Different Levels of PIP available in Michigan under new No-Fault Law


We all know that there are several changes impacting most motorists with Michigan’s New No-Fault Law. In fact, there are a number decisions you will have to make.

When you renew your auto insurance policy now, you can keep unlimited coverage for Personal Injury Protection (PIP) benefits regarding medical expenses, which is the same coverage you have today.

But if you choose a PIP option with less than unlimited coverage, which can range from opting out to a as low as $50,000 in medical coverage or completely opting out with the proper health insurance, you may want to factor in your own personal risk tolerance and financial situation.

For example, consider what happens if you’re severely injured in an accident and your medical bills exceed your new coverage limit. You will need to have enough funds in a health saving account or your own personal savings account to pay the necessary bills.

Additionally, those who can’t work my want to verify the amount of disability coverage they have.

Finally, you need to determine if you have the financial security to cover the cost of a lawsuit if you are at fault in an accident and are sued by an injured party. It is possible your savings or other personal assets could be at risk. This has nothing to do with PIP, this is a totally separate coverage and claim.

Previously drivers had to purchase a policy that included unlimited Personal Injury Protection (PIP) benefits. But now drivers in Michigan are be able to choose from different PIP coverage options. Those include:

  • Unlimited PIP coverage
  • $500,000 limit
  • $250,000 limit
  • $250,000 limit with PIP medical exclusion(s); this option is for drivers who have qualified health coverage (not Medicaid or Medicare) that covers auto accident injuries. (This option is available if your spouse and other relatives who live with you have qualified health coverage that will cover auto accident injuries.)
  • $50,000 limit; this option is only for drivers who are enrolled in Medicaid. (This option is available if your spouse and other relatives who live with you have qualified health coverage that will cover auto accident injuries.)
  • Opt-out of PIP coverage entirely; however, you, your spouse and all relatives who live with you must have Medicare or qualified health coverage to be eligible.

The new No-Fault law in Michigan made the assumption that insurance companies would reduce PIP premium rates, and guarantee that they will be reduced for eight years. However, that rate reduction applies only to PIP premiums, which is just one part of your entire auto insurance cost. Your rate also includes the Michigan Catastrophic Claims Association (MCCA) vehicle assessment fee, which cannot be reduced by insurance carriers.

The reduced amount will depend on the PIP coverage that a driver selects. So there is supposed to be a sliding scale of premium reductions based on the chosen option.

  • Unlimited coverage would receive on average a 10% reduction
  • $500,000 in coverage would reduce on average by 20%
  • $250,000 in coverage would reduce on average by 35%
  • $50,000 in coverage would reduce on average by 45%
  • Individuals with Medicare or qualified health insurance could opt out and receive a 100% rate reduction on certain portions of PIP, depending on their individual circumstances.

If you have any questions regarding which policy to purchase to assure you are covered in the event of an auto accident, contact Lawrence Kajy and the experienced attorneys at Kajy Law today. We have the knowledge about Michigan’s New No-Fault Law that you need to make smart decisions for your family.

Related Post: Know Your Risks with Bodily Injury Coverage

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