Since Michigan’s no-fault reform took effect in 2020, drivers here can choose how much Personal Injury Protection (PIP) medical coverage to carry on their auto policy. Before the reform, PIP was unlimited and mandatory — everybody had the same thing. Now you pick from six tiers, and picking wrong can absolutely wreck you financially if you’re in a serious accident. Here’s how to actually decide.
What PIP does
PIP is the medical coverage on your auto policy. If you’re hurt in an auto accident, PIP pays your medical bills — regardless of who caused the crash. That’s the “no-fault” part. It covers you, passengers, and family members in the vehicle.
In most other states, after an accident your health insurance pays your bills (and sues the at-fault driver’s auto policy to get reimbursed). Michigan works differently: your auto policy PIP is primary for auto-related injuries, and your health insurance is secondary.
The six tiers
When you buy or renew auto insurance in Michigan, you pick one of these:
- Unlimited PIP — no cap on medical expenses.
- $500,000 per person per accident
- $250,000 per person per accident
- $250,000 with medical exclusion — if certain household members have qualifying health insurance, they’re excluded from PIP.
- $50,000 per person per accident — only available to Medicaid recipients under specific conditions.
- PIP opt-out — only available if you have Medicare.
How to actually pick
The right tier depends entirely on what your health insurance covers for auto injuries, and that’s where most people get tripped up.
If you have a standard employer health plan
Check whether it has an “auto-related injuries” exclusion. A lot of plans do — meaning if you get hurt in a car accident, your health insurance won’t pay, and you’re relying entirely on PIP. In that case, don’t go below $250K, and strongly consider $500K or unlimited. Medical bills from a serious crash hit seven figures faster than people realize — a helicopter transport alone can be $40,000.
If you have Medicare
You can legally opt out of PIP entirely. But Medicare has copays and doesn’t cover things like attendant care at home or lost wages, both of which PIP does. A lot of Medicare recipients still choose to keep at least $50K or $250K of PIP for those gaps.
If you’re on Medicaid
You qualify for the $50K tier, which is cheap. But Medicaid has the same gaps — no attendant care, no lost wages. If there’s any way to afford the $250K tier, it’s usually worth it.
If your health insurance is robust and has no auto exclusion
You can probably pick $250K or $500K safely. Unlimited is still the safest choice, but the price difference matters, and if your health insurance actually covers auto injuries you’re duplicating coverage.
The trap: “cheapest = best”
A lot of drivers see the $50K or opt-out tier and grab it because their premium drops. I’ve seen this backfire more than once. After a bad accident with a low PIP limit:
- PIP runs out. Now your health insurance is primary, but if it has an auto exclusion, you’re paying cash.
- You exhaust your own assets — savings, retirement, home equity — paying medical bills you thought you’d never have to cover.
- Even if health insurance does cover, it doesn’t pay for attendant care, home modifications, or lost wages — all of which PIP does. Those costs land on you.
The “savings” from the cheaper tier are usually $200–$600 a year. That sounds like a lot until you compare it to one uncovered hospital stay.
What we recommend for most Lapeer-area clients
- Working families with employer health insurance: Check for an auto exclusion. If there is one (and there often is), pick $500K or unlimited.
- Self-employed or cash-pay health insurance: Pick unlimited. Full stop.
- Medicare, with supplemental coverage: $250K or opt-out, depending on your supplement.
- Young driver on a parent’s policy: Match whatever the parent has. Teens are higher-risk, and shorting their coverage is not the place to save money.
What to do next
Pull out your health insurance summary-of-benefits and look for “auto” or “motor vehicle” exclusions. If you can’t find it, call your health insurance company and ask directly: “If I’m in a car accident, will you cover my medical bills?” Get the answer in writing.
Then let’s review your auto policy together. We’ll go through your PIP tier, your liability limits, and anything else that might not match what you actually own and earn. It’s a 15-minute call and it could save you from the single worst financial mistake people make in Michigan auto insurance.