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What Is Auto Liability Insurance? | Michigan Auto Insurance

posted Feb 6, 2019, 1:25 PM by Jason Grubbs   [ updated Feb 6, 2019, 1:26 PM ]

Liability - Michigan Auto Insurance
Within a Michigan personal auto insurance policy there may be up to five separate coverage items that comprise liability insurance, consisting of:
  • Bodily Injury Liability
  • Property Damage Liability
  • Property Protection Insurance (PPI)
  • Uninsured Motorist Liability
  • Underinsured Motorist Liability
That just sounds confusing right out of the gate - so, let's first address liability insurance as a concept then review each liability related coverage you may find within your auto policy.

The term liable simply means you are responsible by law for something.  In the course of owning and/or operating an automobile you could become legally responsible - liable - if someone else suffers injuries or damages to their property as the result of an auto accident.  Liability insurance is the portion of your auto policy designed to pay for financial damages resulting from you being found liable for injuries or property damage.

Within most Michigan auto insurance policies there is separate coverage for injuring someone (Bodily Injury Liability) and for damaging someone else's property (Property Damage Liability). Some insurance companies will combine bodily injury and property damage as one combined liability coverage (Combined Single Limit or CSL).

Property Protection Insurance (PPI) is also coverage that responds for property damage liability - it is a separate coverage mandated by the State of Michigan, provides $1,000,000 of coverage, and is specifically for property damage that occurs within the state. If, as a result of an auto accident, you are liable for property damages and the accident occurred in Michigan PPI coverage responds whereas if the accident occurred outside of Michigan then Property Damage Liability coverage would respond.

Uninsured and Underinsured Motorist Liability coverage flip the concept of liability insurance.  Each coverage, rather than paying damages for which you are found liable, would compensate you if another person is determine to be legally responsible for injuries you suffer in an auto accident.  Uninsured Motorist Liability would pay if the legally responsible party doesn't have any auto insurance.  Underinsured Motorist Liability would pay if the liable party doesn't have sufficient insurance to pay the entirety of damages for which they are determined to be legally responsible.

The amount of liability insurance you purchase is called the limit of liability.  The limit being the maximum dollar amount your insurance company would pay on your behalf if you were liable for injuries or property damage.

The limit of liability coverage provided by your Michigan auto insurance policy will be identified on the declarations (dec) page, which is simply a summary of your policy identifying the individuals and vehicles insured, the time period of coverage, and specific coverage and premium details for each insured vehicle.

The limit(s) of liability coverage are either expressed as single or split limits:
  • Single limit coverage is easy enough to understand - if your coverage limit is $300,000 then that is the maximum amount your policy would pay for that specific liability coverage.
  • Split limit coverage is somewhat confusing at it specifies two different limits - the first dollar amount being the maximum liability coverage your policy would provide for any one individual being injured while the second amount is the maximum liability coverage the policy would provide for any one accident.
If your Bodily Injury Liability coverage has a split limit of $100,000/$300,000 (100/300) then $100,000 would be the limit of liability coverage for each individual injured while $300,000 would be the overall limit of liability coverage for an accident (regardless how many people may be injured).

What if you don't have enough liability insurance?

This is an important, and frequently overlooked, consideration when purchasing auto insurance.

Michigan is a no-fault state, which means - in most instances - individuals turn to their own insurance for damages resulting from an auto accident, including medical bills and lost wages.  Under no-fault insurance liability claims are less common, however, there are still instances when an individual may be legally responsible (liable) for property damage or injuries - notably when there is serious injury, death, or dismemberment.

Imagine you are driving, glance down at a text on your phone, and happen to miss a traffic light and t-bone another vehicle.
  • What if the driver and/or passenger(s) in the other vehicle are seriously injured to the extent they may need multiple surgeries, extensive physical therapy and even then may suffer debilitating effects from the accident for a long time?
  • How much money would adequately compensate them for their pain, suffering, and diminished quality of life?
If the answer turned out to be $500,000 and you only purchased $100,000 of Bodily Injury Liability coverage you would be responsible for the difference.  Paying $400,000 of a judgement could severely impact your financial situation for a long time - a good reason to purchase as much liability coverage as you can reasonably afford!  You may be surprised to find, in most instances, you can significantly increase the liability coverage within your auto insurance policy for a modest additional cost.

