The Myth Of No-Fault Auto Insurance In Michigan: Understanding The Reality

Michigan is a No-Fault state for auto accidents. The Michigan No-Fault Insurance law was designed to help people injured in car accidents. It ensures that car accident victims get the help they need promptly and without regard to fault. If you are injured in a car accident, your auto insurance company pays for medical bills and lost wages regardless of who was at fault. This is in contrast to the tort liability system, which preceded it and often left injured victims under-compensated or not compensated at all.

Michigan No-Fault Insurance Law Benefits

Michigan's No-Fault Insurance Law was implemented in 1973 to ensure that people injured in car accidents receive compensation for their medical costs and lost income quickly and without launching time-consuming lawsuits. Here are the key benefits of the Michigan No-Fault Insurance Law:

• Prompt Compensation: The law ensures that car accident victims receive timely compensation without having to establish fault or engage in lengthy legal battles. This helps to alleviate the financial burden of medical bills and lost income resulting from the accident.
• Medical Expenses: No-Fault benefits cover accident-related medical bills, including reasonable and necessary medical expenses. This ensures that injured individuals can access the medical care they need without worrying about financial barriers.
• Lost Wages: The benefits also cover lost wages if injuries prevent the individual from returning to work. This coverage can last for up to three years, providing a financial safety net during the recovery period.
• Replacement Services: No-Fault benefits provide up to $20 per day for services that the injured person is unable to perform due to their injuries. This includes household chores, errands, and childcare.
• Funeral and Burial Expenses: In the unfortunate event of a fatality, No-Fault benefits provide financial support for the dependents and help cover funeral and burial expenses.
• Property Protection: This aspect of the law provides coverage for damage caused by the insured vehicle to another person's property in Michigan, up to $1,000,000. This includes damage to buildings or parked vehicles but excludes accidents involving moving vehicles.
• Residual Liability Protection: The No-Fault Insurance Law also offers protection if the insured is sued or found legally responsible for an accident resulting in serious injury, permanent disfigurement, or death. It covers defence costs and any damages awarded, up to specified limits.
• PIP Coverage Levels: Michigan drivers can choose their level of Personal Injury Protection (PIP) medical coverage. This flexibility allows individuals to select the option that best suits their needs and budget.
• Protection for Family and Others: The No-Fault Law's PIP coverage extends beyond the policyholder. It also protects family members living in the same household, passengers or pedestrians without their own no-fault policy, and motorcyclists injured in an accident involving the policyholder's car.

Third-Party Car Insurance Claims

Michigan is a No-Fault state for auto accidents. This means that if you are injured in a car accident, your auto insurance company will pay for your medical bills and lost wages, regardless of who caused the crash.

Now, here is some detailed information about third-party car insurance claims:

A third-party car insurance claim is when you file a claim with another person's insurance company, usually under their liability coverage. This type of claim gets its name from the fact that you are not one of the two primary parties in the insurer-insured relationship, but rather an outside (or third) party.

When to File a Third-Party Car Insurance Claim

You can file a third-party car insurance claim when you suffer injuries or vehicle damage in a car accident caused by another person (i.e., an insured driver). In this case, the other person must also have liability car insurance that could cover your injuries and property damage.

How to File a Third-Party Car Insurance Claim

To file a third-party car insurance claim, you will need to gather some basic information about yourself and the accident, including the date of the accident, the other driver's name, and their car insurance policy number. You can then initiate the claim process by using the other driver's insurance company's online claims portal or mobile app, or by calling them.

Working with a Claims Adjuster

During the third-party claims process, you will need to work with a claims adjuster, who will determine fault by investigating the accident and assess how much you are owed. The claims adjuster will ask you about the crash, including your description of the events leading up to it. It is helpful to write down an account of the accident beforehand. If the other driver is found to be at fault, the claims adjuster will estimate the cost of repairs after inspecting your vehicle. You may also be asked to provide a repair cost estimate from a garage.

Receiving Your Settlement or Disputing the Offer

If your third-party claim is successful, you will receive a payout, also called a settlement offer, from the at-fault driver's insurance company. If your claim is unsuccessful or you believe the settlement offer is too low, you can dispute the judgment or try to negotiate a different offer. Each company has its own process for settling claims disputes, which may involve resubmitting evidence, writing a letter, or providing additional testimony.

Third-Party Claims in No-Fault States

In no-fault insurance states, you still file a third-party claim with the other driver's insurance company for vehicle damage. However, for injuries, you file claims with your own insurance company, even if the other driver was at fault. This is because your personal injury protection (PIP) is what covers your medical bills after an accident, and it is required in no-fault states. In some no-fault states, you can still make third-party insurance claims for injuries if they are serious.

Mandatory Coverages

Michigan is a No-Fault state for auto accidents. To legally drive in Michigan, state law requires that No-Fault insurance is the mandatory car insurance for anyone who drives regularly in the state. The mandatory auto insurance coverages in Michigan under the No-Fault law include personal protection insurance, bodily injury liability insurance, and property protection insurance.

Personal Protection Insurance (PIP)

Personal protection insurance, also known as personal injury protection, provides No-Fault PIP benefits to seriously injured car accident victims. This includes reimbursements for medical expenses, a percentage of lost wages, attendant care (in-home nursing services), and replacement services (help with household duties).

