remains the default if you don't make an active selection during the transition period.
2. $500,000 PIP Coverage
A middle-ground option that provides up to $500,000 in medical benefits. This may be suitable for drivers with good health insurance who want meaningful protection at a lower premium.
3. $250,000 PIP Coverage
This option provides up to $250,000 in medical benefits. Drivers choosing this level must have valid health insurance that would cover auto accident injuries.
4. $50,000 PIP Coverage
The minimum PIP coverage level available, providing up to $50,000 in medical benefits. This option requires that you have valid health insurance coverage, and only drivers enrolled in Medicaid may choose this option with opt-out provisions.
Lawsuit Thresholds Under the New Law
One of the most significant changes in the new law relates to when you can sue an at-fault driver for non-economic damages like pain and suffering. The new law modified the lawsuit thresholds based on your PIP coverage level:
- Unlimited or $500,000 PIP: Drivers retain broader lawsuit rights and can sue for non-economic damages if they suffer serious impairment of body function, permanent serious disfigurement, or death.
- $250,000 or $50,000 PIP: Drivers have more limited lawsuit rights, generally requiring more severe injury thresholds (like permanent serious disfigurement or death) before they can sue for pain and suffering.
How the New Law Affects Insurance Premiums
Michigan historically had some of the highest auto insurance premiums in the nation. The new law was designed to reduce these costs by giving drivers more coverage choices. While individual savings vary based on factors like your chosen coverage level, location, driving history, and other rating factors, many Michigan drivers have seen meaningful reductions in their auto insurance premiums.
However, it's important to note that lower premiums come with trade-offs in coverage. Drivers who choose lower PIP coverage levels may face significant out-of-pocket expenses if they're seriously injured in an accident.
Medical Fee Schedules
The new law established fee schedules for medical services provided to accident victims. These fee schedules set maximum amounts that insurance companies must pay for various medical procedures and services. While intended to control costs, these fee schedules have been controversial and have raised concerns about access to care for seriously injured accident victims.
Special Considerations for Accident Victims
If you've been injured in a car accident in Michigan after July 2, 2020, the new law affects your rights in several important ways:
- PIP Benefits: Your available PIP benefits depend on the coverage level selected by the at-fault driver's (or your own) insurance policy.
- Lawsuit Rights: Your ability to file a lawsuit for pain and suffering depends on the severity of your injuries and the PIP coverage levels involved.
- Medical Treatment: Your medical providers may be subject to fee schedules that limit the amounts they can charge.
- Time Limits: Strict deadlines still apply for filing claims and lawsuits, including the three-year statute of limitations for personal injury claims.
Why You Need an Attorney After a Michigan Car Accident
The new auto insurance law has made navigating Michigan accident claims more complex than ever. Insurance companies are using the new law to deny or minimize claims, and accident victims need experienced legal representation to protect their rights.
At Logeman & Iafrate, P.C., we understand the intricacies of Michigan's new auto insurance law and how it affects accident victims. Our attorneys can help you:
- Understand your rights under the new law
- File claims for all available PIP benefits
- Determine whether you have grounds for a lawsuit
- Navigate disputes with insurance companies
- Maximize your compensation
Get Experienced Legal Help Today
If you've been injured in a Michigan car accident, don't try to navigate the complex insurance system alone. The new auto insurance law has created new challenges and opportunities, and having an experienced attorney on your side can make all the difference.
Contact Logeman & Iafrate, P.C. today at (734) 994-0200 to schedule your free consultation. We'll review your case, explain your rights under the new law, and help you understand the best path forward. We work on a contingency fee basis, so you pay nothing unless we recover compensation for you.
Frequently Asked Questions
Find answers to what matters most about your case and how we work.
When did Michigan's new auto insurance law take effect?
Michigan's new auto insurance reform law took effect on July 2, 2020. The law significantly changed the state's no-fault insurance system, including giving drivers choices regarding Personal Injury Protection (PIP) coverage levels and placing caps on certain medical benefits.
What are my PIP coverage options under the new law?
Under the new law, drivers can choose from several PIP coverage levels: unlimited coverage (the default if you don't make a selection), $500,000, $250,000, or $50,000 (with available health insurance). Drivers enrolled in Medicaid can also choose $0 PIP coverage.
Can I be sued under Michigan's new auto insurance law?
Yes, but with limitations. Drivers who choose lower PIP coverage levels ($250,000 or $50,000) may have less protection from lawsuits. Drivers with unlimited or $500,000 PIP coverage retain broader lawsuit protection. The specific lawsuit thresholds vary based on the PIP coverage you select.
What is the average premium reduction under the new law?
Michigan's insurance reform was designed to reduce auto insurance premiums, which were among the highest in the nation. While individual savings vary, many drivers saw meaningful reductions in their premiums after the law took effect, though savings depend on factors like coverage choices, location, and driving history.
Do I need to take action to change my PIP coverage?
The new law included a transition period where insurance companies were required to offer drivers the option to choose their PIP coverage level. If you didn't make an active selection during this period, your coverage defaulted to unlimited PIP. You can still contact your insurance company to adjust your coverage going forward.
How does the new law affect uninsured motorists?
Michigan's new law continues to require drivers to carry auto insurance, but the penalties for driving uninsured remain relatively modest. This has raised concerns about the number of uninsured drivers on Michigan roads, which can complicate accident claims.
Does the new law change Michigan's no-fault system entirely?
No. Michigan remains a no-fault state, meaning your own insurance company pays for certain benefits regardless of who caused the accident. However, the new law gives drivers more choices regarding PIP coverage levels and modifies some aspects of the no-fault system.
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