Michigan’s No-Fault Auto Reform – what is already in effect as of June of 2019
The no fault reform recently signed by our Governor will have a big impact on those of us who have an auto policy. The major changes go into effect July of 2020. However, there are some important aspects we need to talk about that are already in effect as of June 2019. Interestingly, the first people to feel this recent reform to Michigan’s No-Fault Auto Policy are people with no auto insurance!
As of June of 2019 the system stopped being so generous
The system was originally designed to cover unlimited medical costs for people injured by or in an automobile — even if they didn’t have an auto policy. Those days are gone. So, I want you to keep reading if you…
- Have an auto policy and haven’t thought about your liability limits in quite awhile
- Don’t have an auto policy
- Don’t live with a spouse who has an auto policy
- Are not a resident relative of somebody who has a policy
- Don’t even know what a resident relative is
- Think you don’t need an auto policy because you don’t have an auto
A quick word on “RESIDENT RELATIVES”
The auto policy was originally designed back in the days when people got married and stay married. That’s how the policy was designed. Today, fewer and fewer families are traditional. People get divorced. Someone moves out and they move back in. Are they still resident relatives? Kids get older, they move out and go to college. Are they still resident relatives? People live together who aren’t married because it makes sense for them to do so. Are they resident relatives? If you’re not in a traditional situation, please have a conversation with your agent and get real clear on what a resident relative is. It could come down to you being covered by an auto policy and not being covered by an auto policy. Be sure to read our blog on Resident Relatives for more info on this topic.
Getting Unlimited PIP From Someone Else’s Auto Policy
Before the reform, if you didn’t own an auto policy and you weren’t a resident relative of someone who had an auto policy, and you were injured in somebody else’s car, you could have gotten unlimited Personal Injury Protection (PIP) from other people’s policies – most likely the owner or driver of the vehicle you were injured in. If that didn’t work, you could have gone to the Michigan Assigned Claims Plan (MACP), a governmental entity designed to pay medical costs from car accidents. And all this was designed to give you unlimited medical costs coverage.
The reform is doing away with unlimited coverages in a lot of instances. So in the above scenario, if you’re injured in an accident, your claims are paid by the MACP but only up to $250,000. The unlimited PIP from the MACP is no longer there for you, and your ability to get coverage from other people’s auto policies has been removed.
No worries, I have a personal health plan to cover auto accident injuries
Let’s look at how health plans work in these situations. So let’s say you don’t have an auto policy, you’re not a resident relative of somebody who has an auto policy. The MACP is all you get at $250,000 if you don’t have a personal policy or your personal policy excludes auto accidents.
- Medicare/Medicaid, the MACP will pay up to the limit of $250,000 then Medicare/Medicaid takes over.
- A personal health plan like Blue Cross Blue Shield (BCBS) that’s designed to be “excess” in an auto accident, then the MACP goes first up to the $250,000 limit, then BCBS takes over. If your personal health plan is designed to be “primary” in an auto accident, your personal health plan will go first, then the MACP will pick up co-pays, deductibles, and the things that BCBS would not cover such as lost wages, widened doorways, ramps to your house, things that you need to live in your house after the accident.
Can’t I just sue someone to get my medical costs covered?
Yes. Lawsuits take a long time and aren’t much fun. Meanwhile, medical costs are growing and the bills are coming in, the MACP will pay to the $250,000 limit. If you win the lawsuit, you’ll need to pay back the MACP for what it paid on your behalf.
I have an auto policy with unlimited medical (PIP)… what does this mean for me?
Your PIP coverage is for you and your resident relatives – it will no longer extend to others. If you run into somebody and you’re at fault, the State of Michigan had made it much easier to sue for medical bills. This means more lawsuits than before the reform, and the lawsuits will be going for higher damages since they’ll include medical costs. That’s where your liability coverage comes into play because it responds to damages to other people and their property. When was the last time you thought about how much liability coverage you have?
I’d like to have my own unlimited PIP coverage, but I don’t own an automobile!
Let’s say you’d still like to have an auto policy cover your medical bills and you’d even still like them to be unlimited. You can get a “named, non-owned” auto policy. This allows you to buy medical and liability coverage for yourself even though you don’t have an automobile. It’s like a renter policy in a way — you don’t own a home but you rent, so you buy a renter’s policy. You cover your stuff and your liability but not the home itself. A named, non-owned auto policy covers your medical and your liability but not the car.
A quick recap on Michigan’s No-Fault Auto Reform In Effect June 2019:
It used to be easier to get your unlimited medical bills from auto accidents paid by “the system”. Even people with no auto insurance could get their medical bills paid through other people’s PIP coverage – but that’s no longer the case. Also, the MACP would pay unlimited medical expenses, but now they stop paying at $250,000. The odds of getting sued to cover someone else’s medical costs from an auto accident are higher than they used to be. Make sure you have enough liability coverage on you auto policy to protect you from this!
More information can be found on our MI Auto Reform page.