Finding cheapest option in state’s no-fault auto insurance isn’t easy
Since state lawmakers overhauled Michigan’s no-fault system several years ago, buying auto insurance is no longer straightforward and requires decisions on complex coverage options.
So getting the cheapest price quote now takes a little work.
The biggest new choice concerns the amount of medical benefits coverage desired, known as “personal injury protection” or PIP.
Those who don’t make a choice and simply accept the default option — unlimited PIP — will generally pay a higher monthly auto premium than someone who chooses lower amounts of PIP.
But not everyone is eligible to get the cheaper PIP options. And some who are eligible might like the idea of paying the absolute
minimum for car insurance, yet after consideration, may prefer to go with fuller coverage and the accompanying peace of mind.
Still others may feel that the health insurance they get through Medicare or their employer is good enough to rely on after an accident, and therefore decide to save significant money and drop all PIP coverage. That is what injured drivers do in most other states — fall back on their health insurance.
Here are key details on the six medical benefits coverage options:
Unlimited PIP coverage
This is the default option that is automatically selected if drivers don’t make a choice. It is usually the most expensive option, especially in urban areas such as Detroit. Until July 2020, all Michigan auto insurance policies had to come with unlimited PIP.
This option provides for potentially unlimited, lifetime medical coverage for crash injuries. The benefits are above and beyond those in the best health insurance plans, with
services such as in-home attendant care, continuous rehab care, accessibility modifications for a home or vehicle and long-term custodial care in specialized facilities.
However, some providers have stopped accepting new patients for post-acute services. This situation could change depending on the outcome of a high-profile lawsuit by auto accident survivors that is now before the Michigan Supreme Court.
$500,000 PIP
This coverage option provides PIP benefits up to $500,000. Once the limit is reached, accident victims must rely on whatever other health insurance they have, go without coverage or try to sue the other driver for payment of the excess medical bills.
$250,000 PIP
This is the lowest PIP coverage option available to all auto policyholders.
$50,000 PIP
This option is only available to people enrolled in Medicaid. And there are additional requirements: Any spouse or relative in the person’s household must also be either enrolled in Medicaid, have health insurance that covers auto accidents or be under another auto policy
with $250,000 PIP coverage or higher.
Medicare opt-out
This is a $0 PIP option available only for those with Medicare Part A and Part B or Medicare Advantage. Those who choose it must rely entirely on Medicare, which, since July 2020,
has covered auto accidents in Michigan.
Qualified Health Coverage opt-out
This is a $0 PIP option available only for those with health insurance that covers auto accidents. It requires submission of a proof of Qualified Health Coverage form every six months.
Those who choose this option get no medical benefits from their auto insurance policies, so they fall back on their health insurance. Anecdotally, drivers in high-cost areas such as Detroit can sometimes save $100 a month or even more when going from unlimited PIP to $0 PIP coverage.
Other options, observations
The auto insurance overhaul in Michigan also set new purchase requirements for bodily injury coverage. This type of coverage protects drivers if they cause an accident that results in serious injuries to someone else.
The default coverage option is $250,000 per person injured or killed/$500,000 per accident if several people are injured or killed. The lowest and cheapest option is $50,000 per person/ $100,000 per accident.
Separately, insurance agents have seen an uptick in Michiganders buying umbrella liability insurance coverage of $1 million or more since the new auto insurance options took effect in July 2020.
The heightened interest is generally from people who have higher incomes and assets to protect against the possibility of getting sued for medical bills. Before the no-fault overhaul, an accident victim’s medical bills could have entirely been covered by no-fault insurance. Now, a victim can sue a negligent driver for excess medical bills if their PIP coverage runs out.