Michigan drivers, brace yourselves for a big change: a new auto insurance law is set to take effect on July 2, 2020. This law will impact the way you purchase and use your auto insurance, and it’s important that you understand the changes so you can make informed decisions about your coverage.
What is the New Auto Insurance Law?
The new auto insurance law in Michigan changes the way that drivers can purchase and use their auto insurance coverage. Specifically, the law allows drivers to choose between different levels of personal injury protection (PIP) coverage, which is the coverage that helps pay for medical expenses and other costs if you’re injured in a car accident.
Under the new law, drivers can choose from the following levels of PIP coverage:
- Unlimited coverage
- $500,000 in coverage
- $250,000 in coverage
- $50,000 in coverage if you’re enrolled in Medicaid and your household income is less than 185% of the federal poverty level
- Opt out of PIP coverage entirely if you have other qualifying health insurance
Additionally, the new law changes the way that insurance companies can set rates for auto insurance coverage. Previously, insurance companies in Michigan were required to use a formula called “file and use” to set their rates, which meant that they could file their rates with the state and begin using them immediately. Under the new law, insurance companies will be required to receive approval from the state insurance commissioner before they can change their rates.
Why Was the New Auto Insurance Law Passed?
The new auto insurance law in Michigan was passed in an effort to reduce the cost of auto insurance for drivers in the state. Michigan drivers pay some of the highest auto insurance rates in the country, and the state’s previous auto insurance system had been criticized for being overly complex and expensive.
By giving drivers more control over their PIP coverage and changing the way that insurance companies can set their rates, the hope is that drivers will be able to find more affordable auto insurance options.
What Should Michigan Drivers Do?
If you’re a Michigan driver, it’s important that you understand your options under the new auto insurance law. You should take some time to review the different levels of PIP coverage and determine which level is right for you based on your individual needs and budget.
Additionally, it’s a good idea to shop around for auto insurance coverage from different providers to see if you can find a policy that meets your needs at a lower cost. Remember that insurance companies will be required to receive approval from the state insurance commissioner before they can change their rates, so you may see more stable and predictable rates under the new system.
Conclusion
Michigan’s new auto insurance law is set to take effect on July 2, 2020, and it will give drivers more control over their PIP coverage and change the way that insurance companies can set their rates. If you’re a Michigan driver, it’s important that you take the time to understand your options under the new law so you can make informed decisions about your auto insurance coverage.