What the no-fault auto reform deal means for Michigan drivers

The Michigan House and Senate passed a long-awaited auto insurance plan Friday that they say will dramatically cut car insurance rates for drivers. Speaker of the House Lee Chatfield hugs fellow Republican lawmakers on the House floor immediately following the vote Friday afternoon. (Bridge photo by Riley Beggin)

Gov. Gretchen Whitmer and Republican leaders agreed to a landmark deal Friday that dramatically changes the state’s no-fault auto insurance system by allowing drivers to choose their level of personal injury protection coverage, among other things.

The governor and Republicans say the plan, once signed into law, will bring much-needed financial relief to residents who pay the highest auto insurance rates in the country. Some Democrats were disappointed, saying it doesn’t go far enough to regulate insurance companies and will lead to significantly worse medical benefits.

Related: Bipartisan Michigan auto insurance deal reached between Whitmer, Republicans
Related: Gender and education won't factor into new Michigan auto insurance rates

Here’s what the new law would mean for Michigan drivers:

Five options for personal injury protection (PIP) coverage

Right now, drivers are required to purchase unlimited personal injury protection (PIP) coverage, which guarantees insurance companies will cover all of the medical costs associated with car accident injuries. That also means auto insurance companies pay regardless of who’s responsible for the accident.

Under the new plan, drivers can choose between five tiers of PIP coverage beginning July 1 2020:

  • Unlimited PIP coverage (the same coverage as now)
  • Insurance companies will cover up to $500,000
  • Insurance companies will cover up to $250,000
  • Insurance companies will cover up to $50,000 — the lowest-price option available to people on Medicaid, who cannot opt out entirely.
  • Opt-out of PIP coverage entirely, if you have separate health insurance that covers collision injuries.

If a driver doesn’t have unlimited PIP coverage under the new system and gets in a car accident that’s not their fault, and medical costs exceed the amount of coverage they have purchased, they can sue the at-fault driver for charges beyond their coverage.

Cheaper rates for 8 years

Under the new plan, insurance companies are required to lower PIP coverage rates depending on the level of coverage purchased:

  • Those who keep unlimited PIP coverage would receive a 10 percent roll back of PIP coverage costs on average.
  • Those who choose the $500,000 get a 20 percent rollback on average.
  • Those who choose the $250,000 plan, get a 35 percent rollback on average.
  • Those who choose the $50,000 plan, get a 45 percent rollback on average.

Those rate rollbacks must say in place until July 1, 2028. After 8 years, insurance companies no longer will have to hit exact rate rollback targets, said Gideon D’Assandro, spokesman for Speaker of the House Lee Chatfield. But they’ll still be bound by new rules that require them to get rates approved by the state Department of Insurance and Financial Services before offering them to consumers, he added.

Democrats have argued that the cost of unlimited coverage may skyrocket the more people choose less comprehensive plans.

There’s also an escape hatch built into the plan: If an insurance company goes bankrupt offering the rate rollbacks, they can appeal to the Michigan Department of Insurance and Financial Services (DIFS), which could choose to allow the company to change their rates. D’Assandro said this is unlikely to mean a return to the original rate and would more likely be a negotiated mid-range rate.

People would also no longer have to pay the $220 fee to the Michigan Catastrophic Claims Association used to cover the lifetime claims of catastrophically injured people if they don’t choose unlimited coverage. However, everyone with car insurance would still have to pay a $43 annual fee to help pay down the MCCA’s debt.

Insurers may no longer set rates for several “non-driving” factors

The plan will bar insurance companies from setting auto insurance rates based on several “non-driving” factors: gender, marital status, home ownership, educational level, occupation, credit score or zip code.

At first blush, that would seem to put an end to the highest-in-the-nation rates people pay in Detroit and other areas that insurance companies consider to be higher-risk. However, the bill agreed to Friday still allows rates to be determined by “territory,” which could be considered areas as small as census tracts (which are roughly the size of a neighborhood).  

Insurance companies won’t be able to use a driver’s credit scores as a factor anymore, but that doesn’t bar them from using credit reports or “insurance scores” based in part on credit information.

Eric Lupher, president of the Citizens Research Council of Michigan, said it’s not clear how these changes will affect rates.

May 30, 2019: Whitmer urges business to back gas tax, Michigan Republicans still balking

“If you assume the insurance companies are setting the rates to cover all of their costs, reducing cost in one area might mean they can’t reduce it as much in other areas,” he said.

Rep. Sherry Gay-Dagnogo, D-Detroit, a harsh critic of the deal, said using geography in rate setting is “the true root cause of redlining.” Democrats have been committed to ending redlining, she said, and “I think for us to deviate from that today says something about our value statement.”

