Michigan auto insurance reform changed how drivers choose coverage, especially personal injury protection (PIP). Although the law was signed in 2019 and took effect in 2020, the coverage decisions resulting from the reform still affect Michigan drivers today.
If you are buying a new policy, renewing coverage, changing health insurance, going on Medicare, adding a driver, or trying to lower your premium, it is important to understand how Michigan auto insurance reform works now.
Michigan auto insurance reform created new PIP medical coverage options, changed liability limit rules, increased the mini-tort limit to $3,000, and changed how MCCA assessments apply based on the PIP medical option selected.
What Is the New Auto Insurance Law in Michigan?
Michigan’s new auto insurance law refers to the no-fault reform changes that took effect for policies issued or renewed after July 1, 2020. The biggest change was that Michigan drivers were no longer automatically required to carry unlimited PIP medical coverage in every situation.
Instead, eligible drivers may now choose from several PIP medical coverage levels. The law also changed parts of bodily injury liability coverage, mini-tort claims, medical fee schedules, and Michigan Catastrophic Claims Association assessments.
For a broader overview of how auto coverage works in Michigan, start with our Michigan Auto Insurance Guide.
Michigan PIP Medical Coverage Options
PIP medical coverage helps pay allowable medical expenses after an auto accident, depending on the coverage option selected. Under Michigan auto insurance reform, drivers may have these PIP medical choices:
- Unlimited PIP medical coverage
- Up to $500,000 in PIP medical coverage
- Up to $250,000 in PIP medical coverage
- Up to $250,000 with PIP medical exclusions for eligible household members
- Up to $50,000 for certain Medicaid enrollees
- PIP medical opt-out for eligible Medicare participants
These choices are not just about price. A lower PIP medical limit may reduce part of your premium, but it can also reduce the benefits available after a serious accident. Eligibility may depend on your health insurance, Medicare or Medicaid status, and the coverage status of household members.
For more details, review our guide to Michigan PIP Coverage Options. You can also review the official Michigan Department of Insurance and Financial Services PIP medical coverage guide.
Do not choose a PIP option based only on the lowest premium. Your health insurance, Medicare or Medicaid status, household members, and long-term medical risk should all be reviewed before making a change.
Should I Opt Out of PIP in Michigan?
Some Michigan drivers may qualify to opt out of PIP medical coverage if they have Medicare Parts A and B and meet the required household coverage rules. Other drivers may qualify for reduced PIP options based on Medicaid or qualified health coverage.
Opting out of PIP medical coverage may lower part of the auto insurance premium, but it also means the policy will not provide PIP medical coverage for excluded individuals. That can be a major decision after a serious accident.
Before opting out, review your Medicare status, household members, other health coverage, deductibles, exclusions, and how your health plan treats auto accident injuries. If your health insurance changes, your PIP medical selection may need to be reviewed quickly.
Qualified Health Coverage and PIP Documentation
Some Michigan PIP options require proof of qualified health coverage, Medicare enrollment, Medicaid enrollment, or other health coverage documentation. Drivers should not assume their health insurance qualifies automatically.
Qualified health coverage generally must not exclude or limit coverage for auto accident injuries and must meet applicable deductible requirements. Household members can also affect whether a PIP option is available.
If you are unsure how PIP works with Michigan no-fault coverage, our Michigan No-Fault Insurance Guide explains the broader system.
What Happens If You Do Not Choose a PIP Option?
If a valid PIP medical option is not selected, unlimited PIP medical coverage may apply by default. This is one reason Michigan drivers should carefully review their PIP selection form when starting or renewing a policy.
The default option may provide the broadest PIP medical protection but may also cost more than other available options. The right option depends on your household, health coverage, financial situation, and risk tolerance.
Bodily Injury Liability Limits After Reform
Michigan auto insurance reform also changed how bodily injury liability limits are handled. If a driver does not make a valid selection, a policy may be issued with $250,000 per person and $500,000 per accident bodily injury limits.
Drivers may be able to choose lower limits, but lower liability limits can create financial exposure after a serious accident. This is especially important for homeowners, households with assets, teen drivers, and anyone concerned about the risk of lawsuits.
You can learn more in our guide to Michigan Bodily Injury Liability Limits.
