How does the new law lower costs?

 
Ultimately, the premiums drivers pay will depend on the coverage they choose and their personal situation such as driving history and claims history. When shopping for insurance, you should compare the premiums, but also look closely at the limits and deductibles among the quotes to ensure they are comparable.

PIP Choices: For the first time, you will be able to choose different coverage levels to meet your needs and budget.  PIP covers expenses for medical care, recovery, rehabilitation and some funeral expenses as a result of an accident.

Under some circumstances, drivers may elect to opt out of PIP entirely or exclude household members.  If drivers opt out of PIP, the entire PIP portion of the premium will be eliminated as there will be no PIP coverage under the policy.  Warning: before you opt out of PIP, talk to an expert about the pros and cons of doing so.  

Premium Reduction: All insurance companies are required to reduce statewide average PIP medical premiums for eight years.

Fee Schedule: The new law establishes a few schedule designed to lower the costs that medical providers may charge auto insurers for their services.  This is similar to other arrangements made by health insurance companies such as Medicare or other health care providers.  The fee schedule will make PIP medical coverage premiums more affordable, but will not affect the services to which existing and future accident victims are entitled.

Michigan Catastrophic Claims Association (MCCA) Assessment: The MCCA is an association of auto insurers that reimburses member companies for PIP medical costs exceeding a specific amount.  Drivers choosing less than unlimited PIP with not pay any assessment to the MCCA.