Lucido: Choice equals savings on auto insurance

Landmark no-fault reforms take effect July 1

LANSING, Mich. — State Sen. Peter J. Lucido reminded Macomb County drivers on Tuesday that the historic auto no-fault law enacted last spring will take effect on July 1.

“With everyone focused on the coronavirus, some may have overlooked the fact that the landmark auto insurance reforms we passed last year will be taking effect very soon,” said Lucido, R-Shelby Township. “I’ve been driving since the inception of no-fault, and this is the biggest change for consumers we’ve seen in over 40 years. I encourage everyone to consult their local insurance agent to learn about their options and how much they can save before renewing their policy.”

The reforms, signed into law a year ago this month, were designed to save drivers money by offering more options to better meet individual needs, while improving coverage and consumer protections.

Michigan law requires auto insurance policy holders to carry personal injury protection (PIP), which covers medical costs if a driver is in an auto accident. On July 1, for the first time, motorists will be able to choose from a selection of new coverage levels to better meet their needs and budget.

Each PIP level represents the maximum amount a policy will pay per person per auto accident. Previously, all drivers had to pay for the most expensive, unlimited PIP plan regardless of need or budget, because it was the only plan offered. Senior citizens who are on Medicare and other motorists whose health insurance plans include coverage for auto accident injuries may now choose to opt out of PIP medical coverage on their auto insurance policy.

Under the new law, drivers may select:

  • Unlimited
  • $500,000
  • $250,000
  • $50,000 (for those on Medicaid)
  • Opt-out (for seniors with Medicare or others with qualifying health plan)

All auto insurance companies doing business in the state must also reduce the cost of each PIP level for at least eight years. The unlimited plan must be lowered by an average of at least 10% per vehicle; the $500,000 plan by at least 20%; the $250,000 plan by at least 35%; and the $50,000 plan by at least 45%. Those choosing to opt out will not pay a PIP premium.

The new law includes additional consumer protections, including:

  • A fee schedule to control costs medical providers charge auto insurance companies.
  • A new fraud investigation unit will crack down on auto-insurance-related crimes.
  • Bad actors in the insurance industry will face tougher fines and penalties.
  • Elimination of non-driving factors, like ZIP code, homeownership status and marital status.
  • Auto insurance rates must now be preapproved.

“Picking the right plan can help maximize your savings, and everyone should choose one that best meets their needs and budget,” Lucido said. “That’s why talking to your agent is so important. Your agent will also be able to address additional questions you might have, such as discounts for bundling home and auto insurance, what is covered when you take an Uber or Lyft, or whether your out-of-state children are covered while driving your car, for example. And be sure to also ask about getting a coronavirus rebate, which many auto insurance companies are giving because of the extended stay-home orders.

“This new law should help lower rates for seniors, families, younger people and lower-wage earners. It’s a ‘win’ for everyone.”

Additional proposals Lucido introduced last year would provide further savings by properly enforcing the new law. Under Senate Bill 6, law enforcement would be able to seize a vehicle’s license plate if a driver does not have an active insurance policy for the vehicle, while SB 7 would create an electronic vehicle insurance verification system to enable the real time tracking of a vehicle’s insurance coverage status. Both bills await Senate action.

For more information on Michigan’s new auto insurance law, including a list of insurance agents, visit, email [email protected], or call 833-ASK-DIFS.