Why No-Fault Auto Reform makes Resident Relative Status So Important
When you think about auto insurance, you often think about your vehicle and your insurance policy that is paying to repair/replace it if you are in an accident. The reality is that auto insurance is more about the people who drive vehicles or are injured in/by them. Think about it… it’s possible for you to have an auto policy without having any coverage for your vehicle!
So, WHO is covered by your auto policy? It depends… Who they are determines what they are covered for.
Prior to the recent reform of Michigan’s No-Fault Auto Policy, the Personal Injury Protection (PIP) provided by your auto policy would cover unlimited medical costs for the following:
- Named insureds and their resident relatives.
- Someone injured in a vehicle you own or a vehicle you were driving at the time of the accident
Let’s dive deeper into the second bullet point and talk about how this changed. People with no auto insurance used to get unlimited PIP coverage from someone else’s insurance policy. This included an auto policy owned by the driver of the vehicle involved in the accident or the owner of the vehicle itself. So, this PIP benefit was provided regardless of fault — no lawsuits required. No-Fault Auto Reform has changed this. If you don’t have an auto policy or you aren’t a resident relative of someone who has an auto policy, you can no longer rely on PIP coverage from someone else’s policy. Now, you would have to sue them for your medical costs.
With the once-generous unlimited PIP getting plenty of attention in the recent law signed by Michigan’s governor, it’s more important than ever to be a named insured or a resident relative of someone who has an auto policy!
This is where things can get tricky. Auto policies were originally designed back in the “traditional” days when you got married and stayed married. Your kids moved out and stayed moved out. It wasn’t hard to determine the resident relatives in these situations.
Today, fewer and fewer families are traditional in this manner. People who live together but aren’t married. People separate and move out. Sometimes they move back in. People get divorced and have kids splitting time between residences. Your kids move away to go to college. All of these scenarios can impact your “resident relative” status. Keep in mind, being listed as a driver on an auto policy isn’t the same as being a named insured or a RESIDENT RELATIVE.
So, if you’re not in a traditional situation, please have a conversation with your insurance agent.
They will help you get real clear on what resident relative means and if your loved ones are still covered or not. Some insurance companies even have special endorsements to address these “nontraditional” scenarios. Your agent will be able to instruct you on how to best determine who the named insured(s) should be and who truly are resident relatives. Ultimately, this could come down to someone you love being covered by your auto policy or not being covered by your auto policy. We don’t want you to find out the hard way.
We’re here to help!
So, if any of this is causing you to question your situation, please reach out to your agent. If you do not have an agent, contact us. We would love to help you through these changes. Above all, we will make sure that your insurance is still meeting your needs and expectations.
We have more resources and videos on our AUTO REFORM page to help you get a better understanding of Michigan’s No-Fault Auto Reform changes and how they could impact you.