Yes, we know that adulting is hard, and that sometimes parents hold on too long and too tight when a child needs to take responsibility and do the ‘adulting’ thing. We also know that many times it’s easier and less expensive to still take care of some financial needs for our children.
Now, however, the new Michigan Auto Insurance reform that was passed makes adulting necessary when that child is no longer living at home.
We have always cautioned clients that once their son or daughter is truly living elsewhere, they need to simply be insured on their own. Once you show them how much more expensive the auto insurance will be, the story would sometimes change to well they still stay here now and again.
Because of this, I began seeing claims scenarios over 25 years ago where Michigan would then use a preponderance of evidence stance that stated if everything else pointed to them living elsewhere the majority of the time, (tax returns, bank statements etc.), then they very well could legally be denied both liability protection as well as the Personal Injury Protection (PIP) off the parent’s auto policy. It was the; if it looks like a duck and walks like a duck concept. Or perhaps we should say Cardinal.
Even now I find adults in their late 20s and early 30s, in fact one recently was still on his mother’s auto policy and he’s 51 years old. These are all examples where all of the evidence shows clearly that they are no longer ‘household members’, and yet want nothing to change because, “it’s less expensive this way.” True, but it’s also taking a chance on having no coverage when you need it the most.
The new Michigan Auto Reform is going to make this very issue more financially painful for those who choose to ignore ‘resident relative’ definitions and who are seriously injured in an auto related accident.
Michigan’s ‘unlimited’ medical benefits will no longer be provided the PIP coverage through the named insured’s auto policy unless they are a named insured themselves, a spouse of the named insured, or a resident relative of either. Key word here being ‘resident’ relative!
Instead, Michigan residents who are injured as a driver, passenger or pedestrian, will now only be afforded PIP benefits through the Michigan Assigned Claims Plan (MACP) with a limit of $250,000. Unlimited is no longer available to them as it was prior to this law passing. They will also be responsible to handle the entire medical claims process with their medical providers and the MACP.
So my recommendation to anyone who has possession of a vehicle that is insured on a policy in another household; is that you get that vehicle titled and registered into your own name, pay for your own auto insurance (yes I KNOW it’s going to cost more), and we all welcome you to adulthood.
We of course realize it’s not just ‘kids’ of named insured’s who do this, but those are definitely the most common scenarios that we see in our business. As with any new law and coverage change, there are factors of this law that are still unknown to us until they happen. From my many years of experience in this industry, I can also assure you that I am already seeing gaps that this new law is going to have that legislators never thought out enough to foresee, so we will continue to blog and educate as we can.
We are in the business of taking care of people and as such are here to assist you with your insurance education and needs.