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Michigan Auto Policy holders, there are important changes coming July 2, 2020 that will impact your auto insurance injury coverage and potentially the premium you pay for that insurance. More details here.
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What auto insurance coverage is required?
To be considered a legally insured driver in Michigan, you’re required to have three types of auto insurance coverage. These make up your Personal Liability and Property Damage (PLPD) coverage and are explained in more detail below.
- Personal Injury Protection
- Property Protection Insurance
Previously Michigan’s No-Fault Law has required drivers to have no-fault insurance. These rules are changing with Michigan Auto Reform, which goes into effect on July 2, 2020. Drivers will have more options for the amount of auto insurance injury coverage they purchase, while being required to have more liability coverage. Learn how the changes could affect your policy and your premium here.
Liability coverage protects you, the driver, if you’re held responsible for an accident. It includes two components:
- Bodily Injury (BI): Helps cover the costs of another person’s injuries if you cause an accident. Before Michigan Auto Reform, a minimum of $20,000 of BI coverage per person and $40,000 per accident has been required. After July 1, the required minimum for BI coverage is $50,000 per person and $100,000 per accident. When your policy renews after July 1, your coverage will default to $250,000 per person and $500,000 per accident, if you don’t select a lower limit.
- Property Damage (PD): Helps pay the costs of damage you cause to another person’s property while driving, resulting from an at-fault, out-of-state car accident. A minimum of $10,000 of PD coverage is required.
Personal Injury Protection (PIP)
PIP is the medical portion of a policy that an auto insurer covers. It pays for your medical expenses or the expenses of another injured person as a result of an accident, as well as expenses incurred because of those injuries, including lost income, attendant care (such as in-home nursing), and replacement services (such as child care).
Before July 2, this was required to be unlimited, meaning it covered unlimited medical benefits for the lifetime of the injured person. With Michigan Auto Reform, drivers will choose from up to six coverage options.
Property Protection Insurance (PPI)
PPI may help to cover damage you cause to parked cars or other property, such as buildings, trees, and fences. Each Michigan auto policy includes a mandatory $1 million of PPI coverage.
Other types of coverage and add-ons
These additional coverage types are typically optional, but it’s important to understand if you could benefit from further coverage. These are sometimes required by your lender if you lease a vehicle or are paying on an auto loan.
- Collision – Provides coverage for repairs that your vehicle needs as the result of an accident, regardless of who is at fault. It also covers costs for property damage and damage to your vehicle as a result of an accident.
If your vehicle is totaled in an accident, collision coverage may help to replace the vehicle, covering costs up to its fair market value, minus your deductible (the amount you pay out of pocket before insurance will reimburse you for a claim).
- Comprehensive – Includes coverage to help pay to repair or replace your vehicle if it’s damaged from incidents such as theft, vandalism, fire, or a natural disaster. It covers costs up to your vehicle’s fair market value, minus your deductible.
- Uninsured and Underinsured Motorist Coverage (UM/UIM) – Provides coverage if you’re in an accident with a driver who doesn’t have no-fault insurance or has an inadequate policy.
- Mini Tort Coverage or Limited Property Damage – Coverage pays for up to the first $1,000 of damage to a vehicle that isn’t otherwise insured. With Michigan Auto Reform, the maximum amount of coverage will increase to $3,000.
- Gap Coverage – Covers the difference in value between what a car is worth and what is owed on it.
- Accidental Death – Life insurance coverage in the event that you or a passenger is killed in an auto accident.
What coverage should my auto insurance policy include?
If you’re starting a new insurance policy or renewing your coverage before or after the Michigan Auto Reform changes go into effect July 2, 2020, you’ll want to consider how the rules affect your options, coverage, and premium.
Meet the basic requirements
In Michigan, if you own and operate a vehicle, you’re required to purchase mandatory insurance coverage, including Liability, Personal Injury Protection, and Property Protection Insurance.
If you don’t have the minimum required coverage, penalties include a potential misdemeanor, fines, and having your drivers’ license suspended or revoked. In the event of an accident, you won’t receive any insurance benefits and could be subject to a lawsuit to pay costs that insurance would otherwise cover.
Choose the options that fit your situation
Beyond the minimum requirements, there are personal risks to not having higher levels of coverage. The right coverage can protect your health and finances if you’re injured in an accident, your vehicle is damaged, or if you’re found at fault for injuring another person or damaging their property. Focusing on both the cost and quality of your coverage is important so that you don’t take on unnecessary risks.
Beyond the minimums, you may want to increase certain coverage limits to protect yourself should an accident occur. For example, choosing to no longer have full no-fault coverage after July 1 puts you at risk for being sued for the percentage that you contribute to an accident, which is the Contributory Negligence.
Schedule a virtual appointment for your full policy review and risk assessment from Frost & Remer. We will make recommendations to ensure that you have the best coverage possible, with a premium you can afford.
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