PIP Reform Q&A
Ieuter Insurance Group
PIP Reform Overview
For our Michigan clients, effective July 2, 2020 drivers are now able to select or even out opt out of PIP Coverage (Personal Injury Protection). Before, every insured driver had unlimited PIP coverage. The good news is the assessment per car is going down from $220 a vehicle to $100. We have proactively started the change process for our clients to realize the savings. Michigan drivers are saving even without changing coverage! The new law means that you have some choices. You can reject PIP if you have a qualified health plan, take unlimited, $500K, or $250K. However as a driver, you are a lot more liable while driving. Before if you were in an accident, you didn’t have to worry about the person’s medical, because everyone had unlimited PIP. Now they could have a low PIP limit and end up suing you for their medical coverage. For this reason, we recommend increasing your umbrella coverage. We also highly recommend staying with Unlimited for at least the first year to see how the law plays out. You can change at any time. There are many areas will PIP will cover you where your medical, workers’ comp, or medicare plans may not. Give us a call at 989-835-6701 and we can help guide you through different PIP options.
PIP Reform Q&A
Can I lower PIP limit to 250,000 on my commercial auto policy because my employees are covered by WC
$250K is the lowest that you can drop PIP limits on a commercial policy. However, if you ever use your vehicle personally, we highly recommend that you do not drop it lower. Workers’ comp is primary, but if you are not working, than PIP would apply. So unless the vehicle is used 100% by employees covered by workers’ comp and ZERO personal use, then we recommend keeping unlimited PIP.
Even if you have Medicare Parts A&B, the coverage provided under an auto policy is more comprehensive that a Medicare policy. In Fact, we have 18 items on a chart in our office showing where Auto PIP Coverage is better than Medicare Parts A&B.
Examples include:
- Loss of wages
- Attendant care to help with activities of daily living
- Vehicle or housing modifications
- Replacement services for household activities you can no longer perform
- Survivor benefits
- On top of this, what if you hit someone on a motorcycle? They use your PIP regardless of fault. With none, you liability is on the line.
PIP does not cover cycle injuries if there is not a vehicle involved in the accident. Cycle injuries are covered by medical benefits available on cycle policies up to $100,000 in coverage is available.
If you are hit by another driver their PIP will provide medical coverage.
A motorcyclist that chooses to ride without a helmet MUST carry at least $20k in medical benefits coverage.
With the new MI auto insurance law change, if a child is no longer a resident of your household, regardless of whether or not they have changed their driver’s license address, they are no longer covered for liability or PIP under your MI auto policy. If your child has signed a lease at another address or owns a home, they are not considered a resident of your household. The exception to this is children who are away at school who return to your home during school breaks.
Short answer is Yes, you can reject PIP but only if you have a qualified health plan that covers auto accidents. Your health deductible can’t be more than $6,000 and you have to provide a letter from your health insurance carrier stating that your policy will cover auto accidents. The only pro of rejecting PIP is your premium will go down. The con’s are that there are a lot of gaps in coverage. A medical policy doesn’t pay for loss of wages, attendant care, vehicle or housing modifications, survivor benefits, and many more items. Plus, what happens when you lose your health insurance? Lastly, if you reject PIP and hit a motorcyclist, your PIP is suppose to pay regardless of fault. So now they will likely sue you to recover those damages. In short, we wouldn’t recommend dropping PIP even with qualified health insurance.
One thing that hasn’t changed is you can still keep unlimited medical but you now have options to reduce the benefits to $500K, $250K, $50K(only Medicare clients) or you can opt out if you have Medicare A & B but I would not recommend that. There are benefits under the auto that are not covered by your major medical insurance. Please reach out to me if you would like to discuss PIP or any other insurance questions.
We would recommend increasing your liability insurance because with this new auto reform there are more opportunities for lawsuits than ever before. At this office, we recommend a minimum of $500,000 of bodily injury. The new law requires a minimal requirement of $250,000 bodily injury limits. On top of this, we’d highly recommend you add a personal umbrella to protect you from lawsuits. They are very reasonable price and offer a great benefit to you and your family. I’d be happy to go over any other questions in more detail.
Not all medical policies cover auto-related injuries. You should confirm that with your health carrier before you make any decisions on PIP coverage. Even if your medical policy covers auto-related injuries, the coverage provided under an auto policy is more comprehensive that a health insurance policy. In additional to covering medical expenses, PIP provides coverage for:
- Loss of wages
- Attendant care to help with activities of daily living
- Vehicle or housing modifications
- Replacement services for household activities you can no longer perform
- Survivor benefits
If you have qualified health coverage that covers auto losses, you can reject PIP coverage. Even though you can reject PIP coverage we suggest not rejecting the coverage. PIP offers some coverages that are not offered through traditional health insurance (loss of wages, housing modification, etc.). The savings you receive from rejecting PIP may not be worth the added risk you incur.
Our first recommendation is to continue with unlimited PIP since PIP offers better coverage than Medicare and health insurance. But if you wish to drop down to a lower limit or reject PIP, we can help you. You will need to have a qualified health insurance plan that covers auto accidents and a Medicare Plan that has Parts A and B. The law if very confusing, so please give your friends in the insurance business a call and we can walk you through the various options.
Great question. Your personal auto policy would apply even though you were not in that vehicle. If you or your household members do not have an auto policy, it goes to the Assigned Risk Plan—not your friends PIP insurance. PIP can be very confusing. As your friend in the insurance business, we are here to help you.