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Michigan Auto Insurance Reform

We’re committed to helping our customers with the new Michigan auto insurance reform.


Michigan auto insurance reform offers drivers more choices, as well as changes to their auto insurance. While some changes will be phased in over time, most went into effect July 2, 2020. At RFA Insurance Group, we want to help our customers understand how their insurance coverage may be impacted.


Recent changes for Michigan drivers

The reformed Michigan no-fault insurance law lets Michigan drivers choose the Personal Injury Protection (PIP) option that best meets their unique needs and budget. Previously, it was mandatory for drivers to carry unlimited PIP coverage. As of July 2, 2020, drivers can choose from six different PIP options:

  1. Unlimited PIP coverage

  2. $500,000 limit

  3. $250,000 limit

  4. $250,000 limit with PIP medical exclusion(s); this option is for drivers who have qualified health coverage (non-Medicare) that covers auto accident injuries. (This option is available if your spouse and other relatives who live with you have qualified health coverage that will cover auto accident injuries.)

  5. $50,000 limit; this option is only for drivers who are enrolled in Medicaid. (This option is available if your spouse and other relatives who live with you have Medicaid or qualified health coverage that will cover auto accident injuries.)

  6. Opt-out of PIP coverage entirely; however, you, your spouse and all relatives who live with you must have Medicare or qualified health coverage to be eligible.

Additionally, these changes went into effect July 2, 2020:

  • Insurance companies must reduce PIP premium rates, and guarantee that they will be reduced for eight years. The rate reduction applies only to PIP premiums, which is one part of your entire auto insurance costs. The average reduction takes into account both the PIP premium and Michigan Catastrophic Claims Association (MCCA) vehicle assessment fee, which cannot be reduced by insurance carriers. The reduced amount will depend on the PIP coverage that a driver selects – the higher the coverage, the lower the reduction. For example:

  • Unlimited coverage would receive on average a 10% reduction

  • $500,000 in coverage would reduce on average by 20%

  • $250,000 in coverage would reduce on average by 35%

  • $50,000 in coverage would reduce on average by 45%

  • Individuals with Medicare or qualified health insurance could opt out and receive a 100% rate reduction on certain portions of PIP, depending on their individual circumstances. MCCA deficit fee would still apply (MCCA has announced the deficit fee is $0 for 2020).

  • Minimum bodily injury liability coverage limits increased from $20,000 per person and $40,000 per accident to $50,000/$100,000. The policy will default to $250,000/$500,000 (or $510,000 for commercial auto policies) if the policyholder does not make a choice. Policyholders must sign a selection form to choose limits lower than $250,000/$500,000 (or $510,000). If a selection is made following the first renewal after July 2, 2020, policyholders may keep that option until they request a different option. All following renewals will be issued with the previously selected option. Policyholders will be sent a bodily injury coverage selection form at each renewal so a different selection may be made; however, policyholders may select a different option at any time.

  • Policyholders will be given the option to select their PIP and bodily injury liability coverage at each renewal; selection forms will be sent at each renewal. If a selection is made following the first renewal after July 2, 2020, policyholders may keep that option until they request a different option. All following renewals will be issued with the previously selected option; however, policyholders may choose a different option at any time.

  • Non-driving factors can’t be used to set insurance rates for personal auto policies. Factors include postal zone, credit scores, home ownership, education level and occupation.

  • Tort damages will be recoverable for excess allowable expenses and work loss. And, the “Mini-Tort” damage cap will increase from $1,000 to $3,000 for accidents occurring after July 1, 2020.

  • The order of determining who will pay for a no-fault claim – called the “order of priority” – has changed in some cases involving:

  • Relatives who do not reside in the household of the named insured unless they are away at school. These relatives (such as your children) would need to have their own insurance policy, even if they are driving a car you own.

  • Non-relatives who reside in the household, even if they are listed drivers. They would need to have their own insurance policy.


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