How the changes in no-fault insurance could leave you vulnerable in Michigan

How the changes in no-fault insurance could leave you vulnerable in Michigan

| May 14, 2020 |

Michigan’s no-fault insurance system is notorious for its high costs. Drivers, especially those in urban areas like Detroit, pay exceptionally high premiums for their insurance coverage. Despite the negativity associated with those high costs, the no-fault insurance program in Michigan has historically also been very generous to those who suffered disabling injuries in car crashes. 

Brain and spinal cord injuries, in particular, often produce costs that far exceed standard liability insurance coverage levels in other states, which can be as low as $10,000.  The existing no-fault system does not cap medical coverage for those hurts severely in a car crash. However, this summer, changes in the law will take place that will reduce the insurance that certain people must carry in Michigan.

How will insurance change after July 1st, 2020?

When drivers go to renew their policy or purchase a new one on or after July 1st of 2020, they will potentially have the option to purchase lower personal injury protection insurance amounts thanks to bipartisan insurance reform passed last year

Personal injury protection (PIP) covers medical costs associated with a car crash. Under no-fault insurance, typically your policy protects you, not the other driver. Instead of paying for unlimited personal injury protection, drivers can now potentially carry as little as $50,000 if they have Medicaid insurance. 

Otherwise, drivers can carry $250,000, $500,000 or the standard no-limit PIP coverage. Older drivers who have Medicare can potentially not pay for any no-fault PIP coverage as well. While financial experts estimate that these changes could produce a drastic reduction in how much people pay in insurance, it could also leave many people vulnerable to not having enough insurance for the cost of the crash they experience.

If you or your loved one is injured in a crash, find out more about your options for financial recovery.