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.  

Drivers may select the following amounts of PIP from their auto insurers:

  • $0 or waive. Those with qualified health coverage or PIP under another Michigan policy, through themselves or a relative who lives in the household, are eligible to waive PIP. It also may be waived if the member is covered by Medicare.
  • $50,000 per person, per accident. This option is available if the member or a relative who lives in the household has qualified health coverage or PIP coverage through another Michigan policy. The member also is eligible if covered by Medicaid.
  • $250,000 per person, per accident.
  • $500,000 per person, per accident.
  • Unlimited per person, per accident.

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.