With the biggest changes in Michigan's auto insurance laws in nearly a half-century about to take effect, local insurance agents are spending a great deal of time educating clients on what those changes mean.
"That's all I've been doing," said Jason Parks, who owns a Farm Bureau Insurance agency in Middleville.
Parks started calling clients in March to set up appointments to discuss insurance reform measures that were approved by the Legislature last year and signed into law by Gov. Gretchen Whitmer. He's been averaging 25 to 30 appointments a week.
"We've been proactive in calling all of our clients and doing either a meeting via Zoom or here at the office," Parks said.
The most sweeping changes to the state's no-fault law since it was enacted in 1973 go into effect July 1.
Most notably, it gives drivers a choice in how much personal injury protection, or PIP, coverage they want. In exchange, most drivers in the state will get a break on their insurance premiums, which have historically been among the highest in the nation.
"This is the biggest thing I've seen in 25 years," said Troy Dalman, who owns a Farmers Insurance agency in Hastings.
"We've probably gone through about a sixth of our book (of clients). We're going to be doing (policy updates) for the next five months."
Under the new plan, drivers can now pick from five levels of PIP coverage, including maintaining their present unlimited coverage. Other options include coverage levels of up to $50,000, $250,000 and $500,000. A complete opt-out option is available, but that's only for drivers who have separate health insurance that covers collision injuries.
Drivers seeking to change their coverage will need to fill out and sign a six-page form that explains the options for each level of coverage.
"The new law lowers costs for Michigan drivers, maintains the highest coverage options in the country, and strengthens consumer protections," said Laura Hall, spokeswoman for the Michigan Department of Insurance and Financial Services. "For the first time, drivers will be able to choose a coverage level appropriate for their needs and budget."
The old no-fault insurance system had proven unaffordable for many Michigan drivers, Hall said, resulting in some people deciding to go without coverage.
Dalman said about 90 percent of the clients he's seen are choosing to keep their unlimited coverage, while, for Parks, about two-thirds of his clients are standing pat on their coverage.
"I think people are a little scared to opt out of the unlimited coverage," Dalman said. "I get it. It's unlike any other coverage in the country."
The other key change in the law, Parks noted, involves drivers who choose not to maintain unlimited PIP coverage and are injured in a crash.
"If I get injured and I have no medical [coverage] and that [other driver] is at fault, I can sue them to get my medical bills taken care of," Parks said.
The at-fault driver could be liable for any medical costs beyond the injured person's coverage level.
The reform measure also requires insurance companies to lower rates for PIP coverage, based on level of coverage selected. Those who choose to maintain unlimited coverage will receive an average rollback of 10 percent on their premiums. Those who choose a $500,000 coverage limit will see an average 20 percent rollback, drivers who opt for the $250,000 coverage limit will see an average rollback of 35 percent, and those who choose the $50,000 plan will experience an average rollback of 45 percent. Those rollbacks will remain in place for eight years.
So, should drivers consider reduced PIP coverage?
"It all depends on what they have for their health insurance and their coordination of coverage," Parks said.
Dalman urged drivers who are thinking about changing their PIP coverage to completely review their health insurance policies before making a change.
"If you checked it a year ago, you need to check again," he said.
"We encourage drivers to review the PIP form, understand the risks and benefits explained in the form, and talk to their agent or insurance company to determine the correct level of coverage for them," she said.
Another area where drivers will experience savings is a reduction of the fee paid into the Michigan Catastrophic Claims Association, the organization that was created to provide unlimited lifetime coverage for medical expenses resulting from accidents. The MCCA currently reimburses insurance companies when an injured person's medical expenses exceed $580,000.
Under the reform measure, the fee charged by the MCCA for each vehicle in the state is being reduced from $220 to $100 annually, and it will be assessed only to drivers who elect to maintain unlimited PIP coverage. In turn, only drivers who choose to keep unlimited coverage will be able to benefit from the MCCA.
The Department of Insurance and Financial Services will host several virtual statewide town hall meetings over the next few days to explain the key changes in the auto insurance law and how they'll affect drivers. Meetings are scheduled for today at 1:30 p.m., next Tuesday at 12:30 p.m. and next Wednesday at 12:30 p.m. The link to those meetings is at michigan.gov/autoinsurance. So far, more than 2,000 people around the state have attended DIFS' virtual meetings, Hall said.
In addition, DIFS has a dedicated no-fault hotline where drivers can have their questions answered regarding changes in the law. The hotline, 833-ASK-DIFS [275-3437], is available 8 a.m.-5 p.m. Monday through Friday, or via email [email protected].