Is Opting Out of PIP the Right Move for Michigan Drivers?

For years, Michigan has had a reputation for having some of the highest rates for auto insurance premiums in the country and one thing that was commonly blamed for those high costs was Michigan’s old no-fault law.

Under Michigan’s old no-fault auto insurance law, all Michigan drivers were required to carry insurance that included unlimited personal injury protection (PIP) coverage. PIP coverage is the part of your auto insurance policy that covers medical bills associated with a car accident, as well as other related expenses, like rehabilitation costs, lost wages, and in-home assistance for things like childcare or cleaning the house. Since Michigan’s old no-fault law required all drivers to have unlimited PIP coverage, drivers involved in car crashes would go through their own auto insurance for their damages. In cases when a person is catastrophically injured in a car accident, their related expenses could be covered for the rest of their life.

With the recent changes to Michigan no-fault law, drivers are no longer required to carry unlimited PIP coverage. When the changes started going into effect in July 2020, one of the biggest changes Michigan drivers are seeing is the ability to choose their level of PIP coverage. Drivers can now continue to have unlimited PIP coverage if they choose, or they can opt for coverage that provides up to $500,000 per person, per accident or $250,000 per person, per accident.

In some cases, drivers may be able to choose an even lower level of PIP coverage, or even completely opt out of PIP coverage. Opting out of PIP coverage is an option available if a person is covered by both Medicare Part A and Part B and if all other people in their household are either covered by their own auto insurance policy with PIP coverage or by other qualified health coverage. To be eligible to completely opt out of PIP coverage, the Michigan Department of Insurance and Financial Services states that the “qualified health coverage” other people in a household would need to have is defined as:

• Both Medicare Part A and Part B, or

• Other health and accident coverage with an annual individual deductible of $6,000 or less and doesn’t limit coverage for injuries related to car accidents

Being able to choose the level of PIP coverage a person has gives them more control over the total cost of their auto insurance. If you choose to continue with unlimited PIP coverage, you will likely see a smaller change in your total auto insurance premium. But if you choose a lower level of coverage, or are eligible to opt out of PIP coverage completely, you will likely see a bigger difference. But if you have the option to opt out of PIP coverage, or are just considering reducing your PIP coverage, is it a good idea to do so?

Goodwin & Scieszka recommends continuing to buy unlimited PIP coverage. With unlimited PIP coverage, you’ll have the highest level of protection for yourself and your family. There won’t be any need to worry about hitting any caps in your coverage in the event you’re seriously injured in a car accident.

In catastrophic car accidents, medical bills can add up very quickly. $250,000 or $500,000 levels of PIP coverage can sound like you have a lot of coverage, but if you’re injured to the extent that you’ll need care for the rest of your life, you might be surprised by how quickly you can reach those limits. If you hit your PIP coverage limit after a car accident, you can file a lawsuit against the at-fault driver for damages exceeding your limit. But having unlimited PIP coverage ensures you are covered from the beginning.

Have more questions about the recent changes to Michigan no-fault law? Give us a call. Goodwin & Scieszka has car accident lawyers highly experienced in handling car accident cases and understand how auto insurance laws apply to drivers. We can help answer your questions about the new law and help you figure out which levels of insurance you need. Contact us today.

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