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How Much Money Am I Going to Save with MI No-Fault Reform??

sticky note with a question mark on a stack of money

WELL…. this is the question we ALL have as we wait and see how this new law plays out.

On May 30, 2019, Gov. Gretchen Whitmer signed a No-Fault Auto Insurance Reform legislation that is set to take effect July 2, 2020.  This bill will overhaul the current system. Her goal was to reduce the premium amount on Michigan Auto policies and make insurance more affordable for you.  This idea seems great (at 20,000 feet) and has been long over-do in many Michigan areas… however, with cost reduction comes limitations on your coverage.  She has left many asking, “How much money am I going to save?”

Starting in July, you will see a savings on the Personal Injury Protection (PIP) portion of your policy.

The state will give you a choice on the amount of medical benefits purchased from your policies.  However, the state has also changed WHO is ELIGIBLE for medical coverage on an auto policy.  We have a separate article “Who is Eligible for PIP” that could help you understand this better.

Those who choose lower amounts of medical coverage are expected to see the greatest price reductions.  If you make no changes and keep your current unlimited medical coverage on your policy, you will receive approximately 10% savings on your PIP coverage.  If you choose to purchase limited medical coverage or if you are eligible to opt-out entirely– you could see savings from 15%- 45% on the current Personal Injury Protection portion of your policy.

How much money am I going to save on the Michigan Catastrophic Claims Association fee?

For the period of July 2, 2020, to June 30, 2021, the Michigan Catastrophic Claims Association (MCCA) has announced their fee assessed for each insured vehicle carrying unlimited or limited Personal Injury Protection (PIP) will drop from $220 down to $100 per vehicle, per year. Those that are eligible to opt-out entirely from medical benefits will see the MCCA fee disappear completely.   For more on this, read our article “MCCA Fee to Decrease”.

These initial figures sound GREAT –but it’s important to understand that along with premium savings on certain coverage items namely, Personal Injury Protection (PIP) and the Michigan Catastrophic Claims Association Fee (MCCA) there could also be a HUGE reduction in your coverage should you have an auto-related accident and be faced with hundreds of thousands of dollars in medical bills and rehabilitation.   If you would like to learn more about this, we have a few short videos to help explain these important coverages on our main Auto Reform Page.

There are other important coverage areas in your Michigan Auto Policy that need to be taken into consideration when discussing premium savings, as they too have charges associated with them.

Premium is being charged for Bodily Injury, Property Damage, Limited Property Damage, Under-Insured and Uninsured Motorists, possibly Physical Damage and/or Towing and Rental Reimbursement.   Insurance Companies will be assessing premiums for these coverages multiple times a year which could cause premium increases (or decreases) based on your individual rating factors. If lawsuits spike due to policyholders choosing lower medical limits and/or opting out of coverage and you/others now have the need to sue others for unpaid medical bills – we may see premium increases.  If we find that lawyers are suing for higher limits, and you/others are found to be underinsured, the premium associated with this coverage may increase… the trickle-down effect is unknown at this time as everything associated with Michigan No-Fault Auto Reform is SO NEW to you, Independent Agents and Insurance Companies.

THESE are just a few of the points that make it so hard to answer the BIG question of, How much money am I going to save?”  We too are waiting to see how all the changes will affect coverages and pricing.  In the meantime, feel free to Contact Us and talk through any questions you may have.

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