Soon, drivers in Michigan will have new options when it comes to auto insurance policies. Starting Thursday, Michiganders won't be be required to carry 'unlimited' personal injury protection (PIP) benefits, and can opt to carry less coverage to lower their auto premiums.
"This is brand new and it's going to be a huge change in how auto insurance works in this state," explained Emily Partridge, Partner at law firm Garan, Lucow Miller in Grand Rapids. She specializes in no fault and catastrophic claims, and is urging drivers to continue to enroll in unlimited benefits.
"The problem is no one expects to get involved in a serious car accident, but it can happen to you, no matter how good of a driver you are. Someone else can still cause a collision and cause serious catastrophic injuries," she said. "You're giving up so much in coverage, for just a small reduction in your premium in that six months to a year. It is definitely better to choose unlimited and uncoordinated coverage."
Auto insurers have already started reaching out to drivers about the upcoming changes. You will have the option to drop down PIP coverage, which could lead to saving around $100-200 dollars on your premium.
"The typical options [for PIP] are $500,000 dollars, $250,000 dollars, and you'll get something like a 20 percent rate reduction if you choose $500,000 dollars in coverage, you'll get a 35 percent rate reduction if you choose $250,000 thousand dollars in coverage, but again that rate reduction is really only the line item covering PIP, so you won't receive a rate reduction in like your bodily injury."
Partridge cautions that saving that money now, could open you up to serious risks down the road.
"People don't realize that what your auto insurance covers in Michigan, the reason why it's so expensive, is that right now, unlimited PIP coverage or personal injury protection coverage, provides all of your medical benefits, for your entire lifetime as long as it's related to the auto accident injuries," she told FOX 17 News.
"Your medical bills, including your hospitalization, any surgeries, physical therapy, occupational therapy, vocational therapy.. all of that is covered for your lifetime."
"But, when you think about the level of coverage you are giving up, if you're involved in a serious car accident, I'm not talking a fender bender. I'm talking serious injuries, and when you have a serious injury like that, you can blow through $250,000 to $500,000 thousand dollars in coverage in just your initial hospitalization," Partridge added. "That's not going to cover anything else after that."
She urges drivers to consider the other benefits of unlimited medical benefits if you're badly injured after a crash- like home health aides, and compensation from work loss- things that health insurance will not cover.
Michigan's new law is also slightly raising the required coverage level for bodily injury, or liability coverage.
Experts predict a rise in lawsuits as drivers begin to drop down from unlimited coverage. If you were to hit someone who went cheap with their PIP benefits, they can sue you for their medical bills.
Along the same lines, if you're involved in a hit-and-run, or single vehicle crash, there would be no one to sue and you would be on the hook for the bills related to your recovery- if you no longer have unlimited coverage.
Drivers will need to fill out a form to update their policy. If you do nothing, your coverage will default to unlimited benefits.
The state has compiled a website to break down the changes and answer frequently asked questions at michigan.gov/autoinsurance.