Michigan’s No-Fault insurance is relatively complicated for people who aren’t aware of the details behind it. The Balance mentions that Michigan’s no-fault law is one of the most complex pieces of legislature in the US to wrap your head around. The newest series of reforms to the law happened as recently as 2019. Even though it changed a few things, the law remains challenging to understand. With further improvements looming on the horizon that threatens to change the Personal Injury Protection clause, now is as good a time as any to get a handle on Michigan’s new no-fault insurance law.
Starting from the Beginning
According to the Detroit Free Press, Michigan’s no-fault insurance came into being in 1973 as a means of controlling costs to the individual. However, based on the current rates of car insurance that you can get on All State life insurance, it’s pretty evident that it failed in this objective. Initially, the law proposed to offer someone who was injured in a car accident insurance-covered medical care for injuries sustained, paid for by the insurance. This Personal Injury Protection (shortened to PIP) was a godsend for locals but resulted in many non-locals abusing the privilege using the services of a personal injury lawyer. As a result, insurance companies realized they had made a colossal error in including “lifetime” and “unlimited” as clauses in their coverage.
The Changing Face of Michigan’s No-Fault Law
The Insurance Information Institute states that Michigan is currently the second most expensive state in the US on average to buy car insurance. In addition to this deterrent, legislation has been passed to attempt to reform the original no-fault law and make it more modern. In May 2019, the state made sweeping changes to its no-fault law. Among the changes that surfaced as a result of the passing of Senate Bill 1 include:
· Starting from July 2, 2020, consumers no longer need to pay for unlimited PIP coverage. Instead, they can opt for coverage of either $250,000 or $500,000, with Medicaid users getting a special dispensation to pay for $50,000 medical coverage insurance. To go along with this, the law proposes premium reductions in line with the increased coverage costs.
· If you own multiple policies, there’s a cap on the total amount that the insurance company would need to pay in the event of an accident. That amount is equal to the highest of the insurance premiums that cover you.
· If Medicare covers you, and it makes conditional payments for your medical expenses, the system will expect reimbursement for that payment. It will enact the collection of that payment through a lien on your settlement for pain and suffering.
· Insurance agencies are still allowed to score applicants, but they are limited in the number of categories that they can use. Among the restricted classification for scoring include ZIP code, Gender, Marital Status, Occupation, and Education.
Is the Law an Improvement?
Auto insurers do stand to benefit a lot from the law’s change, but many of them have noted that it doesn’t do enough. Even from a driver’s perspective, the new bill reduces the amount of coverage that you get. If you’re on Medicaid, it forces you to reimburse the system after your settlement comes through. For many individuals, this means that the amount of money you get from a successful agreement is likely to be significantly less after paying back for Medicaid treatment. It’s still a relatively new law, which requires some tweaks for it to function in its full capacity, but the changes are still concerning. While it has made things more modern, it might not have made as equitable a piece of legislation that it could have been.