What is PIP Insurance in Michigan?
Michigan is one of only a few states that requires all licensed drivers to carry what’s known as Personal Injury Protection coverage as part of their auto insurance policy.
Also known as PIP insurance, this requirement under the state law covers drivers and passengers who are involved in car accidents no matter which driver is at fault. For this reason, it’s known as a no-fault law.
Whenever someone is involved in an auto accident, they are entitled to PIP benefits that are paid by their auto insurance policy. What this does is eliminate the need to file a lawsuit against the driver who is determined to be at fault for the accident.
While this would seemingly be a good thing and reduce a lot of confusion when filing claims, Michigan’s PIP law results in the state having some of the highest car insurance premiums in the nation. In 2021, Michigan had the fourth-highest average auto rate for full coverage, at $2,105 annually. Only Florida, New York and Louisiana were more expensive.
There’s a lot that goes into PIP insurance in Michigan, and some choices drivers in the state will now have under a new state law that went into effect in 2020.
What PIP Covers
Anytime someone has been injured as a result of a car accident in Michigan, they are entitled to collect PIP insurance benefits. These benefits cover five main categories of expenses, including:
- Medical: Any medical bills that are directly related to an accident are covered, up to the full dollar amount of the PIP medical benefits you selected on your plan. Before 2020, ever driver had to cover unlimited PIP coverage, which meant all medical bills would always be covered. This is different today, though. More on that in a bit.
- Mileage: This covers any transportation costs you entail getting to and returning from any appointments you need to attend for therapy, rehabilitation, doctor’s visits or hospitals. Mileage provides coverage any time you incur a cost if you can’t drive yourself.
- Wages: If you’ve lost wages because of an injury you sustained, PIP coverage will reimburse you. This could include if you needed to go on disability, or if you had to take PTO days as a result of your injuries. Wage benefits aren’t taxable income, so they are valued at 85% of wages.
- Care: If you require attendant care as a result of your injuries, PIP benefits will cover that cost. You can either have a family member take care of you at your home, or you can trust a nurse or other medical practitioner. As of July of 2021, though, PIP coverage doesn’t have to pay for any coverage that’s provide by a family member in your home that exceeds 56 hours in one week.
- Replacement: If there are any “ordinary and necessary services” you can’t do anymore because of limitations or injuries from an accident, PIP benefits can give you $20 per day for a few years after the accident. This could include daily tasks such as cleaning, garden maintenance, meal preparation or child care, for instance.
Medical Coverage Choices
Before July 1, 2020, all drivers in Michigan were required to carry unlimited PIP medical coverage as part of their auto insurance. Now, the state allows drivers to choose from six different options of medical PIP coverage, which could allow drivers to save some money on their monthly insurance premiums.
These six coverage limits a driver can choose are:
- Up to $500,000
- Up to $250,000
- Up to $250,000 with exclusions: The exclusion is available for any insured person who has health coverage that isn’t Medicare that provides coverage for injuries sustained in auto accidents.
- Up to $50,000: This is available if the insured person has Medicaid or if other members of their household have another auto insurance policy, other health insurance plan that covers injuries sustained in auto accidents, or Medicaid.
- PIP opt-out: The insured has to have either Medicare Part A or Part B. At least one other member of their household also must have another auto insurance policy or healthy insurance policy that covers injuries sustained in auto accidents.
By law, every company that offers auto insurance in the state of Michigan has to reduce the average PIP medical premiums they charge for the next eight years. How much a driver will pay in auto insurance premium will depend on both the PIP coverage they choose as well as their own individual circumstances.
There are four levels of premium reductions that must be offered to insured Michigan drivers under the law. They include:
- $50,000 option: Reduction of 45% on average per vehicle
- $250,000 option: Reduction of 35% on average per vehicle
- $500,000 option: Reduction of 20% on average per vehicle
- Unlimited option: Reduction of 10% on average per vehicle
Those who opt-out of the PIP medical coverage will have the entire medical portion of the auto insurance premium eliminated. They won’t have PIP medical coverage in this case, though.
Work with an Insurance Company That Will Help You
PIP insurance in Michigan can be confusing. There are a lot of different aspects to it, both in terms of what it covers and how much it costs.
While the new Michigan state law that went into effect in July of 2020 provided for reductions in auto insurance premiums, it also potentially added to the confusion that many people already had in regard to auto insurance.
At Signature Insurance, we have been providing drivers in Michigan with the best auto insurance option for years. Our team of experienced professionals know Michigan’s new PIP insurance laws inside and out, and can help educate you on all the aspects pertinent to you.
When we provide you with auto insurance premium quotes, we also describe in detail what all your options are and how each could affect you both now and in the future.
Contact us today to find out more and to get a free quote.
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