What happens when my term life insurance policy expires? | Michigan Life Insurance

posted Jan 16, 2019, 1:05 PM by Jason Grubbs   [ updated Jan 16, 2019, 1:08 PM ]

Term Life Insurance - Michigan

Term life insurance is the lowest cost type of life insurance policy you can purchase - making it an ideal policy for families needing financial protection during their working years.

Since most people prefer to plan their budget around a fixed expense, rather than having the cost for life insurance increase each year as they age, insurance companies offer term policies.  The "term" is simply the time period during which the rate - how much you pay for life insurance - remains the same each year.  Typically you can purchase a term option of 10, 15, 20, or even 30 years - providing the opportunity to lock in your coverage and cost for extended lengths of time.

When you initially purchase a term life insurance policy you decide the term - length of time - you want the rate to remain level based both on how long you expect to need coverage and your budget.  The longer the term, or period of time the rate remains level, will affect how much your term life insurance policy costs.  A term life insurance policy locking in your coverage and cost for 20 years would initially be more expensive than a policy locking in your coverage and cost for only 10 years, but is also likely to be a better value over time if you would need coverage for 20 years.

What is commonly referred to as the expiration of a term life insurance policy is really the end of the time period during which the rate for the policy doesn't change.  Most term policies don't literally "expire" - term policies typically will continue up to age 95 - however, once the term you selected to lock in the rate ends the cost to continue your policy will increase, usually significantly, and continue increasing with each passing year.

Does that mean you're simply stuck paying the higher - and ever increasing - cost to continue an expiring term life insurance policy?  By no means; in fact, you are almost always best served to simply replace an expiring term life insurance policy.

Replacing a term life insurance policy

When you initially purchase a term life insurance policy you go through an underwriting process.  That process involves submitting an application stating how much coverage you intend to purchase along with furnishing details about you.  The insurance company may review your health, medical history, medications, family history, and activities to evaluate their risk insuring you and determine the rate at which they're willing to provide coverage.

Once a life insurance policy is approved and issued the insurance company doesn't have a right to require you to repeat the underwriting process - the insurance company is not permitted to later check whether your health has changed and cannot adjust your rate based on anything specifically related to your individual health or risk of dying.  Due to this when the initial term (length of time the rate remains level) expires, while you have the right to continue a term life insurance policy insurance companies price that option assuming you may no longer be in good health.

If you still need life insurance when the term you selected to lock in your coverage and rate ends insurance companies prefer to have an opportunity to once again complete the underwriting process.  This enables the insurance company to evaluate your current health and the rate at which they're now willing to provide coverage.  As long as you're in relatively good health it's likely to your advantage to apply for a new policy and complete the underwriting process - whether with the same insurance company or another insurance company.

Converting a term life insurance policy

Almost every term life insurance policy now sold includes a conversion privilege, which is simply the right to exchange a term life insurance policy for a permanent life insurance policy offered by the same insurance company.

Permanent life insurance policies - commonly Whole Life or Universal Life - are a more expensive type of life insurance policy usually designed to provide coverage for the entire duration of a person's life.

Converting a term life insurance policy may be advantageous as there aren't any medical or underwriting requirements.  A conversion privilege automatically entitles you to convert to a permanent policy with coverage up to the amount of coverage on the current policy.

Keep in mind permanent life insurance policies are a more expensive type of life insurance.  While a conversion privilege would allow you to skip the underwriting process of applying for a replacement policy converting to a permanent policy isn't likely to be the most cost effective option to continue coverage and may not be the type of life insurance policy best suited to your needs.

There may be limitations on how long you are eligible to convert a term life insurance policy - typically within a specified number of years or by a specified age.

