What no more no-fault means for drivers

Michigan

GRAND RAPIDS, Mich. (WOOD) — Darrell Watkins prefers his skateboard for getting around. Driving car is an expense he’s trying to avoid, especially when it comes to auto insurance.

He had to switch to his parents’ policy “because it’s too expensive for me to pay,” he said as he sat on the steps of the Grand Rapids Art Museum Thursday, skateboard at the ready.

Supporters promised the end of Michigan’s no-fault automotive insuranceapproved by the Legislature last week and signed into law Thursday — will save drivers like Watkins. Whether that’s actually true remains to be seen.

Brian Boer of the Boer Insurance Group near Grand Rapids has crunched the numbers.

“Maybe 5% to 10%, depending on what coverage levels they elect for medical and how they adjust their liability coverage accordingly,” he explained.

That liability coverage is one of the fine-print parts of the measure ending no-fault that concerns critics.

Under no-fault, if someone is injured in a crash that you cause, the cost of their medical coverage is covered by the personal injury protection part of their policy.

But in a no no-fault world, if the same injured person elected to reduce or eliminate their PIP, you’re on the hook if they sue. You’ll need to have enough liability coverage to cover your assets, but that additional coverage will likely cost you.

“We expect liability coverage will become more expensive than it is today simply because you’re going to have some of those medical expenses that other people are seeking via lawsuits from … the driver that caused them,” Boer said.

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Most savings from the end of no-fault will come with the elimination of mandatory unlimited PIP. You’ll still be able to include PIP on your policy, but you’ll have an option on how much coverage you want. While dropping PIP will gave you the biggest chunk of savings, Boer says there are some things you need to consider first. PIP covers everything, including deductibles for medical care if you’re in a crash.     

“So if you have a high deductible plan for your health insurance, maybe it’s $6 grand, $8 grand, $10 grand even, if you’ve elected to not have coverage on your auto insurance policy, obviously that’s your responsibility if it’s being paid by your health insurance,” Boer said.

On the plus side, medical costs for your injuries might come down. The new law requires a fee schedule for medical procedures based on what Medicare and private insurers cover.

“Right now, there is no fee schedule, so costs are all over the board in terms of what gets paid for — the checkup, the X-ray,” Boer said.

The changes won’t become law until July 1, 2020. Boer said agents will be diving deeper into the new rules to let clients know their options before then.

“We think it’s important to get in front of it — make these elections, understand how things are going to work — well ahead of that July 1st date,” Boer said.

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