Michigan No-Fault Reforms Begin Next Summer

Gov. Gretchen Whitmer earlier this year signed historic no-fault insurance reform into law after the legislation sped through the House and Senate.

The new law takes effect July 1 and will allow drivers to choose a level of medical coverage when their policy renews, according to the Michigan Department of Insurance and Financial Services, or DIFS.

The statute is expected to reduce the cost of automobile insurance.

The law, which was signed on Mackinac Island in October – ironically where no cars are allowed – enables people who are receiving payments from their auto policy because of catastrophic injuries from an auto accident to continue to receive the unlimited benefits after the reform takes effect. People who are injured in an accident before July 1 are also entitled to unlimited benefits offered under the current no-fault law.

The lifetime coverage has been provided by the Michigan Catastrophic Claims Association – or MCCA – since 1979. MCCA is a private, nonprofit association that deals with insurance companies, not the general public, according to a facts sheet from DIFS.

The money comes from fees people pay when they register their vehicles or renew their registration. The current fee is $177 for each vehicle according to DIFS, but an additional $43 is charged to reduce a current deficit, so the total is $220 per vehicle. The first assessment in 1979 was $3 per vehicle.

The personal injury protection is unique to Michigan, as the state is the only one in the nation to require unlimited medical coverage. Critics of no-fault say that factor drives up insurance costs, according to the Detroit News.

Under the new legislation, motorists with Medicaid health insurance could purchase auto plans with as little as $50,000 in medical coverage, while other drivers could select plans with $250,000, $500,000 or unlimited personal injury protection, the News reports.

Because the new law will allow drivers to choose a level of medical coverage, insurance companies are required to reduce the premium for this coverage so there will be an average reduction per vehicle based on the level of coverage chosen, according to DIFS. The premium and savings will depend on the personal injury protection option people select and other coverages they choose.

Critics of the reform say people who are catastrophically injured in an auto wreck will likely not be fully covered by their insurance.



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