When Michigan auto insurance reform took effect in July 2020, drivers across Metro Detroit and the rest of the state were promised savings. Many saw their insurance bills drop. But lower premiums came with a trade-off that most Michigan drivers did not fully weigh before making their choice.
In a no-fault auto insurance state like Michigan, it can be hard to figure out what your rights are and what to do next after a serious car accident. The state’s insurance reforms made the personal injury claims process even more complex than it used to be. They also changed how much coverage accident victims receive, who pays for their care, and what happens when medical expenses exceed policy limits.
If you were injured in a crash, these changes directly affect your claim. Kajy Law Firm’s car accident lawyers can help you understand what these changes mean for your Personal Injury Protection benefits and how to pursue the compensation you need under this new system.
Key Takeaways for Michigan Auto Insurance Reform and Accident Claims
- Michigan drivers can now choose Personal Injury Protection (PIP) medical coverage levels of $50,000 (Medicaid only), $250,000, $500,000, or unlimited, whereas unlimited was previously mandatory.
- Lower limits may save money up front, but can leave you paying out of pocket after a serious crash.
- There are new caps on what doctors and rehab centers can charge. This change has made some care harder to find, especially for people with severe injuries.
- Family members can only be paid for a limited amount of caregiving. Insurance usually covers up to 56 hours per week, even if more help is needed.
- You may need to sue the at-fault driver if your coverage runs out. If your medical bills go beyond your policy limit, you can pursue compensation from the person who caused the crash.
How Did Michigan Auto Insurance Reform Change Accident Claims?
Michigan drivers used to be covered by the state’s mandatory unlimited Personal Injury Protection coverage. Under Michigan’s no-fault auto insurance system, PIP provides immediate financial relief regardless of who caused the crash. If you were injured by a negligent driver, your own PIP coverage pays for your medical expenses and a portion of your lost income.
Before July 2020, every Michigan driver carried unlimited lifetime PIP medical benefits. No matter how severe the injury, no-fault insurance covered all reasonable and necessary medical expenses. That protection is no longer automatic.
The 2019 reform (Public Acts 21 and 22) replaced Michigan's unlimited PIP medical coverage with a tiered system. Drivers now choose how much medical coverage they want. Insurance costs may go down as a result, but those who pick lower limits may find themselves with insufficient funds if they are seriously hurt.
The reform also capped what medical providers can charge, limited family attendant care to 56 hours per week, and increased bodily injury liability minimums. Each of these changes shapes how accident victims pursue compensation.
What Are the PIP Coverage Options in Michigan After Reform?
PIP coverage is the foundation of Michigan's no-fault system. It pays for medical care, lost wages, and household services after a crash, regardless of who caused it. The new law gives drivers six coverage options to choose from.
Unlimited PIP Medical Coverage
This provides the same lifetime benefits that were mandatory before reform. It covers all reasonable medical expenses with no dollar cap. Drivers who choose this option still pay the Michigan Catastrophic Claims Association (MCCA) assessment fee, which varies by the level of protection you purchased.
$500,000 PIP Medical Coverage
This covers up to $500,000 in medical expenses per person per accident. For many injuries, this limit is sufficient.
However, catastrophic injuries involving spinal cord damage or traumatic brain injury can exceed this amount within months. Drivers who select this tier receive an average 20% reduction on the PIP portion of their premium.
$250,000 PIP Medical Coverage
This tier offers a 35% average reduction on PIP premiums. While the lower cost is appealing, $250,000 can be exhausted quickly if your injury requires surgery, rehabilitation, or long-term care.
Any bills beyond the limit become the injured person's responsibility unless they can recover additional compensation from the at-fault driver.
$50,000 PIP Medical Coverage (Medicaid Only)
This option is only available to drivers enrolled in Medicaid. The premium reduction averages 45%. After the PIP limit is reached, Medicaid becomes responsible for ongoing care. However, Medicaid may not cover every service a seriously injured person needs.
