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How Will Michigan Auto Insurance Reform Affect You? Thumbnail

How Will Michigan Auto Insurance Reform Affect You?

Everything you need to know about Michigan Auto Insurance Reform and nothing you don’t.

In May 2019, Michigan’s governor signed a historic new No-Fault auto insurance reform bill.

The measure was designed to provide lower rates for drivers in this state, as well as protect our insurance coverage options and enhance various consumer protections.

The changes, however, will have a variety of ramifications for Michigan drivers. Let’s look at some of the most important takeaways from the new law, which takes effect July 1, 2020, and how they might impact you and your budget.

What Will and Won’t Change Under Michigan Auto Insurance Reform

Under Michigan’s existing auto insurance laws, drivers are required to carry unlimited personal injury protection (PIP) medical coverage to pay for expenses resulting from an accident. The newly adopted law changes this, allowing drivers to choose the specific level of medical coverage they want when the policy renews after July 1.

The idea here is that Michigan drivers will now be able to choose a coverage level  that’s appropriate for both their needs and their budget.

However, it’s important to note that those who may already be receiving payments from an auto policy due to injuries sustained in an auto accident will still receive the current benefit. In other words, it will not be impacted by any coverage choice you make going forward. This takeaway also holds true should you be injured in an accident anytime before July 1 when the new law takes effect.

Six Medical Coverage Choices

Going forward, Michigan drivers will be able to select from six PIP coverage levels including unlimited coverage, $500,000, $250,000 and a minimum $50,000 option for Medicaid recipients.

In addition, as a result of the new law, those who have health insurance that covers auto-related injuries, as well as eligible Medicare recipients, can totally opt out of PIP coverage. 

Drivers who elect to forgo PIP medical coverage will have the entire medical portion of their insurance premium eliminated.

Potentially Lower Insurance Bills

The potential upside to Michigan’s new auto insurance law is that it may reduce your monthly insurance bill and thus put more money back in your pocket each month. 

Because the new law allows drivers to select the level of PIP medical coverage they feel is best, auto insurance companies are required to reduce the premiums consumers are charged for such coverage for the next eight years. 

The specific amount of your premium reduction will vary of course, depending on the plan and level of coverage selected. However, the state has provided a general breakdown of how much of a reduction can be expected.

For policies issued or renewed after July 1, insurance companies are expected to issue the following PIP coverage premium reductions:

  • An average 45% or greater reduction per vehicle for the $50,000 PIP option

  • An average 35% or greater reduction per vehicle for the $250,000 PIP option

  • An average 20% or greater reduction per vehicle for the $500,000 PIP option

  • An average 10% or greater reduction per vehicle for the unlimited PIP option

More Information

The new law does require that auto insurance companies and agents provide policyholders with forms describing the benefits and risks of the various new coverage options, so be on the lookout for paperwork and correspondence detailing the changes coming to your policy.

If you’d like to learn more about the new law the Michigan Department of Insurance and Financial Services has just launched a website dedicated to the topic as well as a hotline.

As fiduciary financial advisors, we review the critical issues impacting your overall financial life, it can be helpful to have someone who is objective and looking out for your best interest review what this new law means for you personally.


Erickson Braund is the Founder and Chief Financial Officer at Black Walnut Wealth Management. He is a Certified Financial Planner®️ professional and a Chartered Retirement Planning Counselor®️. Eric brings over 20 years of experience working with high net-worth individuals and families, helping them achieve their goals of protecting and growing their wealth for retirement and for generations to come. Because Eric is a CFP®️ professional, he adheres to high ethical standards and engages in at least 30 hours of approved continuing education in the financial industry each year.

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