In July 2020 Michigan passed law that changed no-fault auto insurance. Insurers now have the option to choose between different PIP coverage. What is PIP and why is it important? Let’s dig in.
PIP
PIP stands for personal injury protection coverage. This is the insurance that pays your medical bills if you are injured in an auto accident. Michigan drivers are required to carry no-fault auto insurance that includes PIP coverage. New limits equal or exceed the highest benefits in the country and unlimited PIP is still an option. Furthermore, companies are required to reduce statewide average PIP medical premiums for 8 years.
PIP Options
There are six PIP medical coverage levels available:
- Unlimited coverage
- Up to $500,000 in coverage
- Up to $250,000 in coverage
- Up to $250,000 in coverage with PIP medical exclusion(s) – A named insured with nonMedicare health coverage that covers auto accidents and/or for household members if they have health insurance covering auto accidents.
- Up to $50,000 in coverage – The named insured is enrolled in Medicaid and their household members have another Michigan auto insurance policy or health insurance covering auto
accidents. - PIP medical opt-out – The named insured has Medicare (Parts A and B) and their household members have another Michigan auto insurance policy or health insurance covering auto
accidents. (source)
Should you lower your PIP coverage?
Ask your HR if your policies meet the requirements to be considered qualified health coverage under the Michigan no-fault law. How do you know if it qualifies? Ask them – does your plan exclude or limit coverage for injuries related to motor vehicle accidents? Does your plan have an annual deductible of $6,000 or less per individual? Keep in mind that PIP coverage covers more than medical expenses. It includes things like attendant care, housing modifications, lost wages, etc.
Once you’ve gathered all the detailed information, figure out the different premium options for PIP with your auto insurance company. When you know the premium costs and coverage limits, review your finances and make an informed decision.
If you don’t have an emergency fund and no extra savings, you’re putting yourself at risk by trying to save a few bucks. Self-insuring some or all of your PIP coverage may not be the best option. If you’re wealthy and have an emergency fund and extra savings, you might be able to choose a lower PIP option, but it might not make sense if you find out that the premiums are less than a date night meal at a restaurant.
Takeaway
Michigan changed its no-fault auto insurance laws. It is possible you can lower your premiums now by lowering your personal injury protection coverage. If you are considering lowering your premiums, figure out what your current health insurance does and does not cover as it relates to auto accidents. Then figure out the different PIP premiums your auto insurance companies offers and what that PIP includes and make an informed decision.