Your dollar may stretch further on medical care

Beginning July 1, 2021 (a year after tiered options would go into effect), health care providers will be required to keep charges for medical services up to 240 percent of what they charge Medicare for the same services through June 2022 (then up to 235 percent and up to 230 percent over the next two years), which bill supporters say will prevent hospitals from charging far more for the same services just because an insurance company is footing the bill.

D’Assandro and House Democratic caucus spokesperson Samantha Hart said the bill includes a requirement that those savings be passed on to consumers, which should mean lower prices at the hospital.  

Joshua Rivera, Senior Data and Policy Advisor at the University of Michigan’s Detroit Partnership on Economic Mobility, said the Medicare fee schedules are “an extremely promising part of the deal.”

“Medical fee schedules were a necessary part of reform. It was just a no-brainer,” he said. “Medical fee schedules can help control cost the same way they do in Medicare, the same way they do in workers (compensation.)”

More people will end up on Medicaid

Allowing people to eschew unlimited PIP means, of course, that some people will end up in catastrophic accidents without coverage that pays for their medical costs forever.

“To choose a lower plan and not have other protection involves some level of risk that you’re not going to get in an accident that will be severe, a budget buster that puts you into poverty,” said Lupher of the Citizens Research Council of Michigan.

Researchers at the nonpartisan House Fiscal Agency predicted in an analysis of an earlier version of the bill (that also offered multiple tiers of PIP coverage) that more people will end up on Medicaid under the plan.

Some people will get major injuries from car crashes and then be forced onto the aid program after their medical costs greatly exceed their coverage. The fiscal agency estimates this will cost the state around $58 million within 10 years for long-term care costs and $14 million within 10 years for acute injury costs.

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Ann Liska
Fri, 05/24/2019 - 6:56pm

Since I retired in late 2017 and returned to my home state, the auto insurance rates have been the most jarring thing. I have every discount possible - good driver, senior driver, multi policy, etc. But I am still paying over $1600 per year for auto insurance under Michigan law. When I lived abroad (UAE) the premium for a year was about $1000. This went down after my car was 8 years old. The UAE is a great place but it is also notorious for bad driving. There are many crashes. The difference is in what people can sue for after an accident. There is swift justice and no prolonged trials. Injured parties can try to bring a case, but in general it's a fool's errand, especially for expats. End "no-fault" and bring equitable rates for MI people. Thank you, Ann p.s. credit score and other things should not be a factor in setting these rates. This is effectively a regressive tax.

erin poyle
Tue, 05/28/2019 - 12:29am

As much as I respect everyone's disdain for high insurance rates, I think people overlook the repercussions of not having no fault insurance options if you were to get injured in any way. I was injured in an auto accident in 1991 and I am a quadriplegic who has since developed fibromyalgia as a result. Everyone feels like it won't happen to them, but if it does, it's devastating for not just the injured person, but for the entire family. The difference would be $177 a year. In the larger scheme of things that is not very much. There will be changes in the fact that there will be options of how much coverage you choose to purchase, but I strongly suggest for everyone that they look at the larger picture and choose as much coverage as possible. Without it, so many people with existing and future injuries will end up on medicaid and forced to rely on family members for attendant care, which would have a cap of 56 hours a week for family members and a limited amount of hours for outside agencies. I don't want to come across as being morose or somber, but as a realist and someone who has lived in fear of this happening for quite a long time. So many families will be affected by this in worse ways than higher insurance rates. I do think there needs to be some major reform as long as the red lining and other issues are still significant. My life and so many others will be devastated by this passing.

Wed, 05/29/2019 - 10:21am

Erin, I do believe you'll be grandfathered in - you will retain your unlimited coverage, as it stands, right now, for the remainder of your life. (If I'm not mistaken)

Wed, 05/29/2019 - 2:30pm

There is no such thing as “grandfathered” in for this case. I know. I was severely injured in 2013.

Dan Schwartz
Tue, 06/18/2019 - 10:13pm

Those already receiving lifetime benefits will continue to receive them. That is why we will still pay $43per vehicle that other states do not have to pay.

Lady O
Thu, 05/30/2019 - 9:53pm

Erin, it's something politicians will never get. They have lifetime benefits. I guess it's more important for them than for us.

Henry Y
Sat, 06/01/2019 - 9:55am

Michigan state legislators do not get lifetime benefits. This is common misinformation. Michigan state legislators have a 401k like all other state employees. Healthcare is not provided after they leave office.

