In our next post on No-Fault Reform, we will discuss how Michigan’s No-Fault Insurance Laws in 2020 could impact your business. Any business that uses one or more vehicles for their day-to-day will be affected by the new No-Fault laws and should be aware of the changes.
Like with personal auto insurance, choosing the amount of Bodily Injury coverage is an important decision. Many believe choosing a lower amount will give them the opportunity to lower their insurance premium but there are a few things to consider before making this choice.
The State minimum used to be 20k per person and 40k per accident. That has been increased to 250/500k. You may request higher limits as well for an increase in premium. This covers you for injuries to others if you are at fault in an auto accident.
Before you choose a lower coverage amount to get a lower premium, consider:
- Your premium reduction will most likely be incredibly small
- If an employee or a covered party is injured, medical bills could quickly exceed $250,000
The new law will also have a “default” coverage of $250,000 unless you sign a form to acknowledge that you understand the potential risk of taking a lower liability limit or choose unlimited.
Protect Yourself from the Every Day
Not many businesses will experience a catastrophic event. Luckily, the odds of someone in your business hitting a pedestrian or causing a terrible accident are fairly low (but it could happen so you should be prepared).
But, it’s not the catastrophic events you should be focusing on.
Instead, consider a much smaller incident, like a fender bender. It might not seem consequential, but let’s look at a situation.
Say one of your drivers rear-ends another car at a stoplight. They were slowing down so it was low speed and there wasn’t a lot of damage, it seems like a minor accident.
But the driver of the rear-ended car bumps his knee on the steering at just enough of angle to cause a limp for a few days. While he thinks it’s ok, after a few weeks, the pain doesn’t go away.
While the driver’s insurance will cover any immediate medical bills, once he reaches his coverage limit (and if he chose a low coverage amount it will happen fast), he and his lawyers are going to look to the business that owned the car that hit him.
If he has to go to physical therapy for the rest of his life because of how he bumped his knee, those bills will add up. When his money runs out, he will come to you. Consistent bills like that could ruin a business if you don’t have the coverage to pay for it.
Or, there is always the possibility of being sued even if the situation didn’t seem that serious to begin with. For more serious accidents, you could be sued for costs that go beyond pain and suffering.
Awareness is the Key
It’s important to be aware of what could happen if you choose a lower amount.
By choosing a lower option than what you currently have, you may not be covered in the event of a catastrophic, or small, incident.
To increase awareness of these new options, you will be required to sign a form at every renewal stating that you are choosing the same level of coverage (or you’ll have the option to change it). If you don’t make a choice, your policy will revert to unlimited coverage.
To learn more about your coverage options and who is covered under No-Fault Reform, you can study the document on our website. We highly recommend taking a look and writing down any questions you may have. Then, when you’re ready, contact an agent to chat about how these changes will affect your business.