Renewing a term life insurance policy

In most circumstances, you can also simply continue or "renew" an expiring term life insurance policy.  As mentioned, the rate for continuing a term life insurance policy is likely to be significantly higher than purchasing a replacement policy.  However, if you have a health issue that prevents you from obtaining a favorably priced replacement policy renewing may be your best option - particularly if your need for continuing coverage would be limited in duration.

What should you do when your term life policy is expiring?
Life Insurance Calculations - Michigan

It's advisable to review an expiring term life insurance policy and take action well before the term ends - ideally 3 to 6 months beforehand.  This will provide time to research options, make an informed decision, and - if you decided to purchase a replacement policy - get approved and have the replacement policy in place before higher rates to continue your expiring term policy take effect.

The first step is to get in touch with your insurance agent.  Let your agent know you are interested in options to continue coverage when your term life insurance policy expires.  You will help your agent in that process by having clear ideas of how much life insurance coverage you still need, the length of time you want to extend coverage, and how much you can afford to budget.

How do accidents affect Michigan car insurance rates? | Michigan Auto Insurance

posted Jan 8, 2019, 1:11 PM by Jason Grubbs   [ updated Jan 8, 2019, 1:12 PM ]

Have you ever heard the saying "Past performance is no guarantee of future results"?
It's a phrase commonly used in the investment world intended to caution investors that the past performance results of a particular investment aren't necessarily indicative of how that investment will perform in the future.

When it comes to auto insurance the opposite is generally true as insurance companies consider past performance to be a likely indicator of future results.  What this means is auto insurance companies consider your driving history, including any tickets and accidents, as key factors in assessing the likelihood of future claims.  In most instances insurance companies look at all accidents - regardless of fault - and those accidents can affect how much you pay for your Michigan auto insurance.

Michigan Auto Accident

Most people understand and accept at-fault accidents are going to affect how much they pay for car insurance.  Typically, insurance companies apply a surcharge (an increase in base rates) for at-fault accidents for 3 years, beginning at the first renewal following an accident.

The amount of surcharge for an at-fault accident is going to vary between insurance companies.  In some instances, the severity of an accident (amount paid in damages) may also be a factor in determining the extent to which an accident will affect your rates.

Is it time to review or update your life insurance? | Michigan Life Insurance

posted Jan 2, 2019, 12:13 PM by Jason Grubbs   [ updated Jan 2, 2019, 12:15 PM ]

Michigan Life Insurance

If you have put off reviewing and updating your life insurance now is an opportune time to address this important financial protection for your loved ones.  Our premier life insurance company, Illinois Mutual, recently updated their term life insurance products.

Term life is the lowest cost type of life insurance and offers options to lock in your death protection and premium for specific periods of time.  Within their updated portfolio of term products Illinois Mutual now offers 10, 15, 20, 25 and 30 year term policies as well as policies To Age 65 or To Age 70 - ideal for policies intended to protect household income during your working years.

Illinois Mutual term life insurance policies offer several advantages, including:
  • Competitive premiums
  • Available for ages 18 - 75
  • Coverage less than $250,000 is non-medical for ages 18 - 65*
  • Six different rating classes
  • Guaranteed level premiums
  • Numerous term options to meet your needs and budget
  • Convertible - offering generous provisions to upgrade to a permanent policy
Best of all, we offer convenience - you can obtain a quote and compare policy options instantly online by clicking the Get A Quote icon.  If a proposal appeals to you an application may be completed through email and you can wait until your policy is approved and pricing confirmed before you commit to a purchase decision.

Please don't hesitate to get in touch with us at 616-454-5677 if you have any questions or if we may be of service for your life insurance protection.

Get A Quote - Life Insurance

What if my car is totaled? | Michigan Auto Insurance

posted Dec 18, 2018, 1:08 PM by Jason Grubbs   [ updated Dec 18, 2018, 1:29 PM ]

Totaled Car - Michigan Auto Insurance
When is a car totaled?

