PIP Option is the Key to Auto Insurance Reform

Close up of a hand dangling car keys with a blurred car in the background

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

Michigan’s long-discussed auto insurance reform legislation takes effect July 1, 2020. It’s been touted as a means of reducing drivers’ insurance premiums, but you need to do your homework to understand how it affects you financially. 

What is Auto Reform?

Public Acts 21 and 22, amendments to the state’s Insurance Code, were adopted by the Michigan Legislature last year and become active Tuesday, July 1.

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 will allow you to select the level of PIP you want. The level of PIP coverage selected will impact your cost of auto insurance coverage.  

Driver Options for PIP

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

PIP has historically been a little-understood area of no-fault insurance. Employees and retirees with U-M health plans – even with Medicare as primary coverage – are already covered for medical claims resulting from an automobile accident. PIP is the primary coverage for medical claims only when coordinating with plans that pay secondary after auto insurance.

U-M’s plans, however, 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 to Provide Letters

If you intend to waive or reduce the PIP on your auto policy, you may be asked to provide a letter stating you have qualified health coverage. If a letter is needed, contact the Shared Services Center:

You will receive a personalized letter for your auto insurance carrier within 10 business days.

Health plan members are encouraged to weigh the value of cost savings against financial needs if they or a member of their households were to experience a major auto-related injury. 

For more information about Michigan auto insurance reform in general, go to michigan.gov/autoinsurance or talk to your insurance agent.

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