6.28.20

Changes to the Michigan No-Fault Insurance Law

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Anne Kuiper discusses no fault insurance changes on the Money, I'm Home podcast.
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Anne Kuiper, personal lines manager for our partner Nulty Insurance, joins us to discuss the changes coming to No-Fault Insurance Law in Michigan on July 2, 2020.

Listen today and discover how to make the best choices for your future auto insurance policy. Money, I’m Home!

 

[transcript]

00:08 Lynne Jarman-Johnson: Money I’m Home! Consumers Credit Union from finance to fitness. We have a wonderful discussion today about something heading your way, it’s a change. Boy, there’s been a lot of change in the air lately, hasn’t there? Well, this has to do with your auto insurance, and it is no-fault auto reform, which is coming your way, July 2nd, I believe is the actual date, but let’s find out from the expert. Anne Kuiper is our partner Consumers Credit Union, and we sure do value our relationship with giving information, especially when things do change, and this is a biggy, no-fault auto reform. Tell us a little bit about it.

00:43 Anne Kuiper: Of course, My name is Anne Kuiper. My title is Personal Insurance Department Manager at Nulty Insurance. First of all, I’d like to say too, we do appreciate our partnership with you, and I thank you for inviting me to come and talk to you about this really important change. Since 1972, no-fault auto insurance has been the same, but effective in July 2nd, there are going to be several, several changes to the law. Probably the two biggest changes have to do with your choices on your bodily injury liability coverage that protects you if you’re sued, and also that you will now have choices on what medical coverages you choose to protect you if you’re involved in an auto accident. In the past, everyone has had unlimited lifetime benefits, which are obviously an excellent benefit, the best of any state in the country. But along with excellent benefits comes an increased cost, and with these changes, there should be some savings that will be passed along to each of the auto insurance policy holders.

02:04 LJJ: So, I’ve kind of heard of this as liking it to a Cadillac, that Michigan had been the top of the line as far as insurance coverage. Now, because of these changes, and yes, we might get dollars back, we really do have to be thoughtful about what we choose for coverage. So explain, how does it happen? What does someone do to reach out to their insurance company to make sure they’re covered?

02:28 AK: Sure. Every policy holder will be sent a pre-renewal letter and packet of information. That goes out about 90 days before the renewal of your auto policy. So, for those people whose policies renew in July, they should have already received or will soon be receiving a renewal packet from their insurance company. In that packet, it gives you information on the different liability limits that you can choose and the different limits of medical coverages that you can choose. You complete those forms, and then you can send them back to your insurance companies so that your policy will renew with the coverages that you want.

03:16 LJJ: So, can someone choose to keep the coverage that had been in place? Is that an option?

03:22 AK: Yes, it is possible to keep the unlimited medical coverages that we have always had. Obviously, that is your best choice as you said, the Cadillac of choices. With most insurance companies, even if you choose to keep the unlimited medical coverages, you should see some savings in your auto premium. The reason that you’ll see the savings and not the premium is that the Michigan catastrophic claims Association Assessment, which is also known as the MCCA, is going to be reducing their assessment that goes on each policy holder, effective also July 2nd. Right now, that assessment is $220 per car per year, and even if you choose the unlimited medical coverages, that assessment is going down to $100 per car for a year, so you’re gonna see a savings right there.

04:27 LJJ: Well, that sounds great. Now, the question though on really knowing what’s covered and if something happens, the liability coverage, I also know is changing. Put it into terms of someone in their everyday life. What should they be thinking about in a sense of making those decisions on what to choose, because you have to make choices, right? This isn’t going to be where something just auto-renews anymore.

04:55 AK: It will automatically renew, if you don’t make a choice. If you don’t make a choice, then your liability coverages will automatically renew for protection at $250,000 each person. So that amount of coverage, if you’re sued for each person you might injure in an accident, $500,000 for the total accident or higher if you have higher limits. So, if you don’t make a choice, that’s what it’s going to renew at. Also, if you don’t make a choice, which means you don’t return the forms, your auto policy will automatically renew with the unlimited coverage. You can change it later, but that’s how the renewal will work.

05:42 LJJ: What’s the recommendation? Are you getting a lot of phone calls from individuals who are worried about it or just questioning, not understanding?

