Do Your Homework on State’s Auto Insurance Tune-up

closeup of car keys with a blurred automobile in the background

(This story was updated July 28, 2020, to reflect clarifications from the Michigan Department of Insurance and Financial Services.)

Michigan drivers have paid some of the highest auto insurance premiums in the U.S. due to the state’s no-fault system. For years, there was nothing to do but grumble as rates continued to rise.

July 1 marked a milestone, however, as bipartisan auto insurance reform legislation took effect. Billed as a means of reducing drivers’ insurance premiums, it has financial advantages ­– but how does it affect U-M employees and retirees?

What Reform Means

Public Acts 21 and 22, amendments to the state’s Insurance Code, were adopted by the Michigan Legislature last year.

Before reform, Michigan drivers were required to pay a set, state-required charge for personal injury protection, or PIP, insurance. This coverage pays the medical costs of the insured for injuries due to auto accidents.

As a “no-fault” system, Michigan drivers were previously required to purchase unlimited PIP through the state. Reform now allows you to select the level of PIP you want. The level of PIP coverage you choose will impact the cost of your auto insurance coverage.  

Your PIP Options

The PIP options available to Michigan drivers under auto insurance reform are as follows:

Open to all drivers:

  • Unlimited coverage
  • $500,000 limit
  • $250,000 limit

Open to drivers covered by Medicare or those with health insurance that covers auto accidents:

  • $0 PIP for those with Medicare Part A and Part B
  • $0 PIP for those with "qualified" health insurance coverage, meaning it covers auto accidents and has a deductible no higher than $6,000. This option is also called "$250,000 with PIP medical exclusion," and is the same option as the $0 PIP offered to those with Medicare. 

Open only to drivers covered by Medicaid:

  • $50,000 coverage

Employees and retirees with U-M health plans are already covered for medical claims resulting from an automobile accident through these plans, even retirees whose Medicare pays primary. U-M health plans are qualified health coverage as defined by the insurance code. PIP is the primary coverage for medical claims only when coordinating with plans that pay secondary after auto insurance.

However, U-M plans do not cover certain services, such as attendant care, housing and vehicle modifications, as well as lost wages.

Learn more about U-M’s health plans and PIP.

SSC Providing Letters

Many drivers are receiving information regarding reform legislation from their current auto insurance carriers. If you intend to waive or reduce your PIP, you may be asked to provide a letter stating you have qualified health coverage. Contact the Shared Services Center if you need this letter:

Employees and retirees are encouraged to weigh the value of cost savings against financial needs if you or a member of your household experiences a major auto-related injury. 

Plan Ahead

For more information about Michigan auto insurance reform in general, go to michigan.gov/autoinsurance. You may want to address questions with your auto insurance carrier before it’s time to renew your policy so you can plan ahead.

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