Michigan’s Legislature passed a landmark bill on May 24, 2019, that would cut the country’s highest auto insurance premiums by allowing drivers to opt-out of the previously-mandatory unlimited Personal Injury Protection (PIP) coverage for crash injuries. The bipartisan overhaul of Michigan’s auto insurance law is now set to reduce auto insurance rates by at least 16.5% which is more than the mandated reductions.
Before this law was passed, drivers required to purchase a mandatory unlimited PIP coverage for crash injuries. A portion of this coverage would also be used for lost wages and assistance depending on the level on the injury. There are now multiple levels of PIP benefits that drivers can pick from; Unlimited, $500,000 limit, $250,000 limit, $50,000 limit and opting out.
How Much You Can Save on Car Insurance? (From July, 2020)
The state Department of Insurance and Financial Services has approved the first six auto insurance rate filings which have covered a quarter of the market. When the proposed rates start taking effect in July, Michigan residents can expect to see savings of at least 16.5% for people who opt into an unlimited coverage PIP instead of the 10% savings that were mandated.
Those with different levels of PIP coverage will see even higher savings.
- Those at unlimited coverage will save a projected 16.5% instead of 10%
- Those at $500,000 coverage will save a projected 36.3% instead of 20%
- Those at $250,000 coverage will save a projected 41.9% instead of 35%
- Those at $50,000 coverage will save a projected 54.3% instead of 45%
- Those that decide to opt-out will essentially save 100%
Anita Fox, DIFS Director, said in a statement that “These filings show statewide savings exceeding the law’s requirement at each PIP coverage level. Michiganders can also choose a coverage that best fits their family’s needs and budget, and can expect savings for each option.”
Governor Gretchen Whitmer and Republican lawmakers that pushed for the auto insurance reform last year praised the new estimates. Whitmer said in a statement, “This is great news for Michigan drivers and their families. Last year, we worked across the aisle to pass a historic, bipartisan auto insurance reform to bring down costs for drivers everywhere. It’s great to see that it’s paying off for Michiganders, especially during a time when drivers may need extra money in their pockets."
State Representative Jason Wentworth said that as more companies’ proposed rates are approved, competition in the market will increase which will lead to even lower prices for Michigan drivers. He commented, “Companies now are going to have to compete even harder to get their clients, the drivers, when they shop around to get the best price. That’s obviously good news for everybody, especially those that have not been able to afford insurance in the past.”