How does the new No-Fault Law in Michigan impact the medical coverage on my business auto policy?
There is a lot of discussion around how the new no-fault law will impact individual personal auto policies. There has not been as much information readily available about how the changes will impact business auto policies and what choices are available to business owners.
Business owners have three personal injury protection (PIP) medical coverage options to choose from. This varies from a personal auto policy, where individuals have up to five potential options. The first option is to keep the unlimited medical coverage. This option will result in a reduction of the MCCA fee from $220.00 per power unit to $100.00 per power unit.
The second option is a limit of $500,000 in PIP medical coverage. By selecting this coverage limit, the MCCA fee per power unit on the policy will be eliminated. If the $500,000 coverage limit is selected the insured will also have an option to buy additional attendant care coverage. The amount will vary by carrier with most offering a $10,000 coverage limit.
The last option available is a limit of $250,000 in PIP medical coverage. By selecting this coverage limit, the MCCA fee per power unit on the policy will be eliminated. If the $250,000 coverage limit is selected the insured will also have an option to buy additional attendant care coverage. The amount will vary by carrier with most offering a $10,000 coverage limit.
At first glance, going with a limited coverage option may seem appealing due to the cost savings. Before moving forward with a limited coverage option a business owner should consider the following questions:
- Am I covered under my workers compensation policy?
- Do I or my employees use work vehicles for personal use?
- Does my health insurance policy cover auto accidents?
Workers compensation coverage is primary for auto accidents if they occur while on the job. If the vehicle is being used for personal use by the business owner or employee, the PIP on the auto policy becomes primary. If the PIP medical is primary and the limit is exhausted, then health insurance (if no exclusions for auto accidents) would begin picking up the medical costs.
Even if the health insurance policy covers auto accidents, it may have high deductibles and co-pays that have to be paid on an ongoing basis. Health insurance may not cover additional services like home/vehicle modifications or transportation costs to and from medical appointments.
It is important to consider all the potential cost and coverage issues when deciding on which PIP limit is best for your business. Choosing a limit other than unlimited may result in some initial savings but could cost significantly more in the long run if a serious accident happens.