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How Michigan’s No fault reform changed the way Personal Injury Protection is covered.

The average person does not understand Michigan’s Insurance laws, and they look to their agent to help them. Unfortunately, the New No Fault Reform that took effect on July 1st, 2020, has left many agents also improperly informed. There are many complexities to the changes beyond the simple new options available to the consumer. If you do a simple google search and pull up the consumer education provided through the State of Michigan, it only gives a portion of the information needed to make an informed decision on your options. To make matters worse, the State elected to allow consumers to take advantage of the new rule changes immediately. By allowing this it forced the hand of the carriers to allow mid-term changes or lose customers. which put undue pressure on agents to meet the unrealistic demand of trying to educate essentially all of their customers within a small one-month window with little time to get educated on all the challenges the new law created.

The priority, front of mind for most agents, was getting educated on what a consumer would be giving up by making changes to their Personal Injury Protection. The media did an excellent job of getting the news out that you could lower your cost, but at what expense? One thing I’ve learned in my time on this earth, is nothing is ever truly free, there is always a cost. If you had a well-educated Agent, they would have advised you that by opting out of the medical and only relying on your Health plan you would be susceptible to some out-of-pocket costs. Those include your plans copays, Coinsurance, and deductibles but that is just to begin. Your Auto Insurance also covers things your health plan typically will not, including Attendant Care, updates to your home or car to accommodate your disability, re-education to re-enter the workforce following a disability, transportation expenses, Long Term Care, and case management services. This was focus of most agents as it was the change that affected the actual premium you paid.

Arguably, the most impactful change that has largely been missed was the change to the order of priority. In the past, anyone driving your car or passengers of your car would be afforded the same benefits under your policy, as you. However, the new laws included a change to the order of priority, used to determine who is responsible to pay for injuries in the event of an auto accident. Now your policy only provides Personal Injury Protection benefits to the Named Insureds, not to be confused with drivers, on the policy and their resident relatives. The key is they have to live with you, or they have no coverage under the policy. For Instance, if you have a significant other who is living with you and they insure their vehicle on the same policy as you, that does not necessarily mean they have the same benefits on the policy as you. Also, if you are trying to help your young adult child by insuring their car even though they have moved out with a friend, they are also in danger of having no coverage under your policy.

Now our lawmakers did foresee an issue here, so they did provide a safety net called the Michigan Assigned Claims Plan (MACP). The MACP provides benefits to Michigan Residents with no other coverage, up to $250,000. I would liken the difference in benefits to be similar to dealing with your employer health plan vs State Aid, you will have more hoops to jump through and payments/care will likely move much slower. Also, you may carry Unlimited Medical only to find out, when it is too late, your loved ones claims are now capped on the payments for their injuries. You can try to blame the agent, if this were to happen to you, but ultimately it is up to you to notify your agent that changes need to be made to the structure of your Auto Insurance.

Michael Vereecke, CLCS
Michael Vereecke, CLCS

Agent/Owner of Customers First Insurance Group
Licensed in Property and Casualty Insurance since 2009

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