Michigan’s new auto insurance reform starts July 2nd

Michigan News

UPPER PENINSULA, Mich. (WJMN) — Starting Thursday, Michigan drivers have an opportunity to change their auto insurance plans to help them have a policy that’s right for them.

After 50 years, the Michigan legislature passed a new auto insurance plan for drivers to make a choice on what kind and how much coverage they want to have.

“In the past, you just had no option, you had to just go into unlimited coverage, even if you had a great personal plan, so you couldn’t opt-out, so the double coverage,” said Jill Leonard, Owner, State Farm Insurance in Marquette Township.

“Now, they’re looking at what do you have and how you are covered and then how do you want your assets covered because if you are in a bad accident you are liable for that accident, so do you want your auto insurance to pick this up, your personal protection, or are you covering this some other way.”

Coverage depends on what fits your lifestyle.

Beginning Thursday, drivers will have the following options for Personal Injury Protection (PIP) coverage on their auto insurance policies:

  • Maintain unlimited coverage
  • Insurance companies will cover up to $500,000
  • Insurance companies will cover up to $250,000
  • Insurance companies will cover up to $50,000 — only available to people on Medicaid
  • Opt-out entirely — only available to people qualified through health insurance or on Medicare Parts A and B

“Say you have 6 cars in your households, then you might have more of significant savings versus the one-car household, but I mean it’s going to cut it drastically,” said Leonard.

Leonard sees this as a great opportunity for Michiganders, but there are some aspects of these new laws that drivers should consider before making a quick decision.

“It all sounds great to save money and it is, who doesn’t want to save money, but I caution you,” said Jill Stagliano, Partner, Iron Range Agency.

“The biggest main question we receive is ‘am I going to save money?’ and my answer is always, ‘it depends’.”

Much of the savings depends on what kind of personal health insurance someone has.
“If you are injured in an automobile accident, the order of priority is you go to your own insurance,” said Stagliano.

“If you don’t have auto insurance, then you go to a resident relative, somebody that you live with that you are related to. If there is not auto insurance, then it goes to the automobile that you are in, and there is a whole line, there is a priority of where the benefits lie, and it’s always been unlimited. This is now changed, so if you are in an automobile accident, if you don’t have your own auto insurance or if you don’t live with a relative that has auto insurance, then your medical bills will go to the Michigan Assigned Claim Plan and it’s limited to $250,000.”

It sounds like a lot, but with how expensive health coverage can be, it’s not.

If someone who isn’t related to you gets into an accident in your car and doesn’t have their own insurance, this can put them into a financial bind.

Both Leonard & Stagliano want to make sure the public also realizes that this change – does not happen automatically.

They recommend you call your insurance agent to learn more about these new auto insurance changes and what steps you should take moving forward.

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