The point of determining when a car is a total loss is going to vary between insurance companies.  Generally, you can expect if the damages to your vehicle add up to more than 70% of your cars value it's likely your insurance company will consider it a total loss.

The reason for this is long experience has taught insurance companies when there is significant damage to a vehicle there is often unseen damage - additional damages that aren't discovered until a body shop begins to dismantle and repair the vehicle.  Rather than run a risk of starting repairs and winding up paying more than a car was worth in repair costs the insurance company will cap their potential expense by declaring the car a total loss and paying the value of the vehicle.

If you accept a settlement offer for your totaled car you should expect your insurance company will take possession of the vehicle.  Insurance companies customarily have arrangements with salvage yards and are able to sell a totaled automobile to recoup a portion of their claim costs.

What is my totaled car worth?

While replacement coverage is an option some insurance companies offer for newer cars, in most instances you can expect your insurance would settle a total loss based on a fair market value for your vehicle.  Fair market value is an approximation based on what it would cost to purchase a similar year, make, model, condition, and mileage vehicle.

The method by which fair market value of a totaled car is determined will vary between insurance companies.  With the wealth of information readily available online many insurance companies utilize websites like AutoTrader to find current listings for comparable vehicles to determine value.

Throughout my career values for totaled vehicles have consistently proven to be a point of contention - arising from the reality that most people placing a premium on their own car.  This is understandable - you know the history of your own car whereas, even if a loss settlement is enough to buy a comparable car, you can't be completely sure of the maintenance history and reliability of a similar vehicle.

Realistically there isn't a way to factor how diligently you may have worked to maintain your vehicle into a total loss valuation.  That being said, if you believe your insurance company is low in their valuation the best counsel I can offer is to provide documentation to substantiate why the value should be higher.  Do a little research of your own online finding any comparable vehicles listing at a higher price; provide records for any recent service that may be relevant - such as if you put new tires on your car within the past month.

Perhaps the best advice is to be courteous and articulate when conveying your reasons for suggesting a higher value for your totaled vehicle.  While the old saying is the squeaky wheel gets the grease it's been my experience nothing can more quickly harden an adjuster's position than when a claimant being gruff and unpleasant.  It's perfectly reasonable to question a settlement, especially if you can provide sound reasoning for an adjuster to reconsider and justify a change in value, but you're best served to do so in a respectful manner.

What if I owe more than my car is worth?

This can be a very valid concern these days: With car loan terms stretching as long as 7 years there is an increased likelihood a borrower could be upside down - with their loan balance exceeding the value of their car.

The way to deal with this potential concern is to address it in advance by purchasing loan or lease gap coverage.  This is an optional insurance upgrade typically available when purchasing or leasing a new car that broadens coverage on the vehicle, in the event of a total loss, guaranteeing the insurance will pay any difference between the value of the vehicle and the balance of any loan or lease.

What if I want to keep my totaled car?

I always caution clients to give careful consideration to any decision to keep a totaled vehicle - focusing on considering the mechanical integrity of the car.  If damages to your car were mostly cosmetic this may not be a concern, but if your vehicle was badly damaged you should be certain the car will be mechanically safe and reliable to continue to operate.

You should also be aware, if you keep a totaled car, your insurance company is likely to remove physical damage coverage (comprehensive and collision) from that vehicle.  While this seems like an obvious course of action I'm routinely surprised how many people object when the insurance company removes full coverage from a totaled vehicle - although, it does raise an interesting, related question:

What if I repair my totaled car?

Over the years I've worked with several clients who chose to keep and repair a totaled vehicle - even when the insurance company thought the car wasn't worth repairing.

Once a totaled car is repaired your insurance company may be willing to once again insure the car for physical damage.  The insurance company will likely require documentation repairs have been completed - typically in the form of a receipt and/or photos of the repaired automobile.

Related article:

Does retiring affect my car insurance? | Michigan Auto Insurance

posted Oct 2, 2018, 11:56 AM by Jason Grubbs   [ updated Oct 2, 2018, 12:26 PM ]

Retirement - Michigan Auto Insurance
If you've reached the milestone of retiring from the daily grind - congratulations!  There are a few items you should review and update on your Michigan auto insurance policy - changes likely to reduce your overall insurance costs.

