Michigan’s long-discussed auto insurance reform legislation takes effect July 1. It’s been touted as a means of reducing drivers’ insurance premiums, but homework may be needed for employees to understand how it affects them. 

Public Acts 21 and 22, amendments to the state’s Insurance Code, were adopted by the Michigan Legislature last year and become active July 1.

Before reform, Michigan drivers were required to pay a set, state-required charge for personal injury protection, or PIP, insurance. This coverage pays the medical costs of the insured for injuries due to auto accidents.

As a “no-fault” system, Michigan drivers were previously required to purchase unlimited PIP coverage through the state. Reform will allow drivers to select the level of PIP they want. The level of PIP coverage selected will impact the cost of auto insurance coverage.  

The PIP options available to Michigan drivers under auto insurance reform are as follows:

Open to all drivers:

  • Unlimited coverage
  • $500,000 limit
  • $250,000 limit

Open to drivers covered by Medicare or those with health insurance that covers auto accidents:

  • $0 PIP for those with Medicare Part A and Part B
  • $0 PIP for those with “qualified” health insurance coverage, meaning it covers auto accidents and has a deductible no higher than $6,000. This option is also called “$250,000 with PIP medical exclusion,” and is the same option as the $0 PIP offered to those with Medicare. 

Open only to drivers covered by Medicaid:

  • $50,000 coverage

PIP has historically been a little-understood area of no-fault insurance. Employees and retirees with U-M health plans — even with Medicare as primary coverage — are already covered for medical claims resulting from an automobile accident. U-M coverage is considered primary, reimbursing providers before auto and Medicare plans.

If health plan members intend to waive or reduce the PIP on their auto policies, they may be asked to provide a letter stating that they have qualified health coverage. If a letter is needed, contact the Shared Services Center:

Employees are encouraged to weigh the value of cost savings against financial needs if they or a member of their household were to experience a major auto-related injury.

Note: This article has been updated from its original version to clarify how U-M retirees are affected, and to clarify available coverage levels.