Should You Opt for Lower PIP Limits With Your Michigan Car Insurance?

When Michigan reformed its auto no-fault insurance laws in 2019, many drivers were attracted to the promise of lower premiums. But selecting reduced personal injury protection (PIP) limits can bring serious consequences that many don’t recognize until after an accident.

We recently saw this play out during a case at Matz Injury Law. On a three-way call with a client and her adjuster from Auto-Owners Insurance, what began as a routine discussion quickly raised concern.

Partway through the call, the adjuster incorrectly told our client that the $50,000 cap on her policy applied to all of her benefits, including wage loss. In reality, that cap only applies to allowable expenses such as medical care. Whether the adjuster misunderstood the law or misstated it, the information was wrong — and potentially costly to the client.

Can You Explain How Michigan’s PIP Coverage Works When Someone Selects Limited or Opt-Out Options?

In Michigan, anyone injured in a car accident may qualify for no-fault benefits. These usually come from their own auto insurance, but coverage can also extend through a resident relative’s policy or, if none exists, the Michigan Assigned Claims Plan.

The 2019 reform introduced options for drivers to choose caps on “allowable expenses” — costs such as medical treatment, attendant care, and transportation to appointments. Before this change, unlimited coverage was required.

Today, drivers can select unlimited coverage or capped limits of $500,000, $250,000, or $50,000. Some can opt out entirely if they have qualified health coverage. Importantly, these limits apply only to allowable expenses and do not affect other PIP benefits such as wage loss or replacement services.

What’s the Difference Between “Allowable Expenses” and Other PIP Benefits Like Wage Loss or Replacement Services?

Confusion often arises when allowable expenses are mistaken for other types of PIP benefits.

Allowable expenses include:

• Hospital bills
• Mileage for medical treatment
• In-home attendant care

Other PIP benefits include:

• Wage loss, which provides income replacement for up to three years, subject to a monthly cap.
• Replacement services, which provide up to $20 per day for three years for help with household tasks you cannot perform because of your injuries.

These benefits are separate from allowable expenses and are not subject to the same dollar limits. The adjuster’s statement that our client’s $50,000 cap applied to wage loss was incorrect.

What Do You Think Most Consumers Misunderstand About PIP Limits in Michigan?

Many Michigan drivers don’t realize that choosing lower PIP limits shifts the risk of major medical bills back onto them.

For example, if you incur $200,000 in accident-related medical costs but only selected a $50,000 cap, you would still owe $150,000. Even if you later receive a $250,000 bodily injury settlement, your health insurer may seek reimbursement from that award. Instead of keeping the full settlement, you could see much of it reduced to cover unpaid medical expenses.

Drivers often pick the lowest-cost option simply to satisfy the state’s insurance requirement, without understanding how financially vulnerable that choice leaves them after a serious crash.

How Did Your Presence on the Call Help Protect the Client From Accepting the Adjuster’s Misinformation?

This moment showed why legal representation matters. During the call, the adjuster incorrectly stated that our client’s wage loss was subject to the $50,000 cap. A member of our firm immediately caught the error, verified the law, and corrected the record while the conversation was still in progress. Within minutes, the adjuster retracted her statement.

Without that intervention, our client could have believed the misinformation and stopped submitting wage loss claims — potentially losing thousands of dollars in benefits to which she was entitled under Michigan law.

Was There Anything Else the Adjuster Said on the Call That Was Legally Incorrect?

Yes. The adjuster confused allowable expenses with the entirety of PIP benefits, which is a serious mistake. And this wasn’t the first issue we had seen with her handling of claims. In a prior case, she cut off a client’s medical benefits after reviewing records on her own and deciding the injuries weren’t related to the crash.

That is not the adjuster’s role. Under Michigan law, an insurance company must obtain a physician’s opinion before terminating medical benefits. In that situation, the required process was simply ignored.

Has This Type of Misinformation Come Up in Other Client Cases?

Unfortunately, yes. We often encounter misinformation from adjusters, whether caused by lack of training, misunderstanding, or something more intentional. Clients without legal representation are especially vulnerable because they may not realize their rights are being misrepresented.

If an adjuster is willing to make these kinds of statements during a call with an attorney on the line, it raises real concern about what may be told to people navigating the process alone.

What Steps Would You Advise Someone to Take if They’re Unsure About What Their Insurance Adjuster Is Telling Them?

Call a personal injury attorney immediately. Almost all of us offer free consultations, and we’ll gladly talk through your situation — even if you’re at fault. We may not take your case, but we’ll still offer guidance. Our goal is to protect people from being misled by insurance companies, even if we’re not the ones representing you.

What Can Someone Do if They Realize They Were Misled and Already Accepted a Reduced Benefit?

Even if you already received a reduced benefit, you still have options. You are not locked into what the insurance company initially pays. If benefits were wrongly denied or reduced, Michigan law gives you one year from the date of denial to file a lawsuit and pursue the full amount you were entitled to. Acting quickly matters — the longer you wait, the more difficult it may be to recover those benefits.

Final Thoughts: Don’t Let the System Work Against You.

If we hadn’t been on that phone call, our client could have lost thousands of dollars in wage loss benefits because of inaccurate information. Situations like this highlight why legal guidance matters.

At Matz Injury Law, we do more than file paperwork. We stand between our clients and the misleading tactics insurance companies often use to reduce claims. From phone calls to written notices, we make sure your rights under Michigan’s no-fault law are protected.

Contact us today for a free consultation. We’ll make sure you know the full truth about your Michigan PIP benefits and fight to get you everything you’re owed.