Michigan No Fault Changes: Be Careful What You Wish For

Michigan’s No Fault auto insurance system is in the headlines once again. This time, the topics of discussion are the proposed changes moving through the Michigan legislator. As a Michigan personal injury attorney whose practice is closely intertwined with Michigan’s No Fault system, I have mounting concerns with whether the end result of these proposed changes will truly keep more money in the public’s pockets.

One of the proposed changes would allow Michigan residents to opt out of the unlimited lifetime medical coverage, which is currently required for all Michigan auto policies. As an alternative to unlimited coverage, people would have the option to choose lesser medical coverage (as low as $0 if the their health insurance covers accident related medical expenses). The idea is that having options for decreased medical coverage could help lower auto insurance premiums for Michigan drivers. However, decreased insurance coverage generally means more exposure to the public.

For example, under the current no-fault system if your vehicle is damaged in an accident, the costs to fix your vehicle are generally covered by your own auto insurance policy. If a person wants to cut costs on their auto insurance premiums, they often choose minimal collision and comprehensive coverage. However, in the event an accident occurs, these same people end up with a damaged vehicle that they cannot afford to fix or replace, leaving them in severe financial hardship. Likewise, if Michiganders are able to choose lower medical coverage on their auto policies, the risk of exposure to medical debt rises significantly.

There is little doubt that steps need to be taken to help ensure that auto insurance in Michigan is affordable. However, the proposed changes do not seem to appreciate the ramifications of what’s to come. Insurance is a risk-based business. The proposed changes merely shift the risk away from auto insurers. If that burden is shifted towards health insurance, we can expect higher health insurance costs. In the event there isn’t a health insurance policy that will kick in after a person’s auto medical coverage is exhausted (or health insurers catch on and begin excluding auto related medical all together), the burden will ultimately fall back on the public.

Whether or not we will see any changes to the No Fault system is still unknown. Regardless, when it comes to Michigan auto insurance, my advice remains the same–get connected with a good insurance agent and cover yourself!

The information and opinions above are generalized and not intended to convey legal advice. If you have questions regarding your specific case, contact us for a FREE consultation at 616.608.3061.

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