People often ask me “how much car insurance do I need?”
Never has this question been more important than now. Michigan drivers now face the biggest changes in auto No-Fault insurance since the No-Fault Act was enacted in 1973.
For example, with the new monetary caps on first party No-Fault insurance, a person who causes a serious car crash will now be responsible for all the medical bills over and above the PIP cap level that the injured person has at the time of a car accident.
These changes are coming fast. Starting July 1, 2020, drivers will be faced with:
Today, I will share my auto insurance coverage recommendations for how much car insurance you need to purchase to protect you, your family and your family’s assets.
Of all the choices that Michigan drivers must make when deciding how much car insurance they need to purchase, this is the most important.
That is why I am talking about it first.
MY AUTO INSURANCE COVERAGE RECOMMENDATION IS THIS: Michigan drivers should still purchase unlimited auto insurance coverage for No-Fault PIP medical benefits.
As an auto accident attorney, this is the most important auto insurance coverage recommendation for you and your family that I am making. Unlimited No-Fault insurance provides you the best medical protection if you or a loved one is seriously in a car accident. Here’s why:
Even though other coverage levels will be available to drivers in policies issued or renewed after July 1, 2020, drivers should resist the temptation to save a few extra dollars by choosing a lower PIP option.
The potential savings that a driver may experience by opting for limited No-Fault medical benefits will be extremely disappointing (if not downright devastating) when compared to what he or she will be losing in terms of protection after a serious car accident by forfeiting his or her unlimited No-Fault PIP medical benefits.
Additionally, if you select a No-Fault PIP deductible, make sure that it does not exceed $500.
No. Our recommendation is to have Michigan drivers decline the managed care option for their No-Fault insurance policies.
Managed care means that if you are injured in a car accident, you will not be able to choose your own doctor. You will have to go to doctors hired by your insurance company. Additionally, you will have to have your insurance company’s permission for treatment, procedures, services and surgeries you may desperately need.
To best understand No-Fault’s managed care option, think the bureaucratic red tape you have to fight through with your HMO. Now multiply that by the fact that many of these doctors that will be selected to oversee your managed care are the same “company doctors” that insurance company adjusters routinely use to cut people off and deny them benefits after car accidents.
The managed care option is an all-around loser for people.
Our recommendation is that Michigan driver’s purchase liability car insurance with limits of at least $500,000 per person and $1 million per accident to protect them and their family.
As I wrote above, your own financial assets are now seriously at risk if you cause a car accident that seriously injures or kills someone.
Fortunately, liability insurance is very inexpensive. Paying the extra difference here to fully protect you and your assets is well worth it.
For people who aren’t insurance agents or car accident lawyers, this is really another way of asking how much liability insurance is needed. Insurance companies list the insurance that you buy to protect yourself if you cause a car accident on your declaration sheet as either bodily injury insurance or liability insurance.
Again, our recommendation is that Michigan driver’s purchase bodily injury insurance (which is also referred to as liability insurance) with limits of $500,000 per person and $1 million per accident.
Our recommendation is to have Michigan drivers purchase property damage liability insurance (which covers “injury to or destruction of property of others” resulting from an at-fault, out-of-state car accident) with a minimum limit of $100,000.
Our recommendation is that Michigan driver’s purchase mini tort (which is also known as Limited Property Damage insurance ) with a limit of $1,000 before July 1, 2020.
And we recommend that drivers purchase mini tort with a limit of $3,000 after July 1, 2020, because after that date the maximum recovery amount under the mini tort law will increase from $1,000 to $3,000.
Because of the rampant, ever-growing problem of uninsured drivers in Michigan (in Detroit, it’s estimated that the uninsured driver rate is now over 50%), our recommendation is that drivers purchase uninsured motorist insurance with limits of at least $500,000 per person and $1,000,000 per accident.
This will protect your family and yourself in case of a car accident caused by a driver who has no insurance.
If you don’t have this, and the person who hits you is driving without insurance, understand that no matter how serious your injuries are you will receive nothing for your injuries and pain and suffering and excess medical bills after a car accident.
The good news is that this insurance is again, incredibly cheap. I often tell people that for the price of a movie and popcorn, you can buy up to $500,000 in uninsured and underinsured motorist insurance to protect you and your family.
Our recommendation is that Michigan drivers purchase underinsured motorist coverage with limits of at least $500,000 per person and $1,000,000 per accident.
This will protect your family and yourself in case of a car accident caused by a driver whose liability insurance limits are inadequate to fully compensate his or her victims for their injuries.
With the new cap levels, if you hit someone who has the lowest amount of mandatory liability insurance of $50,000 in Michigan, and you have selected a lower PIP cap amount, you need to understand just how quickly tens or hundreds of thousands of dollars in medical bills can mount up with no insurance available to pay for it. That leaves Michigan drivers dangerously exposed.
The good news here is that, as with uninsured motorist insurance, underinsurance is also very cheap and you can buy a lot of underinsurance to protect your family and yourself for relatively little extra cost.
Our recommendation is that drivers purchase either broad-form or standard collision insurance with at most a maximum deductible of $1,000.
Our recommendation is that drivers purchase comprehensive coverage, which covers theft and fire and glass damage unrelated to a car accident, with a maximum deductible of $1,000.
Our recommendation is that Michigan driver’s purchase the following full coverage No-Fault auto insurance coverages:
Drivers who purchase the minimum car insurance required under Michigan law are buying what is called PLPD insurance – or “Personal Liability and Property Damage” insurance.
PLPD auto insurance coverage consists of: