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Savings but risk in auto insurance reform

News Photo by Steve Schulwitz Drivers in Michigan, like these seen in Alpena on Friday, may see savings on their auto insurance beginning in July.

ALPENA — Insurance premiums for many Michigan drivers will drop after July 1.

New state law allows policy holders more freedom to customize their insurance plans to bring down cost, but Alpena insurance agents said doing so involves a bit of risk.

The biggest change from the state’s auto insurance reform is that vehicle owners will be able to select the amount of personal injury protection they include in their plan, said Pete Wilson, co-owner of Alpena Agency.

Currently, all insurance holders have unlimited protection, which pays for all medical bills, medicine, and any modifications to homes or vehicles required should someone become disabled in a crash, he said.

Under the reform, drivers will be able to choose from unlimited medical coverage all the way down to zero coverage, Wilson said. The lower the coverage amount, the less your overall insurance premiums will be.

However, he added, injured drivers are responsible for any medical expenses that exceed the insured amount.

“Michigan is the only state where everyone has unlimited medical coverage,” he said. “Some states, like Florida, only have $10,000, so we have really been out there on our own, and it drives up costs. The less coverage you select, the more savings you will see.”

Even people who retain their unlimited coverage will see a 10% reduction in the cost of that coverage and people who choose $500,000 in medical coverage will receive a 20% reduction. Customers who purchase $250,000 in coverage will see a 35% reduction in cost, and others who select $50,00 a 45% discount.

Wilson said those figures can significantly drive down the cost of the entire insurance plan.

“It can save people thousands of dollars, depending on a person’s age, driving record, and other factors,” he said.

There are some other significant changes to the insurance laws.

Wilson said only family in the home of the driver will be covered by the medical portion of the insurance, and anyone who is involved in a wreck and not listed on the plan is responsible for their own health care bills. Family who don’t live with the driver are not covered.

State Farm Insurance agent T.J Hoes said people who choose less medical coverage need to look closely at their personal health care plans. He said many health insurance plans don’t cover car crashes, which people often people don’t realize.

He said knowing if it does or doesn’t before choosing what insurance is right for you could save a lot of money.

“People will have a certain degree of exposure,” Hoes said. “People need to do their homework and know what their medical insurance covers, so they can make good decisions when they choose auto insurance.”

Hoes said all State Farm customers will automatically see savings when July 2 comes. He said those who want to change their policy and lower their personal injury protection amount can do so at any point.

Steve Schulwitz can be reached at 989-358-5689 at sschulwitz@thealpenanews.com. Follow him on Twitter @ss_alpenanews.com.

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