Four Tires: Strategy to “Re-tread” Your Auto Coverage
Updated: Sep 23, 2020
If you are a Michigan resident, 65 or over, you may be wondering about the auto insurance reform that took effect on July 2, and if changes to your policy might be right for you. You are not alone.
Consider approaching Michigan’s new auto insurance law as if you were buying a new set of tires. So, let’s kick those tires and check your options.
Tire 1: Understand the Law
For many years, Michigan has maintained the best no-fault coverage in the nation. This included unlimited lifetime Personal Injury Protection coverage to pay your medical costs if you are injured in an auto accident.
“We have had the highest benefits,” Anita Fox, director of the Michigan Department of Insurance and Financial Services said. “But with it came the highest costs.”
Seniors, especially, paid the price. When Medicare could no longer split costs with their private insurance carriers, their rates went up.
“When seniors enrolled in Medicare, after leaving commercial insurance, their premiums would often jump because they were no longer able to coordinate medical benefits,” said Fox. “We were hearing anecdotally that their auto insurance was becoming unaffordable. Seniors and others were having to make tough budget choices.”
The state’s high insurance costs were also driving up the number
of uninsured motorists. Michigan ranked fourth in the nation with one- in- five drivers uninsured.
Reform was sorely needed but legislators disagreed on what
that would look like. A decade in the making, the new law passed the legislature in 2019 after Gov. Gretchen Whitmer was able to strike a bipartisan compromise.
“The new law maintains high benefits while also putting in place mechanisms for cost savings and choice,” Fox said. “Drivers now have more of a say – just like with their other types of insurance.”
The new law also increases the minimum level of Bodily Injury Residual Liability coverage you must have. This pays for claims made against you if you are found liable for a crash. This minimum coverage level, which had not been adjusted for inflation in more than 30 years, protects you from increased risk if you are sued.
“You can now choose how much PIP medical coverage you want to buy, and how much liability coverage you want to have if you are found to be at fault,” Fox said.
Tire2: Review Your Options
Under the new law, you can still get unlimited lifetime PIP medical coverage. Levels range from up to $500,000 per person per accident, down to a maximum $50,000 per person per accident, which is available only for Medicaid members. PIP medical coverage averages about half of a person’s total auto insurance premium.
Medicaid members can select the lowest PIP coverage option – up to $50,000 – if other household members have another Michigan auto insurance policy with PIP medical coverage, Medicaid, or other health insurance that covers auto accident injuries. Those with both Medicare and Medicaid (“Dual-Eligibles”) can choose any of the PIP options available to people with just one of those coverages.
Medicare Parts A & B subscribers can opt out of PIP medical coverage completely, provided other household members have a Michigan auto insurance policy with PIP medical coverage or other qualifying healthcare coverage. You can also choose the PIP opt-out if you have Medicare Supplemental “Medigap,” which means you already have A & B, or Medicare Advantage, which is Part C.
Tire 3: Weigh Your Risks, Benefits and Budget
The new law offers flexibility for drivers, so there’s lots to consider when making your selections. The PIP medical opt-out may not be right for all seniors. “While Medicare will now provide medical coverage for auto accident injuries, it doesn’t cover everything your current policy covers,” Fox said.
Long-term care, home or vehicle modifications, and caregiver help are examples of additional PIP expenses that may not be covered by Medicare.
“People need to make their own decisions. How much risk do they want? What kind of budget do they have?” Fox said. “There is a difference, and a choice to be made if seniors choose to rely on their Medicare.”
Tire 4: Be an Informed Consumer!
If you were buying that new set of tires, you certainly wouldn’t want to miss getting the best deal on the safest treads. “It’s all about choice,” said Fox. “Shop around if you don’t get the answer you like from your current insurer. We have more than 100 insurance companies in Michigan.” Other consumer benefits that the new law provides:
• If you had a lapse in coverage, no insurance company can refuse to insure you or charge you more for your new policy, if you get that coverage before Jan. 1, 2022.
• Insurers must keep in place mandated statewide average rate reductions, for each PIP coverage level, for eight years.
• You can amend your existing policy and choose other options before your current policy ends.
Fox has been presenting virtual town halls throughout Michigan, with state legislators. In May, Rep. Joe Tate (D-2) co-hosted a forum with Sen. Stephanie Chang (D-1).
“If you don’t do anything, nothing will change,” said Tate. “Your coverage will stay exactly as it is today. Know your options.”
Now that you have your “four tires” to understand Michigan’s new auto insurance law and what it means for you, you should feel ready to roll!
For more information:
CONTACT: Your auto insurance carrier or agent
CALL: 833.ASK.DIFS DIFS (833.275.3437) for questions, and to request information mailed to your home.
TO FILE A COMPLAINT: Ifyouhaveaconcernyoucan’tresolvewithyour insurance company, contact 833.ASK.DIFS (833.275.3437) or Michigan.gov/DIFScomplaint
TO COMPARE BENEFITS: MichiganMedicare/MedicaidAssistance Program has developed a chart comparing unlimited auto PIP coverage to Medicare only. Go to. www.mmapinc.org or call 800.803.7174.