On May 30, 2019, Governor Gretchen Whitmer signed into law a major overhaul to the Michigan no-fault system, completely transforming how auto insurance is written in Michigan. While many of the changes do not take effect until July 2020, some of the legislation became effective June 11, 2019. It’s critical you understand what these changes are and how they might already be affecting your auto insurance policy:

The most immediate change is that Personal Insurance Protection (PIP) now only extends to the named insured(s) on the policy, the named insured(s) spouse, and resident relatives. As of June 11, 2019, it no longer automatically extends to:

• Relatives who do not reside in the household of the named insured, unless they are away at school.
• Non-relatives who reside in the household, even if they are listed as drivers on the auto policy.
PIP coverage for drivers who are no longer covered automatically or who are uninsured will be provided by the Michigan Assigned Claims Plan and limited to a maximum of $250,000. Benefits are no longer unlimited.  

In addition, the no-fault reform legislation changed the order of priority under which PIP benefits can be pursued. The named insured, spouse and resident relatives will continue to pursue coverage under the named insured’s auto policy.

Previously, an injured person collected PIP benefits in this order:  
1. Insurer of the Named Insured;
2. Insurer of the Spouse or Resident-Relative;
3. Insurer of the Owner or Registrant of the accident-involved vehicle;
4. Insurer of the Driver of the accident-involved vehicle; otherwise,
5. Injured Person applies for benefits through the MACP (unlimited).

As of June 11, 2019, an injured person collects PIP benefits in the following order:
1. Insurer of the Named Insured;
2. Insurer of the Spouse or Resident-Relative;  
3. Injured Person applies for benefits through the MACP with a     
     maximum benefit limit of $250,000.

You will notice that the owner, registrant or driver of the involved vehicle are no longer options in the new order of priority. An example in which this would apply is if a child is still listed on a parent’s auto insurance policy after they are no longer in school and do not reside with the parents. In order to be eligible for unlimited PIP benefits, these drivers would need their own policy. The exception to this is a college student away at school, as those students can remain on their parent's policy until they move out.

Another example would be two unrelated, unmarried adults living in the same household. The only way for both to be eligible for unlimited PIP benefits from the same policy is if the second person is designated as a secondary named insured. Otherwise they would each need their own policy.

If you have questions about these changes, or would like to review your policy, please call your MDA Insurance Personal Lines Agent at 800-860-2272 or click here.