Navigating Michigan No-Fault Reform

Posted: 6 years, 4 months ago

(0 comments)

Updated December 2025

How Michigan Auto Insurance Reform Affects Policyholders Today

Michigan’s auto insurance reform was one of the most significant changes to the state’s no-fault system in nearly 50 years. While much of the original legislation took effect in 2020, the real-world impact has continued to evolve as insurers, regulators, and courts clarified how the law applies to everyday drivers.

Now that policyholders have several years of experience under the reformed system, it’s more important than ever to understand how these changes affect your coverage, your family, and your financial protection.

Below is a 2025-updated breakdown of what Michigan drivers should know—especially when it comes to Personal Injury Protection (PIP) coverage and the order of priority.

---

Why Order of Priority Still Matters in 2025

The order of priority determines which insurance policy pays PIP benefits after an auto accident. Under Michigan’s reformed no-fault law, this order became more limited—and in some cases, much less forgiving.

Many drivers assume PIP automatically follows the vehicle or the driver. That is no longer always true.

---

Private Passenger Vehicles: What Changed

Under current Michigan law, PIP benefits are generally only available through your own policy if you are:

• The named insured

• The named insured’s spouse

• A resident relative of either

If you fall into one of these categories, you typically pursue PIP benefits through that policy.

Who Is No Longer Automatically Covered

PIP coverage does not extend to:

• Relatives who do not live in the household (unless they are temporarily away at school)

• Non-relatives living in the household—even if they are listed drivers

In these situations, injured individuals are generally forced into the Michigan Assigned Claims Plan (MACP), where PIP benefits are capped at $250,000—regardless of the coverage limits on other policies involved.

This has made household structure, residency status, and policy ownership far more important than in the past.

---

Uninsured or Ineligible Individuals

If an injured person does not qualify through a named insured, spouse, or resident relative, PIP benefits are now pursued through the Michigan Assigned Claims Plan, with a $250,000 maximum.

This means:

• The vehicle owner’s insurer

• The driver’s insurer

• Other involved carriers

are no longer part of the priority chain in many scenarios.

---

Commercial Vehicles and Employer-Provided Autos

For employees injured while occupying an employer-owned vehicle:

• The employer’s commercial auto policy remains first in the order of priority

• This applies to the employee, their spouse, and resident relatives

For vehicles used to transport passengers (such as certain commercial transportation services), PIP generally follows the vehicle’s insurer, unless specific exclusions apply.

Commercial auto coverage remains complex—and incorrect assumptions can lead to costly coverage gaps.

---

Motorcycles: Limited Changes, Same Risks

Motorcyclists still follow a similar priority order as under the previous law. However:

• If the at-fault vehicle carries limited or excluded PIP, the motorcyclist’s benefits may also be limited

• A motorcyclist’s own PIP election does not override the other vehicle’s coverage choice

Motorcycle accidents remain one of the highest-risk scenarios under Michigan’s no-fault system.

---

Out-of-State Drivers

Non-Michigan residents injured in Michigan auto accidents are generally not entitled to Michigan PIP benefits unless:

• The vehicle involved is registered and insured in Michigan

This has significantly reduced PIP availability for out-of-state drivers and passengers.

---

What These Changes Mean for Policyholders

Michigan’s auto insurance reform gave drivers more choice—but also more responsibility. Coverage decisions that once felt optional can now determine whether someone receives:

• Full lifetime medical benefits

• Limited benefits capped at $250,000

• Or no PIP benefits at all

The biggest risks we see in 2025:

• Households with adult children or extended family

• Drivers assuming employer or household coverage applies automatically

• Policies purchased without understanding residency rules

• Selecting PIP options based solely on price

---

Our Role as Your Independent Agent

At Top O’ Michigan Insurance, our job is to help you understand how these reforms apply to your real life—not just what’s written in the statute.

We continue to work closely with:

• Insurance carriers

• The Michigan Department of Insurance and Financial Services (DIFS)

• Industry associations

to stay current on interpretations and best practices.

If you’ve had changes in:

• Household members

• Employment or company vehicles

• PIP elections

• Drivers in your home

…it’s time for a policy review.

---

Have Questions? Let’s Talk Before There’s a Claim

Michigan’s no-fault system is still one of the most complex in the country—even after reform. The best time to address coverage gaps is before an accident happens.

???? Call 800-686-8664
???? Email ClientService@TOMIA247.com
???? Or contact your Top O’ Michigan solution provider to review your auto insurance coverage

 

• Tags:
• auto ,
• auto insurance ,
• insurance ,
• reform ,
• health insurance ,
• michigan ,
• michigan auto insurance ,
• no fault ,
• car ,
• car insurance ,
• PIP ,
• legislative

Share on Twitter  Share on Facebook Back to Blog

• ← 8 Life Events that Affect Your Insurance Needs
• The Rough Notes Company - Agency of the Month →

---