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How to deal with Michigan’s new auto insurance law

New law brings lower auto insurance rates, complex choices

DETROIT – Michigan’s new auto insurance law is one many residents have been waiting for because of the lower rates, but there are complex choices drivers have to make.

The lower auto insurance rates arrive Thursday (July 2).

Michigan car insurance changes: What you need to know

To narrow down the insurance changes in the simplest way possible, there are two choices to make: How much personal injury protection one needs and can afford, and how much liability one needs and can afford.

Personal injury protection

Choice No. 1 surrounds personal injury protection (PIP), or the coverage for accident injuries. You’re going to want to look to see if you have what’s called “coordinated coverage.”

That’s medical insurance. The state calls it “qualified medical coverage,” such as Blue Cross Blue Shield or another carrier that specifically tells you it covers auto accidents and you can opt out of PIP.

RELATED: Michigan drivers face new insurance choice starting Thursday

It’s vitally important to check with your medical insurer and make absolutely certain your coverage is good and the deductible is $6,000 or less.

If not, you can choose to either keep unlimited coverage or reduce coverage and premiums to lesser amounts: $500,000, $250,000 or $50,000 if you’re on Medicaid.

Liability coverage

The second choice surrounds liability coverage. An old law from the 1970s required $20,000 per person and $40,000 all-persons coverage.

Starting Thursday (July 2), it goes to $50,000 per person and $100,000 all injured/single accident.

“If you do not make a choice, you will get a default level that’s higher than that of $250,000 per person, $500,000 for any injured in an accident, which have correspondingly higher premiums if you don’t go back and change it,” said Anita Fox, the Michigan Director of Insurance and Financial Services.

Dan Shrock, of AAA, said none of this is simple, easy or quick.

“It’s taking about 45 minutes to an hour to educate a consumer and let them know their options and make an educated choice,” Shrock said.

The rush is for people whose policies renew this week. For everyone else, there’s more time.

The best answer is to check with your agent -- or call your auto insurer if you don’t have an agent -- and start asking questions.


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