Chuck Fellows
Fri, 05/24/2019 - 6:59pm

When legislation is finally drafted you will discover that zero times any percentage is still zero. The percentage savings will be applied to a PIP Premium amount created by the insurance companies. Further insurers will not be required to share any savings they receive from the fee schedule.

Geoffrey Owen
Fri, 05/24/2019 - 7:02pm

Three issues are inherent in the insurance problem in Michigan. Redlining. Coordination in coverage with health insurance. The Michigan Catastrophic Coverage. The article on reaching a solution does not report on how these have been resolved. As reported here, I would expect Detroit drivers now have a choice of levels to be screwed. As reported here, the insurance companies will pay twice as much as Medicare, but if we all had Medicare why would we be paying for PIP? As for catastrophic, if drivers are choosing different levels of coverage, isn't it more important that we are covered in a catastrophe? The catastrophic coverage was for accidents over $500,000 when we were paying for unlimited. Now if we choose unlimited or $500,000 what is covered. And I had read there was a surplus of $20 billion, but the article says we will be paying $43 per year to pay down the debt.
Last question. What did Gov Whitmer negotiate since this sounds just like the Republican bill?

Christine Temple
Sat, 05/25/2019 - 10:48am

Do you really think the GOP would have even put this out there if not for a Democrat?

Howard Spence
Fri, 05/24/2019 - 7:56pm

Thanks for this summary of the impending negotiated deal regarding No-Fault insurance in our state. The negotiated deal is hopefully going to be a big deal and result in lots of rate relief for many Michigan consumers. I am waiting to see the "details" of these changes and the impact of these changes on my own no-fault policy rates - which are oppressive for me as a senior citizen retiree in our state. I myself as a retiree was moved to an employer-provided retirement insurance program which has as its major or primary health insurance coverage Medicare with an employer provided Medicare supplement coverage. I was complaining on Facebook recently about a $400 immediate increase in my no-fault policy rate when I went from a primary health care with an insurance component to Medicare coverage primary. I am a Democrat, but I look forward to buying lesser auto insurance PIP coverages and hopefully seeing a Medicare "penalty" on my auto policy removed.

When will these changes take place, and how long will it take to get the Insurance Bureau (DFIS) to review and/or approve the new rate structures and classifications??

Sat, 05/25/2019 - 8:52pm

I am on Medicare and my agent shopped my policy and it went down $500. So don’t play the Medicare card.

Sun, 06/02/2019 - 6:47pm

When Medicare kicked in, mine went up by more than that because there was no coordination of benefits between the policies. When I went on medicare, my coverage no longer coordinated with auto insurance. The result is that my medicare coverage would not apply to medical coverage from an auto accident. I am on a standard medicare plan with a top end supplemental policy.

Ann Farnell
Thu, 10/03/2019 - 6:43pm

Me, too! 81 years old.

Steve Losey
Fri, 05/24/2019 - 9:15pm

I was told by my state Rep, Mike Mueller, that I can keep the exact coverage that I have right now, and my rates will go down.

Not sure how that's gonna work? Paying less for the same coverage? Insurance companies are gonna pick up the difference? Should be interesting.

Sun, 05/26/2019 - 4:29pm

I think that rates will go down, just by the fact that there will now be fee structure caps (i.e. 240% of medicare fee structure) for medical expenses. So you could conceivably continue to choose unlimited PIP but the rates will be better because we'll now have a medical fee structure that hospitals will have to follow for charging expenses.

Todd Malott
Sat, 05/25/2019 - 6:49am

This is great. The greedy little plaintiff attorneys and medical providers will stop scamming the system.

Sat, 05/25/2019 - 7:51am

I have Blue Cross and Medicare coverage. Will that be affected in any way. Will my auto insurance cover an accident where I am hospitalized or will it be covered by my other health insurances? Let me know.

Wed, 07/29/2020 - 12:51pm

My understanding is, that your medical ins. is billed first, then your auto pays the rest..minus and ded. Also i also thought my ins coverd anyone in my car was covered,not. their personal ins has to be billed. I know my grandson was involved in an accident not his fault, and his girlfrien had to turn her bill into her own medical.

Mike K
Sat, 05/25/2019 - 8:32am

Why wait for July 1st 2020 ?
Why not just start now? One more year of high rates is wrong for Michigan residents . And who's to say what zip code is a good area to determine our insurance rates.

Thu, 12/12/2019 - 3:59pm

Do you understand how fiscal years work?

Zip codes can be used to determine traffic volume, congestion, past crash data and auto theft data. Those are factors in how much insurance costs.