Each tier carries different financial risks. Drivers who chose lower coverage to save money may face devastating bills if they are seriously hurt in a crash on I-696, I-75, or any Metro Detroit highway.
How Does Michigan's No-Fault Fee Schedule Affect Your Medical Care?
The reform introduced a fee schedule (MCL 500.3157) that limits what medical providers can charge for treating auto accident injuries. The fee schedule took effect on July 2, 2021.
The caps vary depending on the type of provider and whether Medicare covers the service:
- Services covered by Medicare are capped at 190% of the Medicare rate (after a phase-in period).
- Services not covered by Medicare, such as residential rehabilitation and attendant care, are capped at 52.5% of what the provider charged in January 2019.
- Level I and II trauma centers receive higher rates (up to 230% of Medicare) for emergency treatment.
- Ambulance services are exempt from the fee schedule.
Rehabilitation centers that treat traumatic brain injury (TBI) and spinal cord injury patients have been hit hardest. Some facilities have closed or reduced capacity because they cannot operate at 52.5% of their previous rates.
For survivors of catastrophic crashes treated at Beaumont Hospital or Henry Ford Hospital, finding long-term rehabilitation care has become more difficult after the insurance reform.
What Happened to Family Attendant Care Benefits in Michigan?
Before reform, family members could be paid for providing round-the-clock care to a catastrophically injured loved one. There was no limit on hours.
Starting July 2021, insurance companies are only required to pay for 56 hours per week of attendant care provided by family members or anyone who had a relationship with the injured person before the crash. This applies to:
- Relatives of the injured person
- People who live in the same household
- Anyone who had a social or business relationship with the injured person before the crash
The 56-hour cap does not apply to care provided by nurses or commercial home health agencies. However, commercial care costs significantly more, which can exhaust limited PIP coverage faster.
According to the Department of Insurance and Financial Services, more than 90% of insurers have agreed to contract for more than 56 hours when needed. But this is voluntary, not required by law. Families often must fight for extra hours or pay out of pocket.
How Did Bodily Injury Liability Requirements Change in Michigan?
The reform raised the minimum bodily injury liability coverage from $20,000/$40,000 to $250,000/$500,000 as the default. Drivers can choose lower limits of $50,000/$100,000, but they must sign a form acknowledging the risk.
This matters because drivers who chose limited PIP coverage can now sue at-fault drivers for excess medical expenses (MCL 500.3135). Before the reform, this was rarely necessary because PIP covered everything.
Higher liability limits give at-fault drivers more protection. But they also mean more funds may be available for injured individuals to recover once their own PIP runs out.
Ask Kajy Law About Michigan's Auto Insurance Reform and Your Accident Claim
What happens if my medical bills exceed my PIP coverage limit?
If your PIP limit is $250,000 or $500,000 and your medical costs exceed that amount, you have two options. You can turn to your health insurance if it covers auto accident injuries.
You can also sue the at-fault driver for excess medical expenses. This is a new right created by the reform specifically to address coverage gaps.
Does the reform apply to crashes that happened before July 2020?
No. The Michigan Supreme Court ruled in Andary v. USAA that the fee schedule and 56-hour attendant care cap cannot be applied to individuals injured before June 11, 2019. If your crash occurred before that date, you retain your original unlimited coverage rights.
Can I still sue for pain and suffering after a car accident in Michigan?
Yes, but only if your injuries meet Michigan's serious impairment threshold. The reform did not change this requirement. You must show an objectively manifested impairment of an important body function that affects your ability to lead your normal life.
What Is the New Michigan Mini Tort Limit for Vehicle Damage?
The reform increased the mini tort limit from $1,000 to $3,000 for crashes occurring after July 1, 2020. Mini tort allows you to recover out-of-pocket vehicle damage costs from an at-fault driver who was 50% or more responsible.
