What is it? What should you expect?
Michigan’s Auto Insurance Reform, it’s finally coming around the corner on July 2, 2020. As many of you know, Michigan passed a bill that will hopefully save many drivers money each year on their auto insurance. This is partially due to the PIP Reform coverage on your auto insurance policies. There are other parts to this, but this blog focuses on just the PIP portion of it.
WHAT DOES PIP STAND FOR?
Personal Injury Protection
WHAT DOES PIP COVER?
PIP is the coverage on your auto insurance policy that pays for the medical costs for auto-related injuries. This will cover not only the medical bills but for any long-term care, wage loss, and replacement services.
WHO DOES PIP COVER?
PIP will cover the named insured of the policy, also known as the policyholder and their resident relatives. Being a listed driver on the auto policy is NOT the same as being a named insured or a resident relative.
WHO IS A RESIDENT RELATIVE?
The definition of a resident relative can be difficult to define as not everyone’s family and living situations are the same. The generalized response would be anyone who is legally a relative of the named insured that permanently resides in the same home as the named insured. This would include the named insured’s children and spouse. Please have a conversation with your insurance agent if your family/living situation does not fall into the “traditional” circumstances.
WHAT ARE THE PIP OPTIONS?
Drivers will now have different options to choose from other than the unlimited PIP coverage. Currently, anyone with an auto policy in Michigan has an unlimited amount of PIP so there is no cap on how much an insurance company will pay out on a PIP claim. As of July 2, there will be options available, but it is important to know that not all options are available for everyone.
The options are:
- Unlimited
- $500,000
- $250,000
- $250,000 (with opt-out options for those listed on the policy with Qualified Health Coverage)
- $50,000 (only for named insureds enrolled in medicaid AND any spouse and all resident relatives have either Qualified Health Coverage, medicaid enrolled or covered under another auto policy with PIP coverage)
- $0 – Opt Out (only allowed if named insured has Medicare A and B AND if everyone else in the household has Qualified Health Coverage.)
The first 3 options have no stipulations so anyone could choose them. The last three options have certain requirements. It is important to discuss your health insurance circumstances with both your health insurance carrier and your auto insurance agent to know which options are available for you. Such as, does your health insurance fall under the “Qualified Health Coverage” under this new law?
WHAT IS QUALIFIED HEALTH COVERAGE?
As defined under the new law, Qualified Health Coverage is: health and accident coverage that does NOT exclude or limit coverage for injuries related to auto accidents/injuries and has an annual individual deductible of $6,000 or less per person. Medicare recipients with BOTH parts A & B would also qualify.
Medicaid and health care sharing ministries are examples of coverages that are NOT considered Qualified Health Coverage.
WHO DO YOU CONTACT ABOUT QUALIFIED HEALTH COVERAGE?
Call your health insurance company using the number on the back of your ID card. If your current health insurance is through your employer, you may be able to also contact your HR department. You may have to provide proof to your auto insurance company that you have the right kind of health insurance.
WHO DO YOU CONTACT ABOUT YOUR PIP COVERAGE CHOICE?
Call your auto insurance agent to discuss what options are available for you.
WHEN SHOULD YOU MAKE YOUR CHOICE / TAKE ACTION?
The beginning of June will be an ideal time to reach out to both your health insurance company to verify your coverage and your auto insurance agent. By this time, all auto insurance companies will have the rates available for the different PIP options. It is ideal to contact your health insurance carrier and get that answer, and then your auto insurance agent.
HOW WILL MY AUTO INSURANCE COMPANY OFFER THESE CHANGES?
Two options that most auto insurance companies are offering if you wish to change your PIP coverage to anything other than unlimited are: 1)You will be able to just make an endorsement (change) to your policy the same as if you were to swap a vehicle on your policy. 2) Some companies are requiring that your policy be rewritten so you would have a new policy vs just making the changes on the current one.
WHAT IS SHIELD INSURANCE AGENCY’S PLAN OF ACTION?
Shield has a plan in place starting in May to try and make this change go as smoothly as possible. We will be emailing all our clients we have email addresses for a quick 2 question survey for how they would like to address their auto policy regarding the new law. There are options to select if you already know your decision or you can select to have someone call or email you to discuss. For those who do not have an email address on file or who don’t respond to the emailed survey, we will be reaching out to you by phone prior to July 2.
To learn more, please feel free to email us at contactus@shieldagency.com or call or text us at 616-896-4600.
You can also visit https://www.michigan.gov/autoinsurance for more information.
Submitted by Agent Melissa Hunt
