Get Ready To Reaffirm Your Auto Insurance Coverage Preference Twice A Year

Customers who choose a lower level of personal injury protection (PIP) coverage in their auto insurance will have to sign a form confirming their choice every time they renew under the new auto insurance law that goes into effect next July.

And that’s going to cause “utter confusion” for some customers, says Bev Barney, CEO of the Michigan Association of Insurance Agents.

“What the new law says is that you must sign that on every renewal. And if you don’t, it will pop back to unlimited coverage,” Barney said.

And then those consumers who also use autopay electronic fund transfers (EFTs) from their checking accounts or credit cards, their accounts will be billed at the new rate for unlimited PIP coverage.

The change runs counterintuitive to what customers are used to. Unless they want to change their coverage at renewal time, there’s no change — whether it’s homeowners insurance, life insurance or anything else.

“It’s completely the opposite in the new law,” Barney said. “You have to sign on every renewal that you want to keep whatever that is. If you chose a different level than unlimited, you have to sign every single time to confirm that.”

Since policies typically renew every six months, consumers will have to sign twice a year to keep their lower level of PIP.

That’s likely to produce “sheer misunderstanding” from the consumers.

“I am just going to assume, as a consumer, that I already filled that out. Why are you bugging me to do that again? Did you lose my form? Why do I have to do this again? Trying to get that back from consumers is challenging at best,” Barney said.

She and the independent agents who are members of the Michigan Association of Insurance Agents (MAIA) are hoping lawmakers will be willing to amend the bill to eliminate that need for signing the form over and over, or at least reduce the frequency to once a year.

Another likely source of confusion will be about rate rollbacks. When Michigan’s no-fault auto insurance law was reformed in May, lawmakers mandated PIP rollbacks connected to the level of coverage. Drivers with the unlimited lifetime coverage are mandated to see 10% savings on their PIP costs. The insured selecting the $500,000 coverage option will see 20% savings, $250,000 35% and $50,000 45%.

“There is a lot of misinformation in the media and, honestly, from the lawmakers. I’ll get something in the mail from a lawmaker that says ‘Look, your premium is going to be up to 50% less.’ It’s really not, and the media doesn’t know any different either. It is hard to read the code in the new law to get a good understanding.”

The rollbacks are only one line of the premium coverage.

“It is strictly on the PIP coverage, which is the medical coverage. And that is not your entire premium. Anything related to your vehicle itself, collision coverage . . . there is no automatic savings or rollback on that,” Barney said. “I think consumers are sitting out there thinking, ‘Wow, my insurance rates are going to go down by half’ and that’s not the reality that most are going to experience.”

MAIA Director of Government Affairs Matt Wesolek agrees.

“It is not always being clearly stated that is off the PIP piece of the premium. I just think we could have some disappointment from the consumer next year on what those rates are. Expectations may not meet reality next year, but we’ll see. Time will tell,” Wesolek said.

Barney pointed out that the no-fault law was put in place 40 years ago to keep drivers out of court and to stabilize the insurance market. That rates have risen so high shows something has gone wrong with the system and, she said, the effort to fix that in May by the Legislature was the first attempt to address it.