This applies to your collision deductible or repair costs not covered by your own insurance. To file a mini tort claim, you must have auto insurance yourself. Uninsured drivers cannot use this provision.
You have three years to file a mini tort claim. If the at-fault driver refuses to pay, you can pursue the case in small claims court for amounts up to $6,500.
What Is the Serious Impairment Threshold for Pain and Suffering Claims in Michigan?
Michigan limits when you can sue for pain and suffering. The serious impairment threshold requires three elements to be present:
- An “objectively manifested” impairment, meaning it can be observed or measured through medical evidence
- The impairment affects an important body function of great value to you
- The impairment influences your ability to lead your normal life
There is no minimum duration requirement. The law focuses on how the injury affects your life, not how long it lasts. Broken bones, herniated discs, and traumatic brain injuries often qualify. Minor soft tissue injuries without documented limitations typically do not.
What Should You Do After a Car Accident in Michigan Today?
Check your policy's PIP coverage level. Many drivers do not know whether they chose $250,000, $500,000, or unlimited coverage. This determines how much medical care your insurance will pay for.
Keep all medical records and bills organized. If your expenses approach your PIP limit, you may need to file a lawsuit against the at-fault driver for excess costs.
Talk to a lawyer before your PIP runs out. An attorney can help you coordinate coverage between PIP, health insurance, and a potential lawsuit.
File your PIP claim within one year. Michigan law (MCL 500.3145) requires you to submit your application for PIP benefits within one year of the accident date.
What Risks Do Michigan Drivers Face with Limited PIP Coverage?
The lower premiums are less expensive, but they often come with higher costs for those who need them. Drivers who chose limited coverage are now exposed to financial risks that did not exist before reform.
- A serious crash can generate medical bills exceeding $250,000 or $500,000 within months.
- Health insurance policies may exclude or limit coverage for auto accident injuries.
- Suing an at-fault driver takes time, and their liability coverage may also be limited.
- Rehabilitation facilities have closed because they cannot operate at reduced fee schedule rates.
- Family caregivers can only be paid for 56 hours per week, leaving gaps in care.
Questions About Michigan Auto Insurance Reform
Is Michigan still a no-fault state after the reform?
Yes. Michigan remains a no-fault state, meaning your own insurance pays for your medical care regardless of who caused the crash. The reform changed how much coverage you carry, but the no-fault structure is still in place.
Who pays medical bills after a car accident in Michigan?
Your own auto insurance pays through PIP benefits up to your coverage limit. If you reach that limit, your health insurance may cover additional costs if your policy includes auto accident injuries. You can also sue the at-fault driver for excess medical expenses.
What happens if I opted out of PIP because I have Medicare?
If you opted out entirely, Medicare becomes your primary coverage for auto accident injuries. Medicare pays at its standard rates, which may be lower than what providers need.
You may also face gaps in coverage for services Medicare does not cover, such as attendant care or home modifications.
How long do I have to file a lawsuit against an at-fault driver?
Michigan’s statute of limitations allows you three years from the accident date to file a personal injury lawsuit against the at-fault driver (MCL 600.5805). This deadline applies to claims for pain and suffering, excess medical expenses, and other damages.
Take Control of Your Car Accident Case
The weeks and months after a serious car accident can make you feel like everything is spinning out of your control. Surprise medical bills, calls from insurance adjusters, missed work, and uncertainty about where everything is headed can take their toll on you and your family.
Kajy Law Firm helps car accident victims across Metro Detroit and Oakland County regain control. We identify every available source of compensation and fight to maximize your recovery.
Our team of 10 Detroit-Metro attorneys and 35+ staff members has recovered more than $100 million for clients injured in car, truck, and motorcycle accidents.
We work on a contingency basis, so you pay nothing unless we recover money for you. Visit our testimonials page to hear how past clients describe their experience with Kajy Law.
Call 248-702-6641 or contact us online to discuss your accident claim and find out what options remain after your coverage runs out.