Sat, 05/25/2019 - 9:05am

I am glad two see there was some discussion and compromise for this bill. There is never a bill where everyone gets what they want. I want to read and understand the entire bill, to see what the impact will be for me, but it sounds like there will be some relief for all.

This is a start.

Roger Peak
Sat, 05/25/2019 - 11:14am

Those rate rollbacks must say in place until July 1, 2028. Did you intend to say "must stay in place?"

Sat, 05/25/2019 - 11:18am

There needs to be disclaimer on everyones insurance policy that notifies them that if they select anything less than the current lifetime coverage and are seriously injured they will be on Medicaid for the rest of their lives. Much as Republicans hate Medicaid, I don't understand why they keep pushing to add more people to it.
Also, there has been little to no discussion about the fact that insurance companies are only on the hook for a limited amount for your medical bills. You then move to the Catastrophic Fund for the rest of your life.

Linda Cook MacDonald
Sat, 05/25/2019 - 11:47am

This so-called "reform" in the long run will do 2 things:
It will not stop the insurance industry from setting rates exactly as they wish without any regulatory oversight. Even the rise in PIP rates was never questioned nor challenged actuarily by the state. Why? Probably because the Insurance Department in state government does not have any actuarial staff! The insurance industry has been fleecing the drivers of Michigan and they have gotten away with it because the legislature and various administrations, most notably republican ones, have weakened the state's ability to watch out for all of us who must purchase auto insurance. There is NO guarantee in the legislation passed by the legislature that anything will change for the average driver. Even "redlining" will continue, under the rubric of "regional" rate setting. Really? AND what about the MCCA? This is a public entity which somehow gets away without transparency. It is a public entity with NO public on it and only insurance executives. This public entity - essentially a pass through re-insurance program for insurance companies - has been making it harder and harder for catastrophically injured people to access the system. Maybe that is one reason there is such an amazing amount of money in the fund. This fund by the way does not go into deficit until 2058 according to some information I have read from C-PAN. Any time the legislature acts like a Lame Duck 5 months into a regular session, then the public should be asking themselves "Why?" And the Governor should be asking the same thing. But I am afraid she has not done the necessary questioning. AND the public has been SHUT OUT in the last days since May 8-9 when a bill was passed at 2am in the morning - a bill that was NEVER HEARD in the committee of the house responsible for it. No. We have let Nesbitt and the Michigan Senate get away with foisting a lie on all of us. There will be "buyer's remorse" but not until long after the Mackinac Conference where the insurance industry and the state chamber will clap their bought legislators on the back for a job well done.

Tue, 05/28/2019 - 12:36pm

Another Farce at the highest levels of government. Even if this was taken to the public, the "promise" of lower insurance rates, the mass amount of spending by the likes of AAA, Allstate, & SF to sway the public in their favor, and the lack of the public reading the details, it still would of passed. Its a shame how much we are giving up for the little savings we will see. Remember, this is not a total reduction of your rates across Comp/Collision/BI/UIM and so on. Its PIP and PIP only. Good luck because the companies will make it up elsewhere.

I plan on continuing to pay for the unlimited benefits as I am not willing to risk my families financial health. I'll save eating out a few times a year to make up the difference. Now onto another BS plan to fix the "damn" roads! Ha!

Ivy Bennett
Sat, 08/08/2020 - 12:41pm

Agreed. I took the gold plan and even bought an umbrella policy to protect me. So I didn’t save a dime

Sat, 05/25/2019 - 4:07pm

They talk about $200 for catastrophic, wonder where they got that figure. I've been paying just shy of $400.

Tue, 05/28/2019 - 8:42am

I have a lawyer family member and she claims this does NOTHING but make it worse. First, if you go over you med benefits, your medical picks up the tab. The medical then sues the other person to recoup but you will see NONE of that money because it only pays back the other medical provider. This does nothing to lower any rates. In fact the "territory" simply means everyone in Detroit area will see increases in rates because instead of using your zip code, they now use all of Detroit to determine the rate. It is the same thing under a new name. This is not a win for anyone.

Sat, 06/08/2019 - 2:06pm

It is a big win....for the auto insurance industry and legislators who line their pockets with insurance industry money.
Why were auto insurance companies allowed to use credit scores to jack up rates in the first place. They will be allowed to use the industry’s charts....good luck with that.
Governor Gretchen Whitmore another “corporate”

Lady O
Thu, 05/30/2019 - 10:04pm

This will not end well at all.

Sun, 06/02/2019 - 2:02pm

Where is all the money in the catastrophic account. Who has it? How much is it? What is going to be done with it?