05:52 AK: Certainly, we’re getting many questions and many phone calls. What we are recommending, just because we see auto accidents and we see where millions of dollars are paid out over a lifetime. As an agency, we are recommending that people keep the unlimited medical coverages. Now, with that being said though, you always have to balance your own personal finances and thoughts about insurance with what your choices are. So, what we’ve been doing is walking people through their choices and telling them what the premium savings is on each choice. So, you can choose the unlimited. The next limit down is to choose a half a million dollars coverage, and you do see a premium savings with that. The next choice is to go to a $250,000 limit. It seems to be a fairly small savings to go from the half a million to the $250,000 coverage limit. You can even, if you’re on Medicaid, go to a $50,000 limit, or you can completely opt out of having any medical coverage at all under your auto policy. Obviously, that’s the biggest savings. But in order to have the opt-out, you need to prove that you do have medical insurance that will pay for an auto accident. And that could either be for Medicare, if you have parts A and B, or it could be, by obtaining a letter from your health insurance company, and it has to be on their letterhead, that says, “Your medical insurance pays for auto injuries and has a deductible of $6000 or less.”

07:47 LJJ: So, it’s important to check that prior?

07:49 AK: Yes. And the auto insurance company will not allow you to opt out without that documentation.

07:57 LJJ: So, tell us a little bit about the changes about household and who’s in your home, and let’s say you have a student that is your son or daughter, and they’re in your home, or maybe a boyfriend or girlfriend stops in temporarily. There’s changes in actually who can drive, is that accurate?

08:19 AK: That is correct. The change is in the medical coverages. In the past, anyone who drove your car, or was a passenger in your car, or even was a pedestrian or a bicyclist that was struck by your car and injured, could collect unlimited medical coverages under your auto policy. But that has been changed, so that the only people that can collect for the medical coverage under your auto policy are people who are related to you and live with you in your house. So, what that means to people, is you have a significant other who has lived with you for years even. You have done all the right things, you have listed your significant other as a driver on your policy, they now would be excluded from medical coverages under your auto policy. You would have, like physical damage for your car. So, if there’s damage to your car and you have a collision, there’s still coverages for that. If you’re sued because of an auto accident, you still have liability coverage under your policy. But that other person who is either not related to you and living with you in your household, no longer has medical benefits under your auto policy. They either have to go to their own auto policy to get coverage, if they have one, or worst case scenario is they would go to the Michigan Assigned Claims pool and would have a maximum of $250,000 coverage for injuries.

10:13 LJJ: So really, all of these changes that take effect July 2nd, it’s really important that we all connect with our insurance agent to make sure that we’re making the right decisions.

10:28 AK: That is correct.

10:28 LJJ: What do you think is the biggest change that is happening that people may not know about, that we haven’t talked about, Anne?

10:38 AK: There are some changes on the rules that the insurance companies can use for rating. So, they can no longer use zip code for rating. And we have seen some of that in the initial rate, some of that has an adverse impact on those of us that live in West Michigan, because they can’t use the zip code anymore. They can use what’s called “territory rating” now, but that’s different. So, we have seen some rates in West Michigan go up, just because it’s balancing off for other areas of the state. So, insurance companies can no longer use credit scores in their ratings. They can still use an insurance score, which is different than a credit score, but there were some insurance companies that used just credit scores. So, if you had a really good credit score, you could see your rates go up a little bit now because that can’t be used. And then there’s a few other minor things, insurance companies, some of them used education level, some of them used home ownership as credits, and they can’t use that anymore.

11:47 LJJ: Okay. Well, I’ll tell you what, thank you so much for your time, this has been very enlightening, and we really do appreciate all that you bring to the table. Your website has just great information, including videos on it, Anne, and just great Q&A. So. if anybody needs any information, they can hop to your website, which is a nulty.com.

12:12 AK: That’s correct, yes. We’ve worked really hard to get that information out there for both our existing clients and just for the public and the general public. We want people to be educated on this.

12:24 LJJ: Well, thank you so much. We appreciate you educating our members and our community.

12:28 AK: Well, thank you very much for inviting me to come.

12:31 LJJ: Money, I’m Home! Lynne Jarman-Johnson, thank you so much for joining us. Consumers Credit Union from finance to fitness. If you have a topic you’d like, please send them our way. Thank you so much, Jake Esselink for your awesome production skills. Hope everybody has a great week.

[music]

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