Since Michigan’s reformed No-Fault law went into effect on July 1, 2020, I have received numerous inquiries regarding auto insurance coverage going forward. Each time, I respond with three pieces of advice:
#1: Keep Unlimited PIP Coverage
Under Michigan’s No-Fault law, those who are injured in an auto accident are entitled to receive Personal Injury Protection Benefits, or “PIP Benefits” for short. Your PIP benefits provide coverage for up to three years of wage loss, up to three years of replacement services, and expenses related to an injured person’s recovery—which includes your medical bills. Before Michigan’s No-Fault reformation, PIP benefits had no monetary cap and could last for the injured party’s lifetime, if medically necessary, hence the term “Unlimited.”
Under the reformed No-Fault scheme, however, Michiganders can elect to decrease their PIP coverage. While this may save drivers a few bucks, it’s ultimately not worth it. If you are seriously injured in an auto accident and your medical bills and other expenses exceed your PIP limits, you’ll be personally responsible for paying the bills in excess of your coverage. Now, not only may injured parties have mountains of medical debt after an accident but they may also have to forgo necessary medical treatment if they cannot afford it.
In sum, for the relatively slight cost difference, Unlimited PIP coverage is far superior coverage and will protect you from significant medical debt if you are severely injured. Rule #1: keep Unlimited PIP.
#2: Increase your Bodily Injury Coverage & Strongly Consider an Umbrella Policy
Bodily Injury Coverage, alternatively, protects drivers in the event that they injure someone else in an auto accident or are the owner of a motor vehicle that injures someone else. Before the No-Fault changes, injured parties could not pursue at-fault drivers for their medical bills because the bills were already covered by Unlimited PIP. Now, because PIP is no longer statutorily required to be Unlimited, injured parties may pursue at-fault drivers for their excess medical bills. In severe cases, these figures could equate to millions of dollars. When the Legislature eliminated mandatory Unlimited PIP, it subjected the public to increased likelihood of personal liability.
Bodily Injury Coverage protects drivers from personal liability exposure. However, most insurance companies cap the amount of Bodily Injury Coverage they will provide to their drivers. Therefore, I also suggest people to strongly consider purchasing an umbrella policy, which are generally inexpensive for significant liability protection. More coverage equals less risk of exposure. Rule #2: Increase your Bodily Injury Coverage and purchase an Umbrella Policy.
#3: Increase your Underinsured/ Uninsured Motorist Coverage
Underinsured/ Uninsured Motorist coverage is implicated in the event someone else injures you in an accident and their Bodily Injury Coverage is insufficient to cover your damages. Essentially, your own auto insurance company steps in to cover the difference between your damages and the at-fault party’s Bodily Injury Coverage, up to your UIM/ UM coverage limits. The more coverage you purchase, the more you are protecting yourself in the event you are severely injured. Rule #3: Increase your UIM/UM coverage.
Michigan auto insurance policies are designed to protect you, but only to the extent of coverage you are willing to purchase. If you choose lesser coverage to save money now, it may cost you drastically, both financially and physically in the future. Since the changes have gone into effect, my suggestion has consistently been increase these coverages to the fullest extent you can afford.
If you have any questions about your auto insurance coverage or if you have been involved in an auto accident and have questions regarding your specific case, call our office at 616.608.3061 or contact us through our website’s contact page for a free consultation.