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If you’re a Michigan driver, you may have noticed on the declarations page of your auto insurance policy that you are paying for personal injury protection (PIP) coverage. Sometimes referred to as no-fault coverage, PIP is required in a handful of states, Michigan included. You might be wondering what PIP is and how it works. Bankrate’s insurance editorial team simplifies Michigan PIP so that you can better understand the coverage you’re paying for and what you need to drive legally in the state.
- PIP insurance in Michigan is mandatory in Michigan.
- PIP can pay for medical costs for the driver of the insured vehicle and passengers in that car.
- PIP may also pay a portion of your lost wages and needed essential services around the household.
- PIP can be used regardless of who is at fault in an accident.
What is PIP insurance?
Your auto insurance policy consists of several coverage types. In nearly every state, liability insurance is required. Liability helps cover injuries and property damages incurred by the other party when an accident is your fault. In Michigan, the minimum liability insurance is:
- $50,000 bodily injury liability per person
- $100,000 bodily injury liability per accident
- $10,000 property damage liability per accident (for damage in other states)
But that’s not all you need. Michigan is also one of 12 no-fault states. In no-fault states, you carry personal injury protection coverage to help pay for injuries that you or your passengers sustain in an auto accident, regardless of who is at fault in the accident. Michigan policyholders will need to select one of the six PIP medical coverage options that offer them the coverage they need at the best price.
- Option 1: Unlimited coverage
- Option 2: Up to $500,000 in coverage
- Option 3: Up to $250,000 in coverage
- Option 4: Up to $250,000 in coverage with PIP medical exclusion(s)
- Option 5: Up to $50,000 in coverage
- Option 6: PIP medical opt-out
Michigan also requires property protection insurance (PPI), which will pay up to $1 million for property damage caused in Michigan, and residual liability insurance, which prevents drivers from being sued in some circumstances.
How does Michigan PIP work?
Here are a few points that are important to know about Michigan PIP coverage:
- It is mandatory for all Michigan drivers.
- It will pay up to your coverage limit for injuries to you or your passengers.
- It can be used even if you are the cause of the accident.
- It is designed to be paid swiftly, usually from 30 to 60 days following an accident.
- It does not pay for property damage of any kind.
For example, if you sustain an injury of around $10,000 in medical costs from an accident that was not your fault, your PIP will likely help cover those medical costs. If the other driver is later determined to be at fault from the accident, their liability might also extend to help cover your injuries.
Is PIP required in Michigan?
PIP is required for all Michigan drivers. As of July 1, 2020, new auto insurance reform laws in Michigan might allow you to opt-out of PIP medical coverage if you have both Part A & B of Medicare coverage and other members of the household have qualified health coverage in place that covers auto injuries. Drivers attempting to opt-out must present evidence to their insurance company that they – and any other members of their household – meet eligibility requirements.
How much does PIP cost in Michigan?
New laws put into place in 2020 require auto insurance companies to reduce premiums for PIP for the next eight years. For example, if you have unlimited PIP coverage in Michigan as part of your insurance, you will get an average of 10 percent or greater off your premium per insured vehicle. If you have $50,000 of PIP coverage, your average reduction will be 45 percent or greater per insured vehicle.
Keep in mind that insurance premiums vary depending on a broad range of criteria. Your insurer will look at the age and type of vehicle you drive as well as your driving history, prior insurance history, your age and more. Your premium will also vary depending on whether you have optional coverages such as collision and comprehensive along with the state-mandated types of coverage.
Frequently asked questions
Your PIP claim should be filed as quickly after your accident as possible. Some car insurance companies have an online portal that allows you to file a claim, but others require you to call in to speak with an agent. For more information on your company’s specific procedure, it may be helpful to contact your company directly. It’s also important to save all medical receipts and documents, as your insurer may need them while processing your claim.
PIP and medical payments have some similarities. Both can be used to pay for medical expenses after an accident, and both apply to both the driver and any passengers in the vehicle. But PIP is generally a bit more expensive than medical payments coverage, which can only be used for medical needs, such as health insurance deductibles, emergency care and diagnostics. PIP coverage in Michigan can cover all those things, but can pay a portion of lost wages due to your accident and help cover necessary routine household services if you cannot maintain household responsibilities due to injuries sustained from a covered claim.
Everyone is looking for something different in their car insurance policy. A cheap premium may be the most critical factor for drivers on a budget. For people who work non-traditional hours, 24/7 service or digital policy management tools might be necessary. For these reasons, the best car insurance in Michigan depends on your specific needs. The best way to find the best company for you is to call or shop around for quotes with multiple companies.
Yes, most likely. The only way to completely eliminate PIP coverage from a Michigan auto policy is if the named insurance and their household residents meet specific criteria. First, the named insured must have both Medicare Parts A and B. Since PIP provides coverage for household members, other people in the home can not be left without coverage. The other requirement is for all other household members to have coverage for medical payments resulting from an auto accident through another auto policy or health insurance. If even one member is not protected, the named insured must keep some form of PIP coverage.
Michigan’s new PIP laws went into effect on all policies issued or renewed after July 1, 2020. The goal of this law was to make car insurance more affordable. Before this law reform, all drivers were required to have unlimited PIP regardless of the type of health insurance they carried. This caused the Michigan Catastrophic Claims Association (MCCA) fee to increase to $220 per vehicle per year. With new laws in place, the fee is $122 per vehicle for unlimited PIP and $48 per vehicle for all other PIP options.