Michigan Mini-Tort Changes
Michigan auto insurance reform increased the mini-tort limit to $3,000 for accidents occurring after July 1, 2020. Mini-tort may allow a not-at-fault driver to recover certain out-of-pocket vehicle damage costs from the at-fault driver.
Mini-tort is often used for collision deductibles or for limited vehicle-damage situations. It is not the same as full collision coverage and does not replace the need to review your own vehicle damage coverage.
For more details, read our guide to the Michigan Mini-Tort Limit.
What Changed With the MCCA Assessment?
The Michigan Catastrophic Claims Association, or MCCA, reimburses insurers for certain catastrophic claims involving unlimited PIP medical coverage. After reform, the MCCA assessment depends in part on the PIP medical option selected.
Drivers who choose unlimited PIP medical coverage generally pay a higher MCCA assessment than drivers who choose other PIP medical levels. The assessment can change each year, so it should be reviewed at renewal.
For more information, visit our Michigan Catastrophic Claims Association Guide or review the official MCCA assessment data.
Did Michigan Auto Insurance Reform Lower Rates?
Michigan auto insurance reform required reductions in the PIP medical portion of premiums based on the selected PIP option. However, total auto insurance premiums still depend on many factors, including driving history, vehicle type, coverage choices, location, claims history, and selected deductibles.
Some drivers saw savings by choosing lower PIP medical limits. Others may not have seen as much savings because other parts of the policy, vehicle changes, claim trends, or rating factors affected the total premium.
If cost is your main concern, review our guide on How to Lower Michigan Auto Insurance.
What Michigan Drivers Should Review Today
Even though Michigan auto insurance reform is no longer new, the coverage choices still matter. Review your policy carefully when you renew, change vehicles, add a driver, change health insurance, move, or become eligible for Medicare.
- Your current PIP medical option
- Whether your health insurance qualifies for the option selected
- Whether household members are properly covered
- Your bodily injury liability limits
- Your collision coverage and deductible
- Your comprehensive coverage
- Whether you carry uninsured or underinsured motorist coverage
- Your MCCA assessment and other policy charges
If you are trying to understand Michigan’s requirements, our Michigan Auto Insurance Requirements Guide explains the basic coverages drivers need.
Michigan Auto Insurance Reform FAQ
What is the new auto insurance law in Michigan?
Michigan’s new auto insurance law refers to the no-fault reform changes that took effect in 2020. The law created new PIP medical coverage options, changed liability limit rules, increased the mini-tort limit, and changed how MCCA assessments apply.
Should I opt out of PIP in Michigan?
Only qualifying drivers may opt out of PIP medical coverage. Before opting out, review your Medicare status, household members, health coverage, medical risk, and financial exposure after a serious accident.
Can I still choose unlimited PIP coverage in Michigan?
Yes. Michigan drivers may still choose unlimited PIP medical coverage. It may cost more than lower-limit options, but it offers the highest available PIP medical benefit.
What are the Michigan PIP coverage options?
Michigan PIP medical options include unlimited coverage, $500,000, $250,000, $250,000 with exclusions, $50,000 for certain Medicaid enrollees, and PIP medical opt-out for qualifying Medicare participants.
Did Michigan’s no-fault reform eliminate no-fault insurance?
No. Michigan is still a no-fault state. Reform changed coverage choices and certain rules, but Michigan drivers still need no-fault auto insurance for vehicles registered and driven on public roads.
What is Michigan’s mini-tort after reform?
Michigan’s mini-tort allows certain vehicle damage costs to be recovered from an at-fault driver, up to $3,000. It does not replace collision coverage.
Did Michigan auto insurance reform lower premiums?
Reform required reductions in the PIP medical portion of premiums based on the PIP option selected. Total premiums still vary based on driving history, vehicle, location, coverage choices, deductibles, and other factors.
Review Your Michigan Auto Insurance Options
Michigan auto insurance reform gave drivers more choices. Still, more choices can also create confusion. Before changing your PIP option, liability limits, deductibles, or vehicle coverage, review how each decision affects your household and financial risk.
A coverage review can help you compare your current policy to your vehicles, health insurance, household members, and budget.