In Michigan, car owners must purchase no-fault auto insurance to drive legally in the state. Under the no-fault system, individuals involved in a motor vehicle accident seek monetary recovery from their own insurance company, regardless of which driver may have caused the collision. 

In the past, Michigan drivers needed to purchase a policy with unlimited Personal Injury Protection. However, a new state law that went into effect on July 1, 2020, allows individuals buying or renewing a policy to choose a lower limit on PIP coverage. 

1. What is PIP?

Personal Injury Protection is the part of an auto insurance policy that pays for approved medical expenses that are necessary for recovery as well as lost wages and other benefits. 

2. What are the new PIP coverage caps?

For policies issued on or before July 1, 2020, PIP provided unlimited payments for medical costs and a portion of lost income for up to three years. 

For plans issued or renewed after July 1, 2020, drivers may choose between different levels of coverage: 

  • Unlimited coverage with no cap on medical expenses 
  • A cap of $500,000 per accident, per person 
  • A cap of $250,000 per accident, per person 
  • A cap of $50,000 per accident, per person if the insured has Medicaid 

Drivers with Medicare may also be able to opt out of PIP coverage entirely. 

3. What if medical expenses exceed coverage caps?

While these new coverage options may offer lower premiums, when an auto injury is severe, a cap on medical costs could prevent individuals from receiving the care needed to fully recover. 

Even under Michigan’s no-fault system, individuals whose medical expenses exceed their PIP coverage may be able to receive compensation from another driver if that driver caused serious bodily injury, disfigurement or death.