Bodily Injury Liability Insurance (BI)

Bodily injury liability insurance, also known as residual liability coverage, protects you in the event that you cause an accident that results in serious injuries to someone else. The law requires minimum coverage limits of $250,000 of BI coverage per person and $500,000 per accident, but drivers may choose to purchase lower limits of $50,000 and $100,000. However, attorneys recommend that you never carry less than $500,000 per person and $1,000,000 per accident to fully protect yourself.

Property Protection Insurance (PPI)

Property protection insurance covers damage you cause to "tangible property" such as parked cars or other property (i.e. buildings, fences, trees, lawns, etc.) within the state of Michigan. Every Michigan auto policy has a mandatory $1 million of PPI coverage. Additionally, as part of a driver's liability coverage, they are required to purchase $10,000 of property damage coverage to protect them in the event they cause damage to another person's vehicle outside the state of Michigan. Attorneys recommend carrying a minimum of $100,000, as you would be responsible for all of the other driver's car damage if you were to cause a crash in a tort state.

No-Fault Insurance Changes

Michigan's No-Fault Insurance law was designed to help people injured in car accidents. It is a unique system that ensures car accident victims get the help they need promptly and without regard to fault. The law was created by state lawmakers and became effective on 1 October 1973.

In 2019, the Michigan Legislature made historic changes to the auto insurance law that affected every driver, including allowing PIP Choice for the first time. The updated law means that residents are no longer required to buy unlimited personal injury protection (PIP) with their auto insurance. Instead, they can choose from different levels of personal injury protection coverage. PIP covers medical expenses, attendant care, housing modifications, and lost wages due to an accident.

Drivers on Medicare will have the option to opt out of PIP medical benefits coverage altogether from July 1, 2020. The intent is that these drivers will turn to Medicare for medical coverage for injuries suffered in a car accident.

From July 1, 2021, auto insurance companies will not be obligated to pay for more than 56 hours per week of in-home, family-provided attendant care. From the same date, doctors, hospitals, clinics, and other medical providers will have to conform their charges to a new Medicare-based fee schedule, which will be a percentage of what is payable under Medicare.

From July 2, 2020, drivers will be required to carry bodily injury liability insurance of at least $250,000 for injury/death to one person and $500,000 for two or more people in any one accident. However, the law also provides that a driver may choose to purchase lower limits of $50,000 and $100,000.

The maximum mini tort recovery amount will increase from $1,000 to $3,000 for car accidents after July 1, 2020.

From July 1, 2020, drivers and/or their family members may need to have health insurance coverage that qualifies as "qualified health coverage" to be able to select certain coverage levels and options.

Other Key Features of No-Fault Insurance in Michigan

• If you are injured in a car accident, your auto insurance company pays for medical bills and lost wages regardless of who was at fault.
• Personal Injury Protection (PIP) coverage applies to accidents occurring in the US and Canada and may provide coverage for any injuries involving a motor vehicle. Benefits are paid by the accident victim's own insurance company.
• Property Protection provides coverage if your car causes damage to the property of others (except moving vehicles), regardless of fault, up to $1,000,000.
• Residual Liability provides protection if you are sued or are legally responsible for an accident involving death, serious impairment of body function, or permanent, serious disfigurement.

No-Fault and Liability Claims

Michigan is a No-Fault state for auto accidents. This means that if you are injured in a car accident, your auto insurance company will pay for your medical bills and lost wages, regardless of who was at fault for causing the crash. This is a unique system that ensures car accident victims get the help they need promptly and without regard to fault.

No-Fault Claims

If you are injured in a car accident in Michigan, your own car insurance will cover your medical bills and other out-of-pocket losses, at least initially. This is known as "personal injury protection" or "PIP" coverage. PIP benefits are available not just to the policyholder, but also to any family members living in the policyholder's house (even if they are a passenger in another person's car or are injured as a pedestrian), any passenger or pedestrian without their own no-fault policy who is injured in an accident involving the policyholder's car, and any motorcyclist injured in a traffic accident involving the policyholder's car.

The benefits provided by PIP coverage include:

• All costs of medical care made necessary by the accident
• Wages lost due to the injury (up to 85% of income, for up to three years)
• Up to $20 per day in "replacement services" (e.g. for someone to take care of household chores that you're unable to perform because of the accident)

Liability Claims

Michigan no-fault insurance also provides "residual liability" protection. This means that if you are found legally at fault for a car accident, your no-fault policy will provide coverage for:

• $20,000 per person hurt or killed in an accident
• $40,000 per accident in which more than one person is hurt or killed
• $10,000 per accident for property damage for an accident that occurs in another state

It's important to note that with a PIP/no-fault claim, you cannot get compensation for your "pain and suffering" and other non-monetary damages stemming from the accident. However, in certain situations, you may be able to step outside of the no-fault system and file a third-party insurance claim or lawsuit against the at-fault driver, in which case "pain and suffering" and other non-economic losses may be available. These situations include:

• The accident caused serious impairment of a bodily function, permanent and serious disfigurement, or death
• The at-fault driver is a non-resident whose vehicle is not insured in Michigan
• The accident occurred in another state
• The suit is for $1,000 or less in damage to your car, the damage is not covered by your own insurance, and the other driver is 50% or more at fault

Frequently asked questions