All of this talk about auto insurance reform has one word or term that keeps floating around: PIP or Personal Injury Protection. There is a lot that is misunderstood about PIP (and a lot that's going to change). Although we don't have many answers yet about exactly what and how things will change with PIP with the new laws being passed, there are some things that have always been true that you should know.
First, PIP is the coverage on your auto insurance that pays out when there are medical expenses from an auto accident. The amount of this coverage is what's being changed with the new auto laws starting July 1, 2020. We won't get into those details with this post, but that's the basic explanation of what PIP is.
Next, there is an "order of priority" when it comes to how PIP is paid out in an accident. These orders depend on whether you are the driver or passenger in a car or whether you are a pedestrian, or whether you are riding a motorcycle. [Newsflash: yes, PIP even applies when you are walking down the street!] We will focus on just the first one for now.
If you are the driver or passenger in a car...
1st priority is your own auto insurance policy, if you have none then
2nd priority is the insurance company of a resident relative, if they have none then
3rd priority is the insurance company of the owner of the vehicle you are riding in, if they have none then
4th priority is the insurance company of the driver of the vehicle you are riding in, if they have none then
5th priority is to the State of Michigan
Now, there is an important piece we want to point out here. See "2nd priority" above. Read it again. If you live with someone who doesn't have insurance, your auto insurance is on the hook for their medical coverage! Now, that might seem like a "nice" thing, but imagine this scenario: your roommate is uninsured and gets in a car accident while riding with a friend. They have serious medical injuries. YOUR auto insurance pays those expenses (based on priority) and now YOUR auto insurance price goes up because of the filed claim! Talk about a shock!
While there is nothing that can be done to protect you in this situation, there are things you can do to protect yourself. We suggest making sure you know your roommates well and make sure they have auto insurance! Yes, it can be expensive, and it might make it hard for someone to find housing if they can't find auto insurance, but our job is to advise and protect our customers, and our advice is to limit your exposure on everything, including PIP.
PIP is something that makes peoples' heads spin around, even seasoned insurance agents. We don't expect you to understand everything - that's what we are here for! If you have questions about PIP or anything else, don't hestitate to contact Levin Insurance Agency at (248) 531-8300.
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