No Fault in a Nutshell, Part II
Happy Fall! It's been awhile since my prior post due to an extremely busy summer here in Leelanau, even with Covid-19 going on! My prior post covered the first portion of the changes on the new no fault law, the PIP changes. However, other components of your policy were also affected by the new law. So let's dive in!
The first change I'll discuss is the increase in the Mini Tort liability limit. The State has increased this from $1,000 to $3,000. What exactly does that mean to you? Well let's say you caused an accident with another vehicle and that guy didn't carry any collision coverage. Or, maybe he had collision but had a large deductible to pay out. Since he was not at fault, he can go back on you to pay up to $3,000 of his damages. The Mini Tort liability on your policy will pay that claim for you. The other party will have to provide a police report showing you were at fault, an estimate of his damages and a copy of his own insurance, showing he complied with the no fault law but did not have collision (or had a large deductible.) Yes, it's true that each person is responsible for their own car damage in Michigan, but this type of situation is the one exception and it only allows up to $3,000 in coverage. (This does not apply if you had hit a parked car, that is another coverage.)
The second change is to your Bodily Injury liability. The State of Michigan used to allow a minimum of $20,000/$40,000 for bodily injury liability. This has now been changed to $50,000/$100,000 limits. Why the increase? Because the new law has opened up a window for more lawsuits. Here's an example: Say you caused an accident that resulted in an injury to the other party. That guy had passed on the unlimited PIP medical and elected to go with minimal PIP coverage to save money. But now, his medical bills are rolling in and his auto insurance and health insurance aren't paying all the bills due to various policy deductibles and limitations...well he can sue YOU for the difference. Yes, he can sue you for a percentage of his medical if you were at fault.
Finally, we now have a Default limit on Bodily Injury liability. If you fail to complete and return your renewal paperwork to the insurance company, the State has set the Default limits at $250,000/$500,000. What does that mean? Say you currently carry $100,000/$300,000 liability limits on your auto policy. Then your renewal comes in the mail and you put it in a stack and forget about it. Your auto policy will automatically renew with $250,000/$500,000 limits on bodily injury and Unlimited PIP. This is not your agent messing with your coverage or your company playing tricks, it's the new State Law default limits.
So what should you do? Read over the documents sent to you by the insurer, call your agent with any questions, choose wisely and return your forms. Here at Devette & Ford Insurance, we suggest you carry as much liability as you can afford, preferably $500,000/$500,000 limits, but no less than the State default of $250,000/$500,000. We also suggest you carry Unlimited PIP, as this provides the broadest medical coverage available in the event of an auto accident injury. If you do elect lower PIP limits, or opt out, be aware of what you are potentially giving up for yourself and your family. And lastly, we recommend you purchase an umbrella liability policy, to cover over your auto and home and protect your assets.
We live in a litigious society and with the new no fault law, more lawsuits will be the norm. Let your insurance provide the protection you need!
Well, I am, still yet, as always....