Michigan’s New Auto No-Fault Reform Insurance Law

Effective July 2, 2020, Michigan’s Auto No-fault Reform law takes effect. The new legislation provides numerous reforms to the auto insurance industry in Michigan. The following highlights important changes:

New PIP Medical Options for Personal and Commercial Auto Policies

Under the new law, you will no longer be required to carry unlimited Personal Injury Protection (PIP) coverage which pays for your medical expenses if you are injured in an auto accident.

PIP Coverage OptionsPersonal and Commercial Auto Stipulations
$50,000Medicaid enrollees only, subject to conditions (Personal Auto option only)
$250,000Option to exclude PIP Medical for Personal Auto*
$500,000
UnlimitedDefault if coverage options not selected

*Will allow an applicant or policyholder to “opt out” of PIP coverage if they have proof of a qualified health coverage or benefits payable from another Personal Auto Policy.

  1. All household members have Medicare; OR
  2. Applicant/Named Insured has Medicare and other household members are covered by a health or accident policy; OR
  3. Applicant/Named Insured has Medicare and other household members have another personal auto policy

*Exclusion to the $250,000 PIP medical coverage level if an applicant or named insured has qualified health coverage.

  1. All household members are covered by health or accident coverage; OR
  2. Applicant/Named Insured covered by health or accident coverage and spouse/relatives covered by Medicare; OR
  3. Applicant/Named Insured covered by health or accident coverage and some, but not all, spouse/relatives covered by health or accident coverage or Medicare

Requires a listing of household members to be excluded. Members not explicitly listed will have $250,000 PIP medical coverage.

Order of Priority for No-Fault Claims

The law also changes the order in which an injured person collects PIP benefits. Beginning July 2, 2020 an injured person will pursue PIP benefits in the following order:

  1. Insurer of the Named Insured
  2. Insurer of the spouse or resident relative domiciled in the same household; THEN
  3. Michigan Assigned Claims Plan – MACP ($250,000 benefit limit)

The law eliminates the owner, registrant and driver of the accident-involved vehicle from the order of priority for both occupants and non-occupants. Coverage is no longer extended to nonrelatives of the Named Insured who live in the household and relatives who do not reside in the household, even if they are listed as drivers. Out-of-state residents are no longer entitled to PIP benefits for injuries sustained in a Michigan motor vehicle accident unless the out-of-state resident has a vehicle both registered and insured in Michigan.

New Bodily Injury Options

New bodily injury limit options will need to be selected beginning July 2, 2020.

Bodily Injury LimitsPersonal AutoCommercial Auto
Split Bodily Injury/Property DamageCombined Single LimitCombined Single Limit
Default level if selection not made$250 / $500 / $10N/A$1,000,000
Bodily Injury and Uninsured Motorist (UM)/ Underinsured Motorist (UIM) - Minimum Financial Responsibility Limit$50 / $100 / $10Bodily Injury - $110,000 UM/UIM - $100,000Bodily Injury - $110,000 UM/UIM - $100,000

In the Coming Months

Changes passed down by legislation, court challenges, and regulators will consequently provide uncertainty and unknowns to the Michigan Auto No-Fault Reform. In the coming months, your risk solutions team will discuss how the law may affect you, your family, and your business. We will continue to keep you informed on the latest information.