No-Fault Auto Reform has generated some complicated-looking paperwork that will arrive ahead of your auto policy renewal. It’s designed to help you make decisions about two incredibly important coverages on your auto policy. This article is intended to help you understand what your options are and how your decisions may affect your coverage. Interestingly, some of you will have two decisions to make, others only one. Our “Two Important Choices” video also provides a summary of the decisions.
Decision 1: Choice of Bodily Injury Liability Coverage Limits
We usually refer to this simply as “Liability.” This is your lawsuit protection such as legal defense, awarded damages, and related expenses should you be found responsible for some or all of someone else’s auto accident-related injuries. You can watch our “No-Fault Auto Reform and the Legal System” video if you would like to learn more about this.
If you already have Liability limits of $250,000/$500,000/$10,000 or higher (if you’re our client you probably do), you WILL NOT be receiving this additional form to fill out in your auto policy renewal paperwork.
If you aren’t currently carrying Liability limits of at least $250,000/$500,000/$10,000, you WILL receive a one-page document in your renewal paperwork offering options for different Liability limits. See a sample of the Michigan Choice of Bodily Injury Limits Form here. If you want your Liability limits to be lower than this, contact your agent for additional paperwork you will need to complete, sign, and return.
Per the No-Fault Reform laws, if you don’t turn your paperwork in on time, the insurance company will automatically increase your Liability limits to the State of Michigan’s newly defaulted limits of $250,000/$500,000/$10,000.
Do not carry less than $250,000/$500,000/$10,000 in Liability limits. No-Fault Auto Reform has changed the legal landscape for our ability to sue each other for auto accident medical costs. The conditions for being “at fault” have also changed. It’s easier to be found responsible for someone else’s injuries and you can be sued for incredibly high amounts. We recommend purchasing:
- The highest Liability coverage your auto insurance company will provide
- An Umbrella Policy for another $1,000,000 in Liability coverage – See our “Auto No-Fault Makes an Umbrella Policy a Must” article for more information.
Decision 2: Selection of Personal Injury Protection (PIP) Medical Coverage
We simply refer to this as “PIP.” Four pages of your auto policy renewal paperwork will focus on the six options for PIP Medical. See a sample of this PIP form here. These choices range from keeping the “Unlimited PIP” (we’ve had for decades) to opting out of PIP Medical entirely and relying on your health plan (such as Blue Cross, Medicaid, or Medicare A&B) to cover your medical costs from an auto accident.
If you’re enrolled in Medicare A&B, you can read our “No-Fault Reform and Medicare” article that zeroes in on important coverage differences. However, if you have a Medicare Supplemental policy, you’ll need to understand how it responds to auto accident injuries and compare what it covers to what PIP covers.
Auto accident medical costs covered by a health plan could leave you personally responsible for hundreds of thousands of dollars in uncovered medical costs that Unlimited PIP would have paid for with no deductibles, co-pays, out-of-network charges, etc. To take on this risk, you may save a couple of hundred dollars a year per auto for what you’re paying for Unlimited PIP Medical coverage.
We recommend keeping your Unlimited PIP coverage. If you’re looking to save some money, and you have a health plan that doesn’t exclude auto accidents, ask your agent to quote “Coordinated PIP”; this is where your health plan AND PIP Medical work together to pay for your medical expenses and could result in a nice discount (of course, proof is required)!
Your Auto Policy Insurance Costs
There’s more to your auto policy than PIP Medical and Liability. There are other coverages (such as physical damage to your vehicle, uninsured/underinsured motorists coverage, etc.) and many factors that influence what you pay for all your auto policy coverages year to year. As always, we are here for you to help you make good decisions on how to get the coverage you need at a competitive overall bottom line price.
There is so much to consider with the new laws. It’s okay to be unsure. That’s where we come in! Contact us today and let us help you make decisions that assure you and your family are properly protected!