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No Fault Reform: The Devil is in the Details.

In May of 2019, Gov. Gretchen Witmer signed into law Sweeping changes to our No Fault Law. Most have heard of the savings the law will provide, through new options available on the Personal Injury Protection, a new fee schedule for Medical Claims, Fraud Prevention Measures, and Changes to rating factors. But what is not be reported is how these changes affect who and how your injuries will be covered under the new law.

You are now able to choose lifetime caps to your Medical that are calculated per person/per occurrence. The Caps available include Unlimited, 500,000, 250,000 and $50,000 (Medicaid only). In certain circumstances, you will be allowed to opt out of the Medical all together. One of the reasons, Michigan residents can opt out is due to enrollment in Medicare Parts A&B. But buyer beware, Medicare by nature is a secondary payer in auto accidents, so this means they have the right to collect on any auto injury claims they have paid out. Time will tell as we begin to see some case law, but this could mean a lien on any future Settlement for Bodily Injury and possibly against the assets of your Estate.

Another area of concern is coverage for others while in your vehicle. Unlike the old law, your policy will only cover the Named insureds and Resident Relatives. This can leave you with not only a moral dilemma but increased Liability risk. So scenarios that will need to be discussed with your agent include the following: Children away at School, Others Borrowing a vehicle on your policy, Out of Town Visitors, Children in a Split household, Elderly with a caretaker, to name a few. If any of these scenarios apply to you, you will need to talk to a licensed insurance agent to determine the best way to protect those individuals, as well as your increased risk of being sued.  

In closing, I would tell you that the agents out there that tell their clients that they are advising everyone to stay unlimited are just taking the easy way out and protecting their pocketbook. Each person’s situation is unique, and there is not one right answer. On the other side of the coin, even though you can opt out, does not necessarily mean you should. My advice is to find someone you feel you can trust, to know the law and give sound advice.

Michael Vereecke, CLCS
Michael Vereecke, CLCS

President of Customer First Insurance Group,
Commercial Lines Coverage Specialist (CLCS) Designated, and Property and Casualty Licensed since 2009

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