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Frequently Asked Questions about Michigan’s Auto Reform Law


Michigan’s new auto reform law is now in effect.

Understanding the new changes can be confusing, but don’t worry.

An independent insurance agent is your best option for handling auto reform. That’s why you can trust us with your auto reform needs.

We’ll work with you to help ensure you get the coverage you need.

Courtesy of our partners at Hanover Insurance Group, here are some frequently asked questions regarding the new auto reform and answers to those questions:

What Is Personal Injury Protection (PIP) Coverage?

Personal Injury Protection is coverage for injuries you and other passengers in your vehicle sustained due to a car accident.

This coverage covers medical bills and lost wages for you and your passengers from injuries sustained in the accident. The cost of PIP coverage varies based on the coverage limit you selected when you started your policy. 99% of all PIP claims are covered with a $500,000 limit.

What Is Bodily Injury (BI) Coverage?

Bodily Injury Coverage is a liability coverage that helps pay for the injuries a driver and/or passenger received in an accident in which you were at fault. Just so you know, your BI coverage limit must meet the new state required minimum of $50,000 per person and $100,000 per accident.

What Is the New Michigan Auto Insurance Law?

Governor Gretchen Whitmer signed Senate Bill 1 into law to help lower the cost of auto insurance for Michigan drivers.

This new auto reform law now allows you to pick your coverage limits for your PIP and your BI portions of your policy.

Before the new law, the PIP coverage limit had to be unlimited. Now, you can completely opt out of PIP coverage or choose a different coverage limit if you wanted to.

According to, “The new auto insurance law will allow you to choose a level of PIP medical coverage. Insurance companies are required to reduce the premium for this coverage so that there will be an average reduction per vehicle based on the level of coverage chosen.”

For BI coverage, the minimum limits will increase from $20,000 per person/$40,000 per accident to $50,000 per person/$100,000 per accident, with a default minimum of $250,000 per person/$500,000 per accident.

Will My Auto Insurance Rates Change with Michigan’s No-fault Reform?

Your savings and rate will depend on the coverage limits and options that you choose.

However, per Senate Bill 1, “An insurer shall not establish or maintain rates or rating classifications for automobile insurance based on any of the following: sex, marital status, home ownership, education level attained, occupation, the postal zone in which the insured resides and credit score.”

Senate Bill 1 is aimed towards reducing PIP premium costs based on the coverage you select, starting at a 10 % savings.

Also, policies with unlimited PIP coverage will see a 55 % reduction in Michigan Catastrophic Claims Association (MCCA) fees, from $220 to $100 per vehicle. You will only be charged this fee if you choose to keep your unlimited PIP coverage.

If you choose to lower your PIP limits, you may avoid the fee altogether.

Senate Bill 1 also requires insurance carriers to increase bodily injury minimum limits from $20,000 per person/$40,000 per accident to $50,000 per person/$100,000 per accident.

BI coverage will default to $250,000 per person/$500,000 per accident under the new law. However, you can choose lower coverage limits by completing a selection form.

Still Have Questions?

If you’re still unsure about how the new auto reform law will affect your policy and rate, please reach out to us and we’ll be glad to help even if we aren’t your insurance agent.

To check out additional resources regarding the new auto reform, check out the links below.,9555,7-405-96601—,00.html

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Headquartered in Rochester Hills, Mich., Allied Insurance Managers is one of the largest, privately-owned, independent insurance agencies in Michigan.