Beginning Wednesday, July 1, Michigan drivers will need to determine their Personal Injury Protection (PIP) based on the new state-mandated tiered coverage system, which replaces the current required unlimited no-fault coverage.

 Current law requires you to have auto insurance that includes unlimited PIP medical coverage to pay for your expenses if you are injured in an auto accident.

 The new auto insurance law allows you to choose a level of medical coverage when your policy is issued or renewed after July 1.

 According to the Michigan Department of Insurance and Financial Services (DIFS), if you are already receiving payments from your auto insurance policy due to injuries from an auto accident, you will continue to receive the current unlimited benefit regardless of the choice you make for the future. This is also true if you are injured in an accident between now and July 1, 2020.

 This new law comes after Gov. Gretchen Whitmer signed the bipartisan no-fault auto insurance reform legislation (Public Acts 21 and 22 of 2019) May 30, 2019 to provide insurance coverage options, lower rates for Michigan drivers while maintaining the highest benefits in the country, and strengthen consumer protections.

Lower costs expected

 PIP choice: Drivers will now be able to choose a coverage level that is appropriate based on their needs and budget. PIP covers the driver and others covered by the driver’s policy for medical expenses that result from an auto accident.

 Rate reduction: Each insurance company will be required to reduce average PIP medical premiums. A driver’s premium will depend on individual circumstances and the coverage selected.

 Fee Schedule: A required cost control measure between auto insurance companies and health care providers is to make PIP medical coverage more affordable for consumers. The law sets a schedule of fees that can be charged by providers for PIP coverage.

Consumer protections

Elimination of non-driving factors: The new law prohibits auto insurance companies from using sex, marital status, home ownership, credit score, educational level, occupation, and zip codes in setting your auto insurance rates.

Fraud investigation unit: A newly established unit investigates criminal and fraudulent activity related to the insurance and financial markets and works with Attorney General law enforcement to prosecute these crimes.

 Michigan Catastrophic Claims Association (MCCA) transparency: The MCCA is now required to provide an annual report to the Legislature, post an annual consumer statement on their website, and is subject to an audit by DIFS every three years.

Prior approval: Auto insurance rates and policies must now be filed with and approved by DIFS prior to being offered to consumers.

Fines and penalties: The new law allows for increased fines on insurance companies, agencies, and licensed agents for certain violations of the law.

Additional Changes

 Residual bodily injury (BI) coverage: The new law protects you from claims by other injured persons by increasing the minimum BI coverage limit an insurance company is required to offer you.

Mini-Tort: The new law increases the amount of money that can be recovered in small claims court for uninsured damages.

 Contact your auto insurance provider for further details.

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