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Michigan's new auto insurance law takes effect July 1: What to expect


Michigan's auto insurance new law takes effect July 1, giving drivers the choice for PIP coverage, among other options. (WWMT/File)
Michigan's auto insurance new law takes effect July 1, giving drivers the choice for PIP coverage, among other options. (WWMT/File)
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Auto insurance in Michigan is the most expensive in the nation, but a new law going into effect Wednesday, July 1, 2020 could change that.

For decades, Michigan has required drivers to pay for the highest level of Personal Injury Protection insurance in the event of an accident. While that’s still an option, the law introduced the ability to choose lower levels that suit you.

"The new law provides drivers for the first time with a choice on the level of medical coverage they want," Zachary Dillinger, a spokesman with the Department of Insurance and Financial Services, said. "It lowers costs while maintaining the highest level of coverage in the nation and it increases consumer protections."

Drivers’ premiums will depend on the coverage they choose, and factors related to their personal situation, such as driving record and claims history. When shopping for auto insurance, drivers should remember to compare the premiums, limits, and deductibles among insurance companies to ensure that the quotes are comparable.

Read more:

PIP Premiums

PIP, also known as no-fault insurance, protects auto-accident victims. Each insurance company will be required to reduce statewide average PIP medical premiums for eight years.

Beginning after Wednesday, July 1, insurance companies are subject to the following overall statewide PIP medical coverage premium reductions:

  • An average 45% or greater reduction per vehicle for the $50,000 PIP option
  • An average 35% or greater reduction per vehicle for the $250,000 PIP option
  • An average 20% or greater reduction per vehicle for the $500,000 PIP option
  • An average 10% or greater reduction per vehicle for the unlimited PIP option

According to the state, premiums should drop for drivers no matter what level of PIP coverage they choose come July 1.

Shopping rates:

The Department of Insurance and Financial Services said insurance providers are required by law to inform their customers about the new changes to selecting PIP coverage.

They also recommended shopping between providers to find the best rate.

Consumers will not see a drop in their premium rate until they sign up for an insurance plan after July 1.

Jeff Duncan, an Allstate agency owner said the changes were long overdue.

"When we wrote it in 1974, auto insurance was very minimal and it never changed. So, now we have a level playing field and people are seeing better rates that are much more affordable. I think we are going to see a lot more people carrying insurance that couldn’t afford it before,” Duncan said.

Questions:

With the launch of the auto insurance law website, the state also created a dedicated phone line and email address to answer any questions about auto insurance.

If your policy renews before July 1 the Michigan Department of Insurance and Financial Services recommends that you reach out to your insurance provider to see if you can take advantage of the new prices.

You can find auto insurance resources from the state of Michigan by clicking here.

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