Public Education Campaign Will Help Consumers Understand Complex Changes
Michigan’s 7.2 million licensed drivers know little about the state’s new auto no-fault insurance law that takes effect July 1 with a menu of first-time coverage choices and exceptions that could lower premiums and substantially limit medical care for motorists injured in car crashes, new research finds.
An in-depth study of 1,005 Michigan motorists conducted by Escalent, a southeast Michigan company that conducts specialized market and consumer behavior research for many companies and industries, found that only 12% of insured motorists are “very familiar” and 35% are “a little familiar” with the new law, while 53% have just “heard of it” or are “not at all familiar.”
Under the state’s current auto no-fault law, unlimited medical and rehabilitation care and benefits are included in all auto insurance policies. When changes to the law approved by Gov. Gretchen Whitmer and the state Legislature take effect July 1, Michigan consumers for the first time will be able to choose, based on individual circumstances and with some exceptions, the amount of medical coverage they want to buy with their new policies. The choices motorists make could lower the cost of a portion of their auto insurance premiums — but expose them to substantially higher out-of-pocket medical bills and limited access to care if they are seriously injured in a car crash.
“The new auto no-fault law will affect every single Michigan motorist, but right now Michigan motorists just don’t know much about it,” said Stacy Sims, Escalent’s research director who led the research project on behalf of the Michigan Health & Hospital Association (MHA). “This state is largely uninformed about a new law that could lower premiums for some consumers, but have other financial and medical consequences as well.”
The MHA intends to launch a public education campaign in the spring based on the research to help drivers understand the many nuances of the new auto no-fault law, which is more complex than the current law, and what these new coverage choices could mean for them and their families. The campaign will use a variety of communications channels and tools to educate motorists about the new law, including paid media ads, social and digital media, the news media and more.
“Our intent for the campaign is not to debate whether the law is good or bad, but to give Michigan motorists the information they will need if they’re going to be able to make informed choices going forward,” said MHA CEO Brian Peters. “At the end of the day, it will always be important that motorists — and all Michiganders — have coverage and access to the healthcare services they need, and the MHA is committed to doing our part to ensure that happens.”
Instead of all auto insurance policies in Michigan coming with lifetime necessary medical care, the new no-fault law allows motorists to purchase different levels of medical coverage, called “Personal Injury Protection (PIP).” The PIP options under the new law, with some exceptions and exclusions, are:
- Unlimited medical coverage per person per accident.
- Up to $500,000 in medical coverage per person per accident.
- Up to $250,000 in medical coverage per person per accident.
- Up to $250,000 in medical coverage per person per accident with exclusions (under certain conditions).
- Up to $50,000 in coverage per person per accident (under certain conditions).
- PIP opt-out (under certain conditions).
The Escalent study also sought to predict what level of coverage Michigan motorists might choose under the new law. The research found that 24% of insured motorists will “opt out” if they qualify, choosing to buy no medical coverage with their auto insurance policies. Some 25% are unsure if they will opt out. The research also shows that some drivers who would choose to opt out would do so because they have private health insurance, despite the fact that health insurance doesn’t cover many of the services covered by PIP coverage. Another 51% said they will not opt out, but are unsure what level of medical coverage they will choose to buy.
“Obviously, we don’t know if Michigan motorists will behave in a way consistent with the research when they are renewing their policies under the new law,” said Peters. “What we do know is that, right now, not enough drivers are informed about what choices they’ll have and what those choices mean. The purpose of our campaign is to give consumers the facts about the new law and how the choices they make could affect their lives.”
Escalent also found that 38% of insured Michigan motorists and 52% of those who have no auto insurance either have been in a serious car crash or know someone who has been in a serious crash.
“When roughly four of every 10 Michigan motorists have been in a serious crash or know someone who has, the importance of making sure consumers are informed about the new law can’t be overstated,” Peters said. “Thousands of people are injured in car crashes in Michigan every year, and some require extensive and even life-long medical and rehabilitation care. All of us need to understand the law and the choices we will make under it after July 1.”
Members with questions should contact Ruthanne Sudderth at the MHA.