New Changes to the No-Fault System and New Policies Coming in July
With the shutdown of the state and Michigan still reeling from the coronavirus, some may have forgotten about some of the many changes that are coming under the no-fault reform that was passed last year. In particular, insurance companies will now have had time to build new insurance policies and establish new premiums. There has been much buzz about lower premiums, and we will shortly see whether or not the savings will be as substantial as has been claimed, but an important question is what exactly will change on July 1st, 2020.
The main difference people will see right away when purchasing coverage is that now people will now have many more options for insurance coverage. Previously there were 3 major forms of coverage. First there is Personal Injury Protection (PIP) Coverage which handles medical expenses, lost wages, household or replacement services, transportation expenses, and attendant (or nursing) care. Next, there is Bodily Injury Coverage. This is liability coverage in case you cause injury or damage to someone else. Finally, there is collision coverage if your vehicle gets damaged.
As to the third form of coverage, nothing really changes there, if you buy collision coverage for your car, your car will be covered. There first to forms of coverage are changing dramatically.
As to PIP coverage, the only option previously available was unlimited coverage and that was mandatory. Now unlimited coverage is no longer mandatory, and there are several levels of coverage available ranging from $50,000 with Medicaid, $250,000.00, $500,000.00, or Unlimited as purchase options. With certain qualifying heath insurance, a person can even opt-out of coverage all together. What does this mean? This means that you could reduce the amount of coverage available to you to cover your medical bills as far down as $0.00, meaning you could end up with no coverage at all for your injuries. This may result in lower premiums, but in this attorneys opinion, selecting this option is extremely dangerous, as having anything less than full coverage means that you could potentially be on the hook for your medical bills, even if you were not at fault.
With the unlimited option coverage, you are guaranteed by contract that your medical bills related to the motor vehicle accident are covered. Without it, you may have to pay co-pays, deductibles, or even your entire bill if you are involved in a motor vehicle accident where your injury occurs.
There may also be numerous other options within this such as an additional attendant care rider, allowing your family to care for you for more than 56 hours per week if you require at home attendant care or nursing care assistance or a managed care option, which allows the insurance company to effectively choose what network of doctors you treat in. In this author’s opinion, a managed care option would be unwise as you would likely not be able to see a doctor of your choosing.
But in addition to all the changes to the PIP benefits, people will also see changes to the Bodily Injury Coverages. Previously, the minimum coverage in Michigan was $20,000.00. This means that you were covered for bodily injury you caused to someone else. This usually took the form of “pain and suffering claims,” and occasionally excess economic damages if the person injured earned a high level of income or was off work for over 3 years. Otherwise, previously, people who caused accidents were generally immune from being sued for economic damages in Michigan. Now, the new minimum is $50,000.00 worth of coverage, meaning that you are covered if you injure someone else up to $50,000.00.
This has now changed however, and a person may now be subject to serious economic as well as non-economic damages if the injured individual chooses a policy with less than unlimited PIP benefits. In other words, if someone buys $50,000.00 worth of PIP coverage, but they have hospital and other medical bills that are $150,000, previously an at fault driver had tort immunity. Now, however, the person causing the accident would be on the hook for the remaining $100,000 in medical bills. And this is where the Bodily Injury coverage comes in. If a person purchases the new minimum coverage of $50,000.00 worth of bodily injury coverage, they could still be on the hook for another $50,000 worth of medical bills (or as much as the person racks up) that went unpaid from their insurance and the injured party’s insurance. There will be other coverage options, however as well, with a default of $250,000.00. Again, in this author’s opinion, it is important that the coverage purchased be as high as possible. Paying an extra $5 a month is well worth it to avoid potentially hundreds of thousands worth of bills.
John T. Schroder
Attorney at Law
Law Offices of Joumana Kayrouz