LANSING, Mich. – Michigan drivers who renew or buy auto insurance have a choice starting Thursday: stick with unlimited health coverage, go with less, or, for seniors with Medicare, opt for total exclusion.
The decision, a hallmark of a new law that will reduce the cost of personal injury protection benefits in a state with the highest auto premiums in the country, comes down to risk tolerance and people’s desire for savings. But unlike choosing between a $ 500 or $ 1,000 deductible, this selection can have long-term implications in the event of a serious accident.
Insurance agents report that, at first, many people whose policies are about to be renewed get unlimited health care, which became mandatory in 1973, but will no longer be necessary. This is because, on average across the state, PIP rates will drop 15.5% for those who do nothing and remain firm, largely because a $ 220 annual fee assessed on each vehicle to cover catastrophic claims. it’s going down to $ 100.
“Most people say, ‘Yes, I’m fine with that. It has been the law for 50 years. I’m going to sit down and wait awhile, ‘”said Will Lemanski, an agent for Meiers Lombardini Lemanski Insurance in East Lansing. “With this, we are dealing with bigger problems because you are not talking about damage to your car. You’re talking about possible life-threatening injuries that can affect you for the rest of your life. “
PIP generally represents nearly half of a premium, according to the state Department of Insurance and Financial Services.
Motorists can avoid the Michigan Catastrophic Claims Association fee entirely, saving an additional $ 100 a year, forgoing unlimited coverage, and choosing $ 500,000 of coverage (30.6% PIP savings on average) or $ 250,000 (41.8% saving). Those on Medicaid can choose $ 50,000, while people on Medicare can choose not to participate fully, as long as everyone else in their household has another car policy or health insurance that covers auto accident injuries.
However, the savings will be offset in part because the new law raised the level of required bodily injury liability insurance, which generally represents about 10% of a premium. Covers claims made against a driver guilty of serious injury to others. Such demands are expected to increase as fewer people will have unlimited medical services.
The minimum bodily injury limit was $ 20,000 per person and $ 40,000 per accident. It will rise to $ 50,000 / $ 100,000. But unless a motorist completes a form, coverage will default to $ 250,000 / $ 500,000. PIP coverage will default to unlimited if the form is not returned.
“We just wanted to make sure that if someone hasn’t made a decision, it’s better to make sure you have coverage until the time they make the choice rather than the other way around, getting less coverage than they wanted, having an accident, and then looking at what perhaps they pretended and simply ignored it, “said Anita Fox, director of the state’s insurance department.
People can always change their policy, he said.
Fox said concerns that increased bodily injury coverage would completely negate PIP savings have not been confirmed. A person with unlimited medical coverage and predetermined bodily injury coverage, for example, will still save about 10%, according to state data.
The Coalition Protecting Auto No-Fault, a group that opposes the revised law, said motorists in Detroit, where premiums are much higher, won’t save much and will have to forgo substantial protection to get even marginal benefits. While insurers will be prohibited from using non-conductive factors, such as the zip code, to set rates, critics said there are still other avenues for possible discriminatory pricing.
Saundra Gay, who was paralyzed 20 years ago in a car accident, said that the unlimited medical benefits for rehabilitation and home care have allowed her to return to some kind of normalcy. She said people who choose less coverage and see themselves or a seriously injured family member “are going to be really in trouble, because if we didn’t have that insurance, God knows where we would be.”
Supporters of the landmark law said it gives people a real savings opportunity and that, starting next year, it will prevent healthcare providers from charging three to four times more for car accident injuries, a factor in discharges. cousins.
Agents said they are receiving calls from customers who are confused after receiving forms from their insurer. The state said calls to its auto insurance hotline have increased tenfold since May.
Insurance companies, agencies and state regulators have created videos and websites to explain the changes to the law.
Fox urged consumers to search for insurance and visit the state’s website or call their agent.
“Information is available and it is manageable,” he said. “It may sound complicated. Sometimes people hear ‘safe’ and think they will not understand. But really there are only a couple of options. “
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