If you are 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. Along with many other states, Michigan requires PIP insurance. In other words, you need to have PIP insurance in Michigan to drive legally. So what is PIP, and how does PIP coverage in Michigan work?
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 for bodily injury liability per person
- $100,000 for bodily injury liability per accident
- $10,000 for property damage liability per accident (in another state)
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.
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 30-60 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% or greater off your premium per insured vehicle. If you have $50,000 of PIP coverage, your average reduction will be 45% 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.
Key things to note about PIP insurance in Michigan
- PIP 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.
- The cost of PIP will be impacted by multiple factors, including which one of the six medical coverage options you choose.
Frequently asked questions
How and when do I file a PIP claim?
Your PIP claim should be filed as quickly after your accident as possible. File your claim by calling your insurance agent or using the claim tool on your insurer’s website if it has one. Save all medical receipts and documents, as your insurer may need them while processing your claim.
Are PIP and medical payments the same?
PIP and medpay 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 somewhat more expansive than medpay, 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 routine household services if you cannot maintain household responsibilities due to injuries sustained from a covered claim.