By Jessica Mathews/

While the coronavirus pandemic might be overshadowing it, big changes are coming for auto insurance in Michigan.

An overhaul of Michigan’s auto insurance system has finally happened, meaning more choice for consumers. AAA’s Senior Vice President of Sales and Life/Field Operations Dan Schrock Jr. says now is the time to be pro-active and they want the general consumer to understand that it’s important to get educated and look into what you have or don’t have.

Since the early 1970’s, Michigan has had lifetime un-limited medical personal injury protection or PIP. He says it’s been one choice only and anyone who had auto insurance in the state had unlimited PIP. Schrock says the change is that Michigan drivers no longer have to have unlimited coverage and can choose different levels of PIP, which some people will be attracted to because it will also save them money. The new law also included a 10% rate rollback on PIP coverage, assuming someone has no changes to their policy.

As for what will happen July 2nd and after – Schrock says if a consumer does nothing when their policy renews, it will renew into the unlimited feature and their bodily injury limits will be raised because the consumer didn’t make any choice. If someone chooses a lower option than unlimited, then there are required documents that need to be signed acknowledging someone is choosing a lower limit. That’s where the potential savings come in. Effective July 2nd and after, he says people also have to have a required bodily injury property damage limit. It can be lowered but similar to taking a lower PIP option, someone would need to sign documents to lower it. However, Schrock cautions that people need to make sure they fully understand what they’re choosing and the tradeoffs of their choices to make sure they have adequate protection.

The new also law included a 10% rate rollback on PIP. Assuming someone has no changes, Schrock says then there will be a reduction on the PIP part of a policy. He says anyone who renews July 2nd or after will get at least a 10% reduction for that coverage. He cautions that only applies to renewals though. If a policy renews prior to the new law July 2nd, then the policy would renew in its current state because the law isn’t in effect. People always have the option to contact their insurance agent and request changes for a new policy. Once July 2nd arrives, Schrock says consumers in Michigan are eligible to change their policy based on the new law regardless of when their renewal was, although carriers will handle it different ways.

Schrock strongly recommends, regardless of carrier, that people get educated and find out what their options are. He says AAA’s strategy is that they’re contacting every member proactively on their renewal date so they don’t leave anything to chance. He says AAA is already reaching out to members to educate them and explain options because even though the law is effective July 2nd, renewals for July 2nd and beyond are already being processed. Schrock stressed that it can be overwhelming but consumers really need to be reaching out to a licensed professional to be able to explain the options and understand the trade-off of how the options will impact coverages for them and their families.

Meanwhile, unrelated to the upcoming auto insurance reform is that some drivers will be seeing refunds or savings from their carriers due to COVID-19. Because of decreased driving and reduced claims, some insurance companies are providing refunds. For March and April, AAA is refunding 20% of monthly premiums to insured customers.

More information about the upcoming auto insurance reforms is available through the provided link.