Check the use of your vehicle

With most insurance companies the use of your vehicle is a factor in determining how much you pay for auto insurance.  Vehicles are customarily rated as pleasure use, commuting to-and-from work, or business use.  Pleasure use is typically the lowest cost rating classification, so check with your agent to make sure the use of your vehicle is updated to reflect your retirement.

Check your annual mileage

Just as the daily use of your vehicle affects insurance rates how many miles a year you put on a car can also impact how much you pay for auto insurance.  Many insurance companies offer low mileage discounts, so be sure to ask about availability and qualifications.

Check your Personal Injury Protection (PIP) coverage

Every Michigan auto insurance policy includes Personal Injury Protection (PIP) coverage comprised of two parts: Medical Coverage and Work Loss Benefits/Replacement Services, both of which provide benefits for individuals injured in an auto-related accident.

The medical portion of PIP coverage pays medical bills resulting from an auto accident and is either rated as primary coverage, meaning the auto policy pays for all auto-related medical bills, or secondary/excess, in which case the auto policy only responds after a separate health insurance policy that covers auto-related accidents.  If your retirement resulted in a change to your health insurance, such as switching from employer-provided medical insurance to Medicare, you should advise your agent of the change and may need to upgrade your auto policy to provide primary medical coverage.

Also, once you've retired you would no longer potentially benefit from or need work loss benefits if you were injured in an auto accident.  You may be eligible to waive this portion of the PIP coverage and thereby reduce your auto insurance costs.

Since the PIP portion of a Michigan auto insurance policy is coverage that affects every driver covered by an auto policy you may not be able to make certain changes, such as waiving work loss benefits, until the change would be applicable to every insured driver.

Michigan Auto Insurance Quote

Does Home Insurance Cover Food Spoiled Due To A Power Outage? | Michigan Home, Condo, Renters Insurance

posted Sep 20, 2018, 12:31 PM by Jason Grubbs   [ updated Sep 20, 2018, 12:32 PM ]

Refrigerator Contents - Michigan Home Insurance

Your Michigan home, condo, or renters insurance may provide coverage to reimburse you for the cost to replace food in your refrigerator or freezer that spoils due to a power outage.  Coverage is usually offered as an add-on (rider) available with these types of policies.

Your current policy may already include refrigerated contents coverage without you even realizing it as this coverage is frequently included within policy enhancements (endorsements) insurance companies offer that bundle together several popular, additional coverage options.

A typical refrigerated contents rider will feature:
  • A lower (or $0) deductible for covered losses
  • $500 or more of coverage per occurrence
  • Coverage for food spoilage resulting from a power outage (storm) & may even cover food spoilage if your refrigerator or freezer simply breaks down
Coverage limits, deductibles, and any conditions of coverage will vary between insurance companies so be sure to review the details of your policy or ask your agent for the specifics of your coverage.

Click here to read a related article How To Be A Smart Insurance Buyer providing useful insight on taking an active role asking questions and defining your concerns when purchasing or reviewing your insurance to be certain your policies will provide coverage that meets your needs and expectations in the event of a loss.

Are You Making Mistakes With Your Insurance? | Michigan Insurance

posted Aug 22, 2018, 1:43 PM by Jason Grubbs   [ updated Aug 22, 2018, 1:44 PM ]

Avoid Insurance Mistakes!
There are three categories of mistakes many people make when it comes to their insurance protection:

Not Purchasing Needed Insurance
The first mistake, with potentially the most devastating financial consequences, is not purchasing needed insurance.  This category of mistake often involves life and disability (income protection) insurance where otherwise prudent people adopt an "It won't happen to me" mentality and forgo purchasing valuable - and affordable - coverage to protect themselves and their loved ones in the event of a financial catastrophe.

What happens if you became sick or were injured and unable to keep working?
Disability Statistics - United Insurance Service
How long could you go without your paycheck?

