Michigan auto insurance bill: Understanding rate decreases, timeline of changes

Drivers won't feel savings immediately

By Rod Meloni - Reporter, CFP ®, Amber Ainsworth

LANSING, Mich. - Gov. Gretchen Whitmer is expected to sign a bill this week that is supposed to lower Michigan auto insurance rates.

The changes won't be felt immediately, though, and there's a catch to some of the rate reductions that could come with the new bill, including the option to decrease personal injury protection.

A mandatory 10 percent rate decrease won't be enforced until July 2020. A mandatory fee schedule for medical rates also goes into effect at that point, but it has a three year phase-in. Those rates haven't been set yet.

Under the new bill, drivers can chose from four levels of PIP coverage. Unlimited coverage, which is currently mandatory, will be available but no longer required. Drivers will see a 10 percent savings on unlimited coverage.

Choosing $500,000 PIP will save drivers about $240 a year; $250,000 PIP coverage will reduce yearly rates by about $420 a year and a $50,000 option will equal about $540 saved in a year.

When choosing PIP coverage, drivers should check to see if their health insurance covers disability. Whether it does or doesn't should be considered when picking which level of coverage is best.

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