Sun, 06/02/2019 - 2:02pm

Where is all the money in the catastrophic account. Who has it? How much is it? What is going to be done with it?

Sun, 06/09/2019 - 6:36pm

Why a one year delay??? Michigan has been forced to pay these outrageous rates long enough!!!

beezer wheezer
Tue, 06/11/2019 - 10:41pm

Well let's see 50K isn't much by the time you walk in a hospital and hopefully there's no cap on it. This is a terrible deal. Once again, it's shifted on the taxpayers to pick up the tab and the only ones making out are the lawyers and insurance companies. Seniors? No mention about them and their budgets. We need to go BACK and open up the states to more competition to drive prices down. Shame on you Lansing!

Greg Main
Tue, 06/25/2019 - 8:20pm

As I have proposed many times in online comments, Michigan should be charging Enbridge a mere $1.00 per barrel for every barrel of oil and gas which flows through their pipeline. Using Enbridge's numbers, the State of Michigan would collect nearly $500,000.00 PER DAY! At the current flow rate, roughly $180 million per year would be collected. That kind of money would eliminate the need for a gas tax and go a long way to properly repairing our infrastructure.

L. Magaw
Wed, 06/24/2020 - 4:56pm

@ Greg Main...I Agree with you, it's about time we get something for allowing the oil industry and their pipeline companies running amok with our environmental safety!

Mike Justice
Sun, 09/01/2019 - 9:30am

Just paid $343 dollars for 12 days of insurance and have to pay another $843 in those 12 days or they will cancel the policy !!! They want $843 a month to drive my own 14 year old car that cost me $1500 that's $5058 dollars for six months or $11016 a year WTF

Mike Justice
Sun, 09/01/2019 - 4:54pm

Oops that's $ 2058 or $ 4116 but still wow!!!

Family of 11
Sat, 09/14/2019 - 5:35am


Mon, 09/16/2019 - 2:23am

I had insurance agency they are some crooks for realI was n a bad car accident had insurance an all that an still fighting with the insurance agency to pay the medical Bill's no end in freakin sight an I've learned this is some5 that happens ALL the time so why pay an outrageous amount for car insurance then when u actually need to use it the fight ur claim its suck a scam

Julie S
Thu, 10/24/2019 - 1:28pm

We need to end NoFault! period. It should be on the ballot and voted on by the tax paying citizens of this state. It is a shame that seniors should bear this burden of car insurance that we cannot afford. We deserve the opportunity to vote on getting rid of it!! I know I cannot afford it and at 70 years old I deserve better than having to move out of state in order to keep driving. Shame on this state and the insurance companies, you all suck.....

Joe Kristoff
Fri, 02/07/2020 - 3:36pm

About time, our insurance is ridiculous. I sold my car, cancelled my insurance. Six months later my rates doubled, because I was not covered the last 30 days. Crazy!

Patti D
Fri, 04/17/2020 - 4:02pm

When we moved to MI and I inquired about insurance, all the local insurance companies couldn't help me because I didn't have MI insurance for a year. Wait...what? Basically I am being charged to MOVE here. Hey, Welcome To Michigan! I then was told I had ONE choice because of this and this was AAA. I am being charged for the equivalent of a high risk driver with a DUI would pay! I am 55 years old and have a perfectly clean record. We actually had to rent somewhere else than where we wanted because of this. I walk to work...and we moved here for that reason, it's close to everything. We even got somewhere the rent was cheaper so we could pay car insurance! And...we still can't afford it. They want the first six months paid upfront...yeah, like I have $2,500+ at my disposal. Yes, this needs to be fixed somehow.

Joe Kristoff
Fri, 02/07/2020 - 3:37pm

About time, our insurance is ridiculous. I sold my car, cancelled my insurance. Six months later my rates doubled, because I was not covered the last 30 days. Crazy!

Don knight
Sun, 05/03/2020 - 5:06pm

If they can determine your rate based on the territory that you live in is the same as using zip code so there's no big difference . As usual the people in Michigan are getting FUCKED I have Hartford insurance, when you ask them how low the rates will be they tell you that they won't know until July 2nd I'm already looking for another carrier.

Sharon Kennedy
Fri, 07/10/2020 - 2:59pm

I just contacted my health insurance company and was advised that we could opt out completely from PIP premium because our health insurance would cover us. Then I contacted AARP the Hartford and was advised that we would have to wait until next March, 2021 when the policy expires in order to take advantage of the new law. This is not right! Someone will have the extra money and we will have paid twice via health insurance and auto insurance.