Understanding Auto Insurance Liability Benefits: Legal Protection For Us Drivers

 Understanding Auto Insurance Liability Benefits: Legal Protection For Us Drivers - When was the last time you looked at your car insurance policy? Could you explain what each coverage point means?

If your answer is yes, it's been a while, or please don't ask me, you're in good company. Car insurance is one of the most complicated products you can buy.

Understanding Auto Insurance Liability Benefits: Legal Protection For Us Drivers

But it's more important than ever that you understand your coverage. Michigan's 2019 vehicle innocence law has created greater risks for drivers and passengers.

Liability Vs. Full Coverage Car Insurance: Which Is Better?

Image courtesy of the Michigan Department of Insurance and Financial Services. You can see PIP on your insurance form here. Click to enlarge.

Previously, all Michigan drivers had unlimited medical coverage on their policies to pay for medical care for themselves or a passenger after a car accident. This coverage is part of your personal injury protection (PIP) policy. The law now allows people to choose health insurance limits lower than unlimited. Most people can only choose $250,000. People on Medicaid can opt out of only $50,000, and people on Medicare can opt out of PIP altogether.

However, the experts we consulted unanimously advise people to stick with unlimited medical PIP in their policies. Wayne State University law professor Wayne Miller said the cost of hospital and post-hospital care in a serious accident can easily exceed $250,000, and in the worst case scenario, it can reach millions of dollars. Miller said the savings on policy insurance is an "ostrich approach to buying insurance." You know, "That would never happen to me." And of course, it's statistically very unlikely that you'll have a horrible, expensive, life-changing accident. There are millions of drivers in the state of Michigan and "only" thousands of people are injured like this. But you buy insurance to protect yourself against the worst. That's what it's for."

Michigan's old no-fault law required auto insurance companies to pay a reasonable rate for medically necessary care for car accident injuries, including the most catastrophic, lifelong injuries. The Auto No-Failure Act of 2019 sets a rate cap for this assistance. Brain and spinal cord injury rehabilitation centers and home care facilities can charge as little as 55% of what they used to charge for car accident victims. For the vast majority of these institutions, this amount is less than the cost of providing medical care. This is why so many people have either gone bankrupt or stopped seeing car accident patients.

What Determines Your Auto Insurance Rate

So, while our experts still encourage people to keep unlimited PIP, it's not the cover it used to be. In many cases, people who have suffered catastrophic injuries will no longer be able to receive professional care at home or extensive rehabilitation services at a specialized clinic.

Brandi Marsh is often the sole carer for her five-year-old daughter, who is paralyzed, because of the 2019 no-fault auto law. "Her life is in my hands," she says, fearing that exhaustion will cause her to make a life-threatening mistake.

The law also limits the number of hours family members can be paid to care for a seriously injured loved one at home. Families are limited to a total of 56 hours per week, and must contact an agency for the rest if their loved ones require 24-hour care. Many were unable to get help from the agency after the law changed.

Here's another "worst case" scenario that our experts say people should consider — especially those with significant assets — what happens if you don't have enough personal injury coverage? This is the part of your policy that pays for injuries you cause to someone else in an accident. Lansing personal injury attorney Steve Sinas said when everyone has unlimited health care, they usually don't need to sue the other driver to get the help they need. Now, if they're hurt by someone with significant assets, they're more likely to sue that person.

Services Insurance Car Formulas

"Let's say a child is playing outside and you go home and you're wealthy and you're looking at your cell phone because you got a text or something and you can't see that child and you're traumatizing that child, and she will need care for the rest of her life,” Sinas said. “And let's say their parents bought $50,000 in medical expenses because they're on Medicaid, or the $250,000 limit. This child will only be covered up to these limits. So now they have to reimburse their medical expenses. Because of that, we now have to insure ourselves more on the other side of the equation, which is with more liability insurance.”

Sinas said wealthy people should consider purchasing umbrella policies. An umbrella policy provides extra money, sometimes several million dollars, to cover medical expenses for someone you've injured, in addition to the coverage on your car insurance policy.

He also said that regardless of your economic situation, if you can, you should have uninsured/underinsured coverage. It's not required by law to have it, but it adds to the benefits you can claim if you're injured by someone driving without insurance or driving with a very low limit.

Short answer: on average, no. Four years after its no-fault law, Michigan is once again the most expensive state in the country to insure cars, according to consumer website ValuePenguin.

Reinsurance Definition, Types, And How It Works

Doug Heller, director of insurance for the Consumer Federation of America, said the law offers phantom savings by requiring insurance companies to lower the cost of personal injury coverage but not other parts of your policy.

"So those savings have been largely eaten up by shifting the PIP premium to other types of coverage," Heller said. “Insurance companies can increase other parts of your premium, and one place you see that is personal injury liability. So it's from a different pocket, but it's the same pants."

On July 1, 2023, your insurance company must add a $48 fee to the Michigan Catastrophic Loss Association's estimate of your policy. Even if your policy does not have unlimited lifetime health coverage that covers the MCCA, you will still have to pay this surcharge. You can learn more about this fee here.

Doug Heller said if Michigan lawmakers really want to lower auto insurance costs and make them fairer, they'll need to give the Department of Insurance and Financial Services the power to monitor insurance company profits, the same way the Michigan Public Service Commission monitors utility profits. enterprises. And he said the state would have to limit the ability of insurance companies to charge people more based on factors unrelated to driving, such as where they live or if they don't have excellent credit.

Car Liability Insurance Benefits

Instead of lowering your coverage limits, make a few calls to other insurance companies and see how much they would charge you for the same coverage you currently have, said Wayne State professor Wayne Miller.

"The number one suggestion I would make is to shop around," Miller said. "It's really an amazing difference between insurance companies for exactly the same coverage, for the same demographic."

It's also worth remembering that while you may feel loyal to your insurance company, your insurance company may not treat you the same way when it comes to setting rates.

Doug Heller said it's not uncommon for insurance companies to track your overall purchasing behavior through "loyalty" metrics and charge you more because you tend to use the same companies year after year instead of shopping around.

D&o Insurance Explained

Wayne Miller said the second best way to save money on auto insurance is to opt out of collision and comprehensive coverage if your car is more than five years old and you have a safe driving record.

"No matter how well you maintain your car, it's a depreciating asset," Miller said. "And the cost of insurance for him does not depreciate much. So if you really want to save money, consider getting older vehicles to cancel your collision and comprehensive.”

Finally, you can call your health insurance company and see if you can put your health insurance first in line to pay for accident expenses. Sometimes this can lower your car insurance costs a bit, but be sure to check with your health insurance company before making any changes to your car insurance policy.

For an explanation of other parts of your insurance policy, see your state's coverage guide here.

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Tracy Semilton covers energy and transportation, including the auto industry and the business response to climate change for Michigan Radio. She began her career at Michigan radio as an intern, where she was immediately "bitten by the radio bug" and never recovered. Third-party insurance is a policy purchased by the insured (the first party) from the insurance company (the second party). to protect against claims of another (third party). A typical example of third party insurance is car insurance, which is designed to protect you

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