Important Update About Michigan Car Insurance System

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A photo of Gov. Gretchen Whitmer signing into law an overhaul of Michigan’s car insurance system on Mackinac Island. (May 30,2019)

This morning (Thursday May 30th), Governor Gretchen Whitmer signed into law sweeping changes to Michigan’s auto no-fault insurance law.  While we are all excited for the upcoming changes we wanted you to know this law does not take effect till July, 1st 2020.  We will make every effort to keep you updated and provide educational material on what this will mean to you over the next 13 months.

Look for future updates, including a more detailed look into the coming changes to no-fault auto insurance.

Thank you very much for trusting Olivier-VanDyk for your insurance needs.

 

Photo Credit:

Press, The Associated. “Michigan Governor Signs Overhaul to Cut High Auto Premiums.” WOODTV, WOODTV, 30 May 2019, www.woodtv.com/news/michigan/michigan-governor-signs-overhaul-to-cut-high-auto-premiums/2039111077.

Full Coverage or Just Liability Insurance on Your Auto

This question stumps quite a few people: Should you have full coverage, or just liability coverage, on your vehicle?   Olivier-VanDyk’s answer…it all depends on the car!

Full Coverage vs. Liability Coverage

Take for example, Jane wants to know if she should be paying for full coverage on her fully paid 2011 Toyota Tundra.  The bottom line: if your car is still worth a significant amount of money, then you’ll definitely want full coverage.  In this example, since Jane’s vehicle still has plenty of value remaining, it should be fully insured.

You’ll always need to have liability insurance on your vehicle to protect your assets in case of an accident that’s your fault or appears to be your fault.

When To Switch From Full Coverage To Just Liability

Once a car is about 8 years or older, then it’s time to start looking at the math for collision and comprehensive.

A good rule of thumb: Take your monthly premium for the collision and comprehensive insurance.  Multiply it by 12 (or by 4 if you pay quarterly) to determine your yearly cost.  When your yearly cost for collision and comprehensive becomes greater than 10% of your car’s current value, that’s the point at which you can remove the full coverage, and just pay the liability premium.  This math is based on the law of averages for accident claims.

Worst Case Scenario

Sometimes this could come back to bite you though.  For example: you remove your collision and comprehensive and a few weeks later you total your car.  In this case, you’ll be liable for the expenses on your own.  This is extremely unlikely to happen, but it could.  If you’re someone who does not have a good savings buffer, you would be better served to hold on to your collision and comprehensive for a while longer. At least until either your car depreciates significantly, or you get a little more saved up.

If you have any questions, contact Olivier-VanDyk Insurance and one of our highly qualified Personal Insurance Agents will be able to assist you in determining the best coverage for your vehicle.

Special thank you to Clark Howard for his content.