Michigan No-Fault Auto Reform: What You Need to Know

Auto Reform How Much Coverage Do I Need

Michigan No-Fault Auto Reform will be effective on July 2, 2020, for all new and renewal auto policies. There are several immediate changes that come with the reform dealing with Personal Injury & Liability coverages as well as which household members are covered under the new laws.

Trust Shield is providing a guide to help navigate the auto reform options and what will need to be done prior to the renewal of an auto policy.

Personal Injury Protection

Personal Injury Protection (PIP) currently provides unlimited medical benefits, loss of wages, nursing care, and replacement services if you or a household member is injured in an auto accident. Auto reform will now allow the following optional PIP coverage limits:

  • Unlimited
  • $500,000
  • $250,000
  • $50,000
  • Opt-out entirely*

Trust Shield strongly recommends maintaining unlimited PIP coverage so you are covered as you always have been and are assured lifetime protection from the result of an auto accident injury.

*Please note that opting out of PIP coverages requires Medicare or participating health insurance.

Liability Coverage

The Michigan No-Fault reform will now require the following minimum liability limits:

  • BODILY INJURY – $250,000 Per Person/$500,000 Per Accident
  • UNINSURED & UNDERINSURED MOTORISTS – $100,000 Per Person/$300,000 Per Accident
  • PROPERTY DAMAGE – $100,000 Per Accident

If your existing liability is at the minimum required limits, no changes are needed.

Auto Reform Young Driver

If they are below the required limits, your policy will automatically be increased to the mandatory limits.

We do not suggest lowering coverage to the minimum limits as the opportunity for one to sue for bodily injury and non-economic damages will drastically increase. As people purchase the lower amounts of coverage, when they run out of insurance, it is possible they will look to the judicial system to seek compensation to include pain and suffering.

Some carriers may not be offering a Combined Single Limit on Bodily Injury coverage. Your limits could change to $500,000/$500,000 or automatically increased to $510,000 if not instructed otherwise.

Who is covered under my auto policy?

The No-Fault reform also brings changes to who is covered and can be insured under your auto policy. In addition to the named insured, PIP coverage applies to the named insured’s:

  • Spouse
  • Resident relative
  • Children who are away at school yet retain the named insured’s address and return home in the summers.

Who is not a resident relative?

PIP coverage does not apply to:

  • A significant other.
  • A child that has permanently moved out of your home to attend school or work and will not be living with you again.
  • Anyone that is not related to you and may be living with you temporarily.

If you have anyone currently listed on your policy that is not a resident relative or that drives your vehicles on a regular basis, you will need to contact us immediately so we can offer options to provide these individuals with proper coverage.

What Do I Need to Do?

Auto Reform Choosing A PolicyInsurance carriers will be sending a No-Fault reform packet 90 days before your renewal date with instructions to complete, sign, and return these forms to the company or agency 45 days prior to your renewal date. Please read this packet carefully.

  1. Review your current automobile liability limits – If your coverage for Bodily Injury liability is $250,000 per person/$500,000 per occurrence OR HIGHER, we suggest that you do not make any changes.
  2. Review your Personal Injury Protection (PIP-medical) – If it states that you have “Full coverage” or “Unlimited” we suggest you do not make any changes.
  3. You only need to return the form if you are making changes to your coverage.
  4. If you do not return the form & are not meeting the State of Michigan’s minimum requirements, coverage will automatically be renewed to include Unlimited PIP & minimum Liability coverages.

Additional Information

Michigan Dept. of Insurance and Financial Services

Citizens Insurance Co.

Trust Shield Insurance Group is always available to answer any questions you may have. Do not hesitate to contact our team if you have any questions or need guidance with the No-Fault Reform process.