It used to be that when you signed up for auto insurance, Michigan’s default policy was a policy that offered unlimited Personal Insurance Protection (PIP) benefits. Today, you have a choice in the amount of coverage that you can purchase.
With an “unlimited” policy, if you are in an accident, no matter how serious your injury, no matter how great your need for medical care, and no matter how long it lasts afterwards, your insurance pays for treatment. A car accident might mean you can’t work, or need home care for the rest of your life. Or it might result in an expensive hospital stays. You might require temporary or permanent mobility aids. Even if you suffer a less serious injury, that can still periodically need treatment years later. All of this is by an unlimited policy and paid for by your insurer. They are on the hook for your treatment until you don’t need it anymore.
Under new laws, insurance companies can limit your care and their costs right from the beginning of your policy, long before you’ve suffered an injury. Instead of signing you up for an unlimited policy automatically, they can drive up prices on unlimited policies—and hope that you’ll choose a capped policy instead.
“Capped” policies have lower monthly premiums that seem to provide monthly savings—but have seriously reduced benefits.
You can still choose to have unlimited PIP benefits in Michigan. But you can also chose the following types of “capped” coverage:
- $500,000 per person per accident
- $250,000 per person per accident
- $250,000 per person per accident with exclusions: To select this option, one or both of the following must be true:
- a named insured person has qualified health coverage that is not Medicare;
- any resident relative or spouse who is excluding PIP medical has qualified health coverage
- $50,000 per person per accident with exclusions: To select this option, both of the following must be true:
- the applicant or named insured is enrolled in Medicaid and
- any spouse and all resident relatives have qualified health coverage, are enrolled in Medicaid, or are covered under another auto policy with PIP medical coverage
- No medical PIP coverage: To select this option, both of the following must be true:
- the applicant or named insured has coverage under both Medicare Parts A and B and
- any spouse and all resident relatives have qualified health coverage or are covered under another auto policy with PIP medical coverage
Capped policies sometimes don’t even offer much savings, but still entice you to choose policies that limit your recovery. If you’re never in an accident, maybe they save you a few bucks. But that makes every drive a gamble. Sometimes, because of increases and add-ons, they aren’t even a savings! They’re just less complete coverage.