Changes to Michigan’s No-Fault Law Take Effect July 2, 2020 – What You Need to Know

Decoding insurance can feel like a chore, but it’s important to educate yourself on the ins and outs of Michigan’s new No-Fault reform — it can help uncomplicate the process and get you the best coverage you’ll need after a car accident

Michigan’s state legislature passed a new No-Fault law that changed fundamental aspects of the state’s existing No-Fault guidelines. With insurance companies set to offer new plans starting this July, where does that leave you as a driver?

Car insurance is necessary to have, and good coverage can lead to a better outcome for your car accident lawsuit, but it’s your responsibility to know which plans fit you best. 

To help you make the right decisions, the Open Mike podcast tackled Michigan’s latest No-Fault insurance reform. There’s a lot of controversy swirling around these changes, especially with how much insurance companies stand to gain now. 

But don’t let that scare you — here’s what to do to have the upper hand as a Michigan driver and the information you need to choose the insurance policy that works for you.

Read on to learn:

  • The details of Michigan’s reform to its No-Fault law 
  • Which policy benefits will keep you protected after a car accident
  • What to do after a car accident with an uninsured driver
  • The unethical practices insurance companies get away with

Behind the Scenes of Michigan’s No-Fault Reform

Without a public hearing or any debates, Gov. Gretchen Whitmer signed a No-Fault auto insurance reform bill that promises Michiganders future rate reductions. Residents of Michigan, however, are skeptical of the discounts they are being promised, while insurance companies seem to be very pleased about the changes.

In case you find yourself in a car accident lawsuit, there are certain things you need to know about this reform.

No-Fault — also known as Personal Injury Protection (PIP) — is a type of insurance coverage that will help pay for your medical bills if you’re injured in a motor vehicle accident, no matter who caused it. 

Under the former No-Fault law, you were automatically enrolled into unlimited medical coverage and your insurance would pay for: 

  • Medical care
  • Wage loss 
  • Household services
  • Attended care 

Starting July 2, 2020, the previously “unlimited for all” policy will change. That’s when insurance companies will offer new premiums and, you will have to choose a specific level of medical coverage for PIP. No-Fault insurance coverage levels vary by state, and in Michigan, the levels are: 

  • $50,000
  • $250,000
  • $500,000
  • Unlimited

Here’s where you have to be careful: You might be tempted to choose a low coverage level, but the money you save upfront could cost you your quality of life later on. 

Buying a policy with limited coverage means that in the event of a car accident, your protection will be limited, too: Limited coverage means your benefits will run out quickly, which leads to subpar medical treatment and care. 

When the time comes to renew your insurance policy, make the right choice and choose an unlimited coverage option — it might lead to a better result in a car accident lawsuit. 

Don’t Skip Out on Uninsured/Underinsured Motorist Benefits

In case a negligent, distracted or impaired driver with no insurance wrecks your car, there’s a way to protect yourself.

Remember: While No-Fault covers medical, wage loss, household services and attendant care, uninsured motorist (UM) benefits will cover the pain and suffering that occurs after an accident. 

You should get the best UM insurance you can afford, and nowadays, even a $100,000 policy isn’t enough — if it’s possible, you want to be in the $500,000 to $1,000,000 range. 

If that same distracted driver has below average insurance, your underinsured motorist protection (UIM) will come in handy. 

For instance, say you get into an accident with someone who was texting while driving:

  • They have a $20,000 injury policy and you have a $500,000 injury policy. 
  • After the accident, you collect a check from their insurance carrier for $20,000. 
  • You’ll be able to turn to your own underinsured benefits policy and collect another $480,000 that compensates the difference, which covers any bodily injuries that may occur as a result of the car accident. 

Realistically, the difference between a $100,000 policy and a $500,000 policy is about $40 over a year — it makes sense to sign up for it and you’ll be better protected in the long run. 

Insurance Companies Aren’t Afraid to Be Unethical

Ultimately, insurance is about protecting yourself — thankfully, Michigan allows you to be as selfish as you desire in this degree. 

That’s exactly why it’s critical to choose an honest, credible insurance company that will look out for your best interest. (You might want to steer clear of the State Farms and All States of the insurance world.)

Your insurance company isn’t doing its job if they deny your claim and place you under investigation

Too often, these massive insurance companies get away with unethical tactics like:

  • Using redlining inequity against lower-income communities: Redlining is a discriminatory practice that restricts services to specific areas according to the racial traits of the applicant’s neighborhood. This is usually applied to predominantly mixed-race or African American districts.
  • Checking credit scores: Insurance companies often deem you worthy of purchasing a policy based on your credit score. If you have a low credit score, for instance, they assume you’re more likely to get into an accident or have your vehicle stolen, so they hike up your premium or deny you coverage based on their presumptions.

Final Thoughts

Understanding Michigan’s No-Fault laws is essential for making the right choices as a driver in the state of Michigan. In case you get injured in a car accident, you want to have the right protection that will lead to better outcomes in a car accident lawsuit. 

While Michiganders await rate reductions and other amendments part of this reform, make sure you sign up for unlimited No-Fault coverage, get the best uninsured motorist (UM) policy you can afford, and be aware of the changes going on in your community. 

This article is based on an episode of Open Mike, my weekly podcast featuring key Detroit figures and other guests discussing the topics you care about – we’re going to tell you the truth about the law, your rights, and current events both here in Detroit and nationwide.

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