In 1973, Michigan passed a no-fault auto insurance law. This law allows you to file a claim on your auto insurance if you get an injury in an accident, regardless of who caused the accident. The system was designed to save money by eliminating the need to sue other drivers for reimbursement after an accident. 

Personal injury protection, generally known as PIP insurance, was initially required in Michigan for drivers to acquire “unlimited lifetime medical coverage.” People wounded in car accidents would be covered for “reasonable and necessary” medical expenses for the rest of their lives under that rule. Michigan was the only state that had such a requirement.

In addition, Michigan has some of the highest vehicle insurance premiums in the country. According to critics of the state’s no-fault system, one of the key reasons for high car insurance costs is free lifetime medical coverage.

On May 30, 2019, Michigan Gov. Gretchen Whitmer signed no-fault auto insurance reform legislation to reduce high rates and expenses. Michigan drivers will have new coverage options to choose from for policies issued or renewed after July 1, 2020. As a result of your coverage choices, you may be able to reduce your premiums.

Will the cost of auto insurance in Michigan decrease?

Michigan drivers, on average, pay some of the highest vehicle insurance premiums in the country. Michigan’s vehicle insurance reform is aimed at lowering prices. According to the DIFS, there are a few reasons why your auto insurance bill can go down:

• Option for PIP: You were required to get PIP insurance with unlimited lifetime coverage before July 1, 2020. You’ll have six options to choose from if you buy or renew a policy after July 1, depending on your eligibility. Therefore, consult your insurance agent to find out which choice is best for you.
• A decrease in the rate: PIP prices will have to be reduced on average by auto insurance firms. The coverage you choose and other factors unique to you (such as qualifying for PIP opt-out or lower coverage amounts) determine your rates.
• The payment schedule: To make PIP coverage more affordable, Michigan requires a cost-control measure between vehicle insurance companies and healthcare providers. The statute establishes a cost schedule for medical services that one can pay under PIP coverage.
• Consumer safeguards: Other safeguards in Michigan’s auto insurance reform include eliminating non-driving elements in rates, a fraud investigative unit, MCCA openness, prior approval of rates and policies, and stricter fines and penalties for insurance companies and agents that break the law.

Even with these changes, some Detroit residents may see higher auto insurance rates. One driver learned she was overpaying for PIP coverage. Her current PIP is limitless, but lowering it to $250,000 would cost her an extra $145 each month. She’d pay a lot more for unlimited coverage or $500,000 coverage.

If you’re paying more for less coverage and getting higher rates, you should consult an independent insurance agent. Switching auto insurance providers may save you money and also inquire about any available auto insurance discounts.

What Happens If I Don’t Have Automobile Insurance in Michigan?

If you’re driving without auto insurance in Michigan, you’ll have an 18-month amnesty period starting July 2, 2020, during which you won’t be penalized.

• Before: Uninsured drivers faced additional fees and restrictions before getting insurance coverage under the previous regime.
• After: As a result of a lapse in motor insurance coverage during the amnesty period, insurance companies are no longer allowed to limit the coverage available, demand a reinstatement fee, or raise the rate.

In a statement, DIFS Director Anita Fox noted, “Michigan had a disproportionate number of uninsured drivers, and the new auto insurance law removes numerous barriers to coverage.” She says that the next 18 months are the best time for previously uninsured drivers to purchase car insurance. This is because there will be no penalties, and statewide average savings and new medical care options will be guaranteed.

Auto Insurance Reform in Michigan: Frequently Asked Questions

How will I know what options I have and which ones I should take?

The new Michigan auto insurance law mandates that vehicle insurance firms and agents provide you with documents outlining your coverage options. You should discuss these options with your insurance agent to determine the appropriate amounts.

Here’s a guide to Michigan auto insurance that discusses the different types of coverage you can get.

In Michigan, how do I receive car insurance for damage to my vehicle?

PIP and liability insurance can help pay for medical bills and property damage, but they won’t cover your car.

You’ll need collision and comprehensive insurance if you want coverage for things like car accidents, car theft, hail, fire, falling items (like a tree branch), floods, vandalism, riots, civil commotions, and collisions with animals (like a bird or deer).

Is it necessary for me to purchase car insurance in Michigan?

In Michigan, it is mandatory for car owners to have auto insurance. Auto insurance is mandatory in Michigan. If you are currently uninsured, you can get coverage for 18 months starting July 2, 2020, with no penalties.

Uninsured drivers face a $200-$500 fine, a year in jail, or both.

In Michigan, how many drivers are uninsured?

According to the Insurance Research Council, Michigan has the fourth-highest percentage of uninsured drivers in the country. Nearly 20% of automobile owners do not have auto insurance.

If an uninsured driver hits you, your PIP insurance will cover your medical bills, but not your agony and suffering.

Uninsured motorist coverage can help pay for expenses such as lost wages, pain, and suffering. It assists with work replacement services and medical expenditures if an uninsured motorist causes an accident.