What happens if you make a hasty exit from this life?
Overestimating Cost of Life Insurance
Would your spouse and family have the financial means - without your income - to buy groceries, pay the mortgage, and maintain their standard of living?

I've found many individuals also make the mistake of an "all or nothing" approach when it comes to not purchasing needed insurance.  Over the years I've witnessed numerous instances when a client asks about life insurance with a specific coverage amount in mind. When they find that amount doesn't fit within their budget they make the mistake of going without that insurance entirely.
If your family would need $500,000 of life insurance and all you can reasonably afford is a $250,000 policy, buy the $250,000 policy!  Your family would be far better off with $250,000 than to be left destitute if you make an untimely exit from this life.

Not Understanding What Insurance You Need and/or Purchased
While the first mistake is about neglecting to purchase needed insurance the second mistake is not taking time to understand what coverage you may need and/or what you have purchased.
Questions - United Insurance Service

While it is certainly understandable that insurance can sometimes seem complicated and confusing, most insurance agents are perfectly willing to review policies, explain coverage options, and answer questions - whether at the time you request a quote, when you purchase a policy, or any time questions arise - to make certain you understand and are purchasing appropriate coverage.

Unfortunately, when a disaster strikes is when it's too late to question whether you have appropriate or adequate insurance protection.  If you don't understand your coverage or wonder whether a certain type of damage is covered ask your insurance agent.  Being an informed buyer requires having a clear understanding what insurance you may need and what your policy covers.

Believing All Insurance Is The Same
There are a lot of insurance companies selling the same types of insurance policies.  While many of those policies offer similar coverage benefits every insurance company is not going to provide you with the same service - particularly at the time of a loss.

While price is certainly an important consideration when you're shopping for insurance you should also take time to learn about the insurance agent and company.  Ask friends for recommendations, research on the internet - find out about their reputation for customer service, including who will assist you when you have a question or policy change and how claims are handled.

A local insurance agent can be an excellent resource to help you make informed coverage decisions and to assist you after purchasing a policy with coverage and billing questions, policy changes, and claims.

What Is Storage Insurance? | Michigan Auto, Motorcycle, Recreational Vehicle Insurance

posted Aug 16, 2018, 1:01 PM by Jason Grubbs   [ updated Aug 16, 2018, 1:20 PM ]

Storage Insurance - United Insurance Service
Many types of vehicles - including travel trailers, fifth wheels, motor homes, motorcycles, and even some cars - may only be used seasonally, typically between early spring and late summer.

In season those vehicles are typically fully insured both for any potential covered damages to the vehicles as well as liability protection, as needed, to protect the vehicle owner(s) and operator(s) in the event someone is injured or property is damaged while the vehicle is being operated.

In the offseason, when those vehicles are safely tucked away in storage, there isn't the same potential risk of damages - most owners are only concerned what would happen while there vehicle was in storage if there was a fire, someone stole the vehicle, or perhaps a tree or other object fell on the vehicle.

Many insurance companies provide an option for the owner of a seasonal use vehicle to remove all coverage except comprehensive, which is commonly referred to as "storage insurance".  Comprehensive is the coverage that responds for other than collision damages including fire, theft, vandalism, weather-related damages, and falling objects.

While storage insurance provides an opportunity for seasonal use vehicle owners to reduce their insurance costs during the offseason that option also carries with it added responsibility for those vehicle owners to update their insurance accordingly when their vehicle is both going into and coming out of storage.

If you seasonally store a vehicle and change to "storage insurance" it is advisable to leave a note - prominently displayed - either on the vehicle or with the keys stating "Call Insurance Agent" as a reminder to update your insurance when you're ready to pull your vehicle out of storage and put it back on the road.

Auto Insurance Reform - What's Not Changing, What Is Changing & What It Means To You | Michigan Car Insurance

posted Jul 18, 2018, 1:53 PM by Jason Grubbs   [ updated Jul 19, 2018, 7:23 AM ]

Michigan Auto Insurance Reform
In recent years there have been several legislative attempts, each of which ultimately failed, to reform Michigan auto insurance.

