With a little over a week to go before major changes to Michigan’s auto insurance law takes effect, Laurel Deruda still isn’t sure how it could impact her own coverage.
Like many Michigan drivers, the Comstock Park resident is currently puzzled over a new policy approved last year that will allow drivers to pick their level of personal injury protection (PIP) coverage starting next month and trigger mandated statewide average reductions in PIP costs.
Deruda’s current policy is set to renew in August, but she’s still waiting for word from her insurance provider about how the new law or any changes she makes to her policy could impact the price tag. And while she’s open to shopping around, she remains skeptical that the new law will do much to bring down Michigan’s highest-in-the-nation rates.
“I honestly don’t know what the changes are going to be and what my options will be, so that’s really where we’re at right now,” she said. “If there isn’t a measurable change, I don’t even know what the point of talking about this is...I’m very jaded about the whole situation.”
Big choices ahead, but mixed reactions
Come July, drivers can choose to keep their current level of PIP coverage, opt-out entirely or switch to a lower tier of coverage allowed under the new law.
People with health insurance that covers auto-related injuries and senior citizens with eligible Medicare plans will be allowed to fully opt-out of PIP coverage. Other drivers can choose to maintain unlimited PIP coverage or choose coverage plans capping out at $500,000, $250,000 or $50,000 for Medicaid recipients.
For the most part, what the majority of Michigan drivers will decide when they change or renew their policies after July 1 is unknown - although surveys conducted ahead of the law change suggest Deruda isn’t alone in not knowing what she might do.
A statewide survey of 1,005 Michigan drivers commissioned by the Michigan Health and Hospital Association found less than half of the respondents - 47 percent - were either very familiar or a little familiar with the law.
The statewide online survey, conducted by the market research firm Escalent last fall, found 51 percent of insured drivers surveyed would not fully opt out of PIP coverage given the choice to do so. Another 24 percent said they would fully opt out if given the choice, and 25 percent of respondents said they weren’t sure whether they would or not.
Asked what level of coverage they would choose, 43 percent of survey respondents said they would choose unlimited coverage, while 27 percent said they would opt out entirely.
A more recent online survey of 546 Michigan drivers commissioned by The Zebra, a national auto insurance comparison site, found 64 percent of respondents were aware the law was changing.
But only 20 percent of respondents said they planned to compare auto insurance rates or shop for a new policy when the law goes into effect on July 2, and 39 percent said they weren’t planning on shopping for new rates at all. Another 15 percent said they plan to compare rates before it’s time to renew their policy, and another 25 percent said they plan to do so once their policy comes up for renewal.
Many drivers may not know they can shop for new policies or rates even if they recently renewed, or might feel like they won’t be able to get a better rate even with the new law, said Nicole Beck, a licensed insurance agent and director of communications for The Zebra.
“Michiganders have been dealing with this for so long - obviously it was even dominating the election cycle, which is not something you see (in other states),” Beck said. “The proof will be in the pudding once people see those differences and hopefully get some relief.”
Related: Why it’s hard to predict individual savings under Michigan’s new auto insurance law
Savings not a guarantee
Complicating matters further for drivers? While the law requires statewide average rate reductions on the PIP portion of auto insurance premiums for the next eight years, individual savings are not guaranteed.
A big chunk of any rate savings a driver would see is predicated on their choices - including the level of PIP coverage they pick and whether they decide to purchase additional bodily injury coverage - as well as other factors like their driving record, credit history or the territory they live in.
Insurers in Michigan are now banned from using a number of other non-driving factors when determining rates, such as age, gender, marital status, zip code and credit score, which could also impact how costs are distributed.
The factors that go into setting rates make it difficult to predict how much of a difference an individual policyholder will see on their next bill, said Anita Fox, director of Michigan’s Department of Insurance and Financial Services.
“Auto insurance is very personal,” Fox said in a recent interview with MLive. “It’s super hard to say what an individual is going to save.”
Related: Michiganders to see $120 reduction in auto insurance fee next year
Unlimited PIP: Keep it, or leave it?
Lake Orion resident Patrick McEvilly Jr. counts himself lucky that he doesn’t have to choose between paying his auto insurance and other bills.
Although he’s recently retired and could technically rely on Medicare for coverage under the new law, he plans on keeping unlimited no-fault coverage, as he’s seen the benefits of having reliable care in the event of an accident.
McEvilly said his sister sustained a closed head injury during a dune buggy accident in the 1960s. After coming out of a coma, she required months of rehabilitation, he said, noting that having the ongoing costs of her care covered significantly helped his family.
“The way I look at it, the risk is greater than the cost” of keeping unlimited no-fault coverage, he said. “It’s just prudent and responsible.”
Mattawan resident Michael Betz is looking to find savings where he can. He said his insurance agency recommended he stay on unlimited coverage, but informed him he could be saving $400 a year if he switched to the $500,000 PIP coverage level.
Betz is still working to figure out whether his health insurance would make up the difference in the event of a catastrophic accident. He’s hoping to avoid a scenario where he’s buying more medical insurance than he needs out of fear.
“It’s kind of unnecessarily complicated, and I think the reason for that is that we then end up over-insuring ourselves unnecessarily,” he said.
Getting the word out
As the new law’s July 2 effective date approaches, many public officials, industry experts and interest groups are working to get the word out there for drivers who are still undecided or unaware of what’s coming.
The Michigan Health and Hospital Association last week launched a “Drive Protected” website and digital ad campaign encouraging drivers to get informed and buy as much coverage as they can afford in the event of an auto injury.
And Detroit Mayor Mike Duggan hosted a virtual press conference walking through drivers’ new options under the law in detail, chiding insurance agencies for not doing more to educate drivers before now. He said drivers have to empower themselves to learn about the changes if they want to save money.
“If you do nothing, you get the same policy and the same bill,” he said. “You have to act for yourself or it won’t change.”
In a statement responding to Duggan’s remarks, Insurance Alliance of Michigan Executive Director Erin McDonough said the alliance - which represents insurance companies throughout the state - agrees that more needs to be done to educate the public, and committed to helping customers find the best plans for them.
“We encourage Michiganders to reach out to their insurance company or independent agent to see what options are available under the new law so they can pick a plan that works for their budget,” she said.
The state’s DIFS website has an auto insurance hotline and email for drivers with questions or concerns - 833-275-3437 and AutoInsurance@michigan.gov, respectively - and is hosting a number of virtual town halls with lawmakers and other officials to answer questions.
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Will Michigan drivers change their policies once new auto insurance law takes effect? Many still don’t know - MLive.com
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