When was the last time you looked at your car insurance policy? Can you explain the meaning of each coverage element?
If your answer is, It’s been a while, or please don’t ask me, you’re in good company. Car insurance is one of the most complex products you can buy.
But it’s more important than ever to understand your coverage. Michigan’s 2019 No-Fault Motor Vehicles Act created greater risks for drivers and passengers.
We’ve put together this guide to help you understand the biggest changes brought about by the 2019 law.
Major change to “PIP,” the Personal Injury Protection portion of our policies.
All Michigan drivers are accustomed to getting unlimited medical coverage on their policies, to pay for their own or a passenger’s medical care after a car accident. This coverage is subject to the PIP (Personal Injury Protection) portion of your policy. The law now allows people to choose lower medical coverage limits than unlimited. Most people can choose up to $250,000 in coverage. People on Medicaid can opt out of as little as $50,000, and people on Medicare can opt out of PIP altogether.
However, the experts we consulted were unanimous in advising people to stick to the unlimited medical PIP in their policies. The cost of hospital and post-hospital care for a serious accident can easily run into $250,000 and, in a worst-case scenario, into the millions of dollars, says Wayne State University law professor Wayne Miller. Taking out PIP coverage, Miller says, is “the ostrich approach to buying insurance. You know, ‘It would never happen to me.’ And of course, statistically, you’re not as likely to have a horrible, costly, life-altering accident as there are millions of drivers in Michigan.” And there are “only” thousands of people infected this way. But you buy insurance to protect yourself from the worst case. That’s what it’s for.”
But even “unlimited” medical coverage no longer covers everything it used to.
Michigan’s old no-fault law used to be Requiring auto insurers to pay a reasonable rate for medical care needed for auto accident injuries, including the most catastrophic and lifelong injuries. The Automated No Fault Act of 2019 set limits on rates for this sponsorship. Brain and spinal cord injury rehabilitation centers, and agencies that provide home care, can only charge 55% of what they used to charge for caring for auto accident victims. For the vast majority of these agencies, this amount is less than the cost of providing care. For this reason, many have either stopped working or have stopped seeing car accident patients.
So, although our experts still urge people to keep an unlimited number of PIP’s, it’s not the same coverage as it used to be. In many cases, people affected by a disaster will not be able to access professional care at home, or extensive rehabilitation services at a specialized residential clinic.
Our Annabelle Marsh story shows the devastating impact this cover can have.
Brandi Marsh is often the sole caregiver for her paralyzed five-year-old daughter, due to the 2019 No-Fault Cars Act. “Her life is in my hands,” she says, fearing her overwork might cause her to make a life-threatening mistake.
The law also limits the number of hours that family members can have to care for a seriously injured family member at home. Families are limited to 56 hours per week, and must request agency care for the rest, if their loved one needs 24/7 care. Many were unable to obtain agency sponsorship after the law changed.
There are new risks, including the risk of prosecution.
Here’s another “worst case” scenario that our experts say people — especially people with large assets — should consider: What happens if you don’t have adequate bodily injury liability coverage. This is the part of your policy that pays for injuries you cause to someone in a collision. Lansing personal injury attorney Steve Sinas says that when everyone has unlimited medical coverage, they usually don’t need to sue the other driver in order to get the care they need. Now, if they were injured by someone with significant assets, that person would most likely sue.
“Let’s say a kid is playing in the street and you’re driving home, and you happen to be rich and you look at your cell phone because you got a text or something, and you fail to see that kid and you hit that kid catastrophically and he needs care for the rest of his life,” Sinas says. his life.” “And let’s say their parents purchased $50,000 worth of medical expense coverage because they are on Medicaid, or the $250,000 limit. This child will only be covered by these borders. So now they have to sue for their medical expenses. Because of that, we now have to insure ourselves more on the other side of the equation, which is insuring more liability.”
Sinas says the wealthy should consider buying “umbrella” policies. An umbrella policy provides additional money, sometimes up to several million dollars, to cover the medical costs of an injured person, in addition to the coverage of your car insurance policy.
He also says that regardless of your economic situation, if you can afford it, you should carry uninsured/uninsured coverage. You are not required by law to have them, but they do add to the benefits you can claim if you are injured by someone driving without insurance, or driving with extremely low limits.
The new law was supposed to lower the cost of car insurance. I did?
The short answer is, on average, no. Four years after the passage of the no-fault law, Michigan is once again the nation’s most expensive state for auto insurance, according to consumer website, the value.
The law provides phantom savings, says Doug Heller, director of insurance for Consumers Federation of America, by requiring insurance companies to lower the cost of personal injury protection, but not other parts of your policy.
“So the savings were pretty much eaten away by transferring the PIP premium to other coverages,” Heller says. “Insurers are free to increase other parts of your premium, and one place where they see that is bodily injury liability. So it comes out of different pocket but it’s the same pants.”
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Heller says if Michigan lawmakers really want to lower auto insurance costs, as well as make it more equitable, they will need to give the Department of Financial Services and Insurance the power to control an insurance company’s earnings, in the same way that the Michigan Public Service Commission controls the earnings of an insurance company. Accompanying. He says the state should limit the ability of insurers to charge people higher rates based on non-payer factors, such as where they live, or if they don’t have an excellent credit score.
What is the best way to reduce the cost of my car insurance?
Instead of lowering your coverage limits, says Wayne Miller, PhD, a professor at Wayne State University, make a few calls to other insurance companies and see what they might charge you for the same coverage you have now.
“The number one suggestion I’d make is go shopping,” says Miller. “It’s really noticeable the difference between and between insurers for the exact same coverage, for the exact same demographic group.”
It’s also good to keep in mind that although you may feel loyal to your insurance company, your insurance company may not feel the same way about you when it comes to setting your rates. It’s not uncommon for insurance companies to track your overall purchasing behavior for “loyalty” tags, says Doug Heller, and to charge you more because you tend to stick to the same companies year after year, rather than shop around.
The second best way to save money on car insurance, Wayne Miller says, is to consider drop collision and comprehensive coverage if your car is more than five years old and you have a safe driving record.
“No matter how well your car is maintained, it is a depreciating asset,” says Miller. And the cost of insurance for that does not go down much. So if you really want to save money, consider vintage vehicles that are collision-canceling and all-inclusive.”
Finally, you can contact your health insurance company and see if you can designate your health insurance as your first turn in paying for accidents. This can sometimes lower your car insurance costs a bit – but be sure to check with your health insurance company before making any changes to your car insurance policy.
For an explanation of other parts of your insurance policy, see your state’s guide to coverage here.