Six years into the revamp of Michigan’s no-fault insurance law, many drivers still remain uncertain of what the changes mean. Vanessa Wenzlick, personal lines account manager at Capital Insurance Services, walked us through the overhaul’s impact.
Can you provide a brief overview of what the no-fault auto reforms entailed?
First would be the (personal injury protection) selection. Prior to the reform, everyone had unlimited PIP. Now insureds have a choice. Although we continue to highly recommend keeping the unlimited PIP, there are a few other options. You can lower your coverage to $250,000 or $500,000 for PIP coverage. If you have Medicaid, you could lower your coverage to $50,000. If you have Medicare A&B, you have the option to decline your PIP all together. …
Another change is the fee schedules for medical care of auto accident victims under the PIP section of coverage. The fee schedule imposes restrictions on how much providers can bill for medical services related to auto accidents. Mini tort coverage was changed as well, and the maximum recovery amount was increased to $3,000. Attendant care now has coverage for 56 hours a week of covered assistance for car accident victims who need help with daily activities.
Finally, another big change would be that Michigan raised the state-recommended limits of bodily injury liability.
What still remains the biggest misconception of the changes?
That our insurance premiums will be less expensive. … The reason why we aren’t seeing as many decreases currently on auto policies is because, although the PIP is more controlled, during COVID we started to see the rise in cost of labor and parts when repairing vehicles.
Some drivers choose the $50,000 PIP limit to save a few dollars a month. In the event of a serious injury, how long does that $50,000 actually last in a modern ICU?
$50,000 is not going to last long if you are hospitalized due to an auto accident. If you need a higher level of care, such as surgeries, scans or a ventilator, your nightly ICU cost can exceed $10,000. Medicare and Medicaid do not pay first in the auto accident; you will have to use the allotted amount of PIP on you auto policy before your medical insurance even kicks in.
If I hit someone who has a capped policy, am I now personally on the hook for their medical bills once their insurance runs out?
Yes. If you hit someone who has a “capped” PIP or lower limits on their insurance policy, there could be a lawsuit for an accident you caused. If the accident was catastrophic and you are at fault, the other party may choose to sue you for coverage that exceeds what their auto policy will cover. This is why it’s very important to select the correct liability limit of coverage for you and your family.
If you could correct one expensive misunderstanding about drivers’ policies, what would it be?
Bodily injury liability. This protects your income and assets/net worth if you are sued due to an accident. Most people have the state-recommended liability coverage, and this is great; it does not mean that you’re fully covered. If you have more than $500,000 in assets, you are going to want to discuss this with your insurance agent.
Christopher Nagy
Christopher Nagy is the senior editor for 517 Business and M3 Group. He spent more than 25 years in the field of journalism working at every level of the newsroom. Despite that, he’s still a pretty good guy.
