When was the last time you checked your auto insurance policy? Could you explain what each cover item means?
If your answer is, it’s been a while, or please don’t question me, you’re in good company. Auto insurance is one of the most complex products you can buy.
But it’s more important than ever that you understand your coverage. Michigan’s 2019 no-fault motoring law has created greater risks for drivers and passengers.
We’ve put together this guide to help you understand the biggest changes in the 2019 law.
A big change for “PIP”, the personal injury protection part of our policies.
All Michigan drivers used to have unlimited medical coverage on their policies, to pay for their own or a passenger’s medical care after a car accident. This coverage falls under the PIP (Personal Injury Protection) portion of your policy. The law now allows people to choose medical coverage limits that are less than unlimited. Most people can choose coverage as low as $250,000. People on Medicaid can choose as little as $50,000, and people on Medicare can opt out of PIP altogether.
However, the experts we consulted are unanimous in advising people to stick to unlimited medical PIP in their policies. Wayne Miller, a law professor at Wayne State University, says the cost of hospital and post-hospital care for a serious accident can easily exceed $250,000 and, in the worst case scenario, can reach millions of dollars. Miller says skimping on PIP coverage is “the ostrich approach to buying insurance. You know, ‘That will never happen to me.’ And of course, statistically, it is unlikely that a terrible, costly and life-altering accident will happen to you. There are millions of drivers in the state of Michigan, and “only” thousands of people are injured like this. But you buy insurance to protect you from the worst of situations. That’s why.”
But even “unlimited” medical coverage no longer covers everything it once covered.
Michigan’s old no-fault law was used to require auto insurance companies to pay a reasonable rate for medically necessary care for injuries caused by auto accidents, including the most catastrophic and permanent injuries. The 2019 no-fault auto law set price caps for this care. Brain and spinal cord injury rehabilitation centers and organizations that provide home care can only charge 55% of what they previously charged for car accident care. For the overwhelming majority of these organizations, this amount is less than the cost of providing care. This is why so many of them have closed their doors or stopped taking road accident patients.
So while our experts still urge people to keep unlimited PIP, it’s not the same coverage as before. In many cases, catastrophically injured people will no longer be able to obtain professional care at home or extensive rehabilitation services at a specialized residential clinic.
Our Annabelle Marsh story shows the devastating effect this ceiling can have.
Brandi Marsh is often the sole caregiver for her five-year-old quadriplegic daughter, due to the 2019 Motor Vehicle No-Fault Act. “His life is in my hands,” she says, fearing her exhaustion could cause her to make a potentially deadly mistake.
The law also capped the number of hours family members could be paid to care for a seriously injured loved one at home. Families are limited to a total of 56 hours per week and must seek care from an agency for the remainder, if their loved one needs 24/7 care. of an agency after the change in the law.
There are new risks, including the risk of being sued.
Here’s another “worst-case” scenario our experts say people — especially people with large assets — should consider: What if you don’t have enough liability coverage for bodily injury? This is the part of your policy that pays for injuries you cause to someone in an accident. Lansing personal injury attorney Steve Sinas said when everyone has unlimited medical coverage, they usually don’t have to sue the other driver to get the care they need. Now, if they’re hurt by someone with significant property, they’re much more likely to sue that person.
“Let’s say a kid is playing in the street and you’re driving home, and you’re rich and you’re looking at your cell phone because you get a text or something, and you don’t see this child and you hurt that child catastrophically and he needs care for the rest of his life,” Sinas says. “And let’s say their parents bought the $50,000 medical coverage because they’re on Medicaid, or the $250,000 limit. This child will only be covered up to these limits. So they now have to take legal action for their medical expenses. Because of this, we now need to insure more on the other side of the equation, that is, with more liability insurance.
Sinas says wealthy people should consider buying “umbrella” policies. An umbrella policy provides extra money, sometimes several million dollars, to cover the medical bills of someone you injure, in addition to your auto insurance policy coverage.
It also says that regardless of your economic situation, if you can, you should have uninsured/underinsured coverage. The law doesn’t require you to have it, but it’s in addition to the benefits you can claim if you’re injured by someone driving without insurance or driving with very low limits.
The new law was supposed to lower the cost of car insurance. Did it?
The short answer is, on average, no. Four years after the no-fault law was passed, Michigan is again the most expensive state in the nation for auto insurance, according to the consumer website, ValuePenguin.
Doug Heller, director of insurance for the Consumer Federation of America, says the law offered phantom savings, by requiring insurance companies to reduce the cost of injury protection but not the other parts of your policy.
“Thus, these savings were largely absorbed by a transfer of the PIP premium to other coverages,” says Heller. “Insurance companies are free to increase other parts of your premium, and a place where you see it’s bodily injury liability. So it comes out of another pocket, but it’s the same pants.
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Heller says if Michigan lawmakers really want to lower auto insurance costs and make them fairer, they should give the Department of Financial Services and Insurance the power to control insurance company profits, similarly. than the Michigan Public Service Commission. controls the profits of utility companies. And he says the state should limit the ability of insurance companies to charge people more based on non-driving factors, like where they live or if they don’t have a great safety score. credit.
What’s the best way to reduce the cost of my car insurance?
Wayne Miller, a Wayne State professor, says rather than lower your coverage limits, make a few calls to other insurance companies and see what they would charge you for the same coverage you have now.
“The first suggestion I would make is to shop around,” says Miller. “It’s really remarkable the difference between and among insurance companies for the same coverage, for the same demographic group.”
It’s also good to keep in mind that while you may feel loyal to your insurance company, your insurance company may not feel the same way about you when it comes to setting your rates. Doug Heller says it’s not uncommon for insurance companies to track your overall buying behavior for “loyalty” markers and charge you more because you tend to stay with the same companies year after year. instead of shopping.
Wayne Miller says the second best way to save money on car insurance is to consider dropping collision and comprehensive coverage if your car is over five years old and you have a clean driving record .
“No matter how well you maintain your vehicle, it’s a depreciating asset,” Miller says. “And the cost of insurance doesn’t depreciate much. So if you really want to save money, consider on older vehicles to cancel your collision and be comprehensive.
Finally, you can call your health insurance company and see if you can designate your health insurance as the first line to pay accident expenses. This can sometimes reduce your auto insurance costs a bit, but be sure to check with your health insurance company before making any changes to your auto insurance policy.
For an explanation of the other parts of your insurance policy, see the state’s coverage guide here.