No Fault Auto Insurance Whether for Personal Injuries or Not Can Increase Auto Insurance Premiums

Some Detroiters could see jumps in their auto insurance rates next month when Michigan’s new no-fault system takes effect, an unpleasant surprise for those who assumed that their rates and everyone else’s would go down.

Overall, the new system is expected to lower insurance premiums for many drivers starting in July, when Michigan motorists are given a first-ever choice in the amount of medical coverage to buy with their auto insurance, coverage known as personal injury protection or PIP.

But early regulatory filings by some insurance companies — plus some anecdotes from customers — suggest that a subset of Detroit residents could see their rates go up not down.

Of those Detroit drivers, the biggest rate hikes would hit people who chose to continue buying PIP coverage instead of dropping it completely. Under the new system, drivers with Medicare or a health insurance plan that covers auto accidents are allowed to opt out entirely of PIP; others can pick lower coverage amounts between $500,000 and $50,000.