The proposed reforms always gained traction in the news as the intention of each proposal was to reduce auto insurance costs, which Michigan motorists would welcome.

Why is Michigan auto insurance so expensive?

In Michigan, by state mandate, auto insurance policies provide unlimited, lifetime medical benefits if you are injured in an auto accident.  These benefits are provided within your auto policy through the Personal Injury Protection (PIP) coverage and Michigan Catastrophic Claims Association (MCCA) assessments.

The reason there are two separate portions of a Michigan auto insurance policy relating to medical benefits is because there is a certain dollar amount for medical benefits - currently $555,000 - your insurance company is responsible to pay out of their own coffers.  If a claim exceeds that amount your insurance company would still pay the entire claim, but they would be reimbursed by the MCCA for medical costs over $555,000.

What were the proposed reforms?

The proposed reforms sought to address medical costs, a significant factor in Michigan auto insurance rates, primarily by introducing optional levels of coverage.  Rather than simply being required to be insured for unlimited, lifetime medical coverage you would have the option to choose different levels of medical coverage.

Whether you supported or opposed the proposed changes one thing is certain: If changes to optional medical coverage limits were enacted more responsibility would have shifted to consumers to understand the options and make informed decisions when selecting their desired level of coverage.

It's all too easy for insurance buyers to narrowly focus on how much their auto policy will cost and how much they would pay if their car was damaged (comprehensive & collision deductibles), overlooking considerations such as what their policy would pay if they were injured in an auto accident.

None of the reforms passed, so why does this matter?

While the proposed reforms didn't pass we are beginning to see insurance companies take steps to provide a level of choice - and potential premium savings - on the front end for medical coverage with deductible options.  Historically, deductibles for the medical portion (PIP) of Michigan auto insurance policies have ranged from $0 to $500.

One of the companies our agency represents, Safeco Insurance, recently introduced a wider array of deductible options for Personal Injury Protection (PIP) coverage ranging up to $2,500.  Since the deductible is the portion of any covered loss you are responsible to pay out-of-pocket before insurance pays obviously - all other things being equal - the premium for medical coverage with a $2,500 deductible would be less than the same coverage with a $0 deductible.

While the premium savings may be welcome, insurance buyers need to be aware of potential out-of-pocket expenses they may incur in the event of a claim, particularly if they have coordination of benefits.

What is coordination of benefits?

If you have separate health insurance that will pay first - for all household members - for injuries sustained in an auto accident you may be eligible to select coordinated PIP coverage on your Michigan auto insurance policy.  Coordinated (or excess) PIP coverage - which costs less than Primary (or full) PIP coverage simply means your health insurance would pay first any medical expenses resulting from an auto accident and your auto policy would pick up any remaining medical expenses.

It's worth noting most auto insurance policies also include a penalty deductible - in addition to any selected PIP deductible - if the medical coverage is set up incorrectly.

If you purchased an auto insurance policy with a $2,500 PIP deductible that includes a $500 penalty deductible and were injured in an auto accident only to then discover your health insurance doesn't cover injuries from an auto accident you could wind up with $3,000 in out-of-pocket medical expenses - in addition to any other out-of-pocket expenses for damages to your car.

What does this mean to me?

It's important to first confirm whether your health insurer would provide primary coverage for auto-related injuries.  You should repeat this process any time your health insurance changes - whether your employer is changing health plans, you change jobs, or you retire.

(Tip: If you don't know whether your health insurer pays first for auto-related injuries call the number on your health plan ID card and ask "Does my plan pay first in the event of a motor vehicle accident?" or "Are there any exclusions in my plan in the event of an accident?").

With this information you will know what type of medical coverage (primary or excess PIP) to include in your Michigan auto insurance policy and then can make an informed choice selecting a PIP deductible - if offered by the insurance company - considering both what you will have to pay now (premium) and what you may have to pay out-of-pocket in the event of a claim. 

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