The Michigan No Fault Law
In May 2019, Michigan Governor Gretchen Whitmer signed a new bill into law reforming Michigan’s no-fault laws that had been in effect since 1973. Under the old law, all Michigan drivers were required to carry unlimited personal injury protection (PIP) insurance and, in the event of a car accident, each driver would go through their own auto insurance to cover their medical expenses and property damage regardless of who was at fault for the crash. This system also allowed those who were catastrophically injured in car crashes to receive unlimited coverage for their medical expenses directly related to the car accident.
The main goals of this reform were to introduce new consumer protections and reduce the cost of auto insurance premiums while still providing a high level of coverage for accident victims. The new law makes significant changes to auto insurance requirements for Michigan drivers with some of those changes becoming effective in July 2020 and others going into effect in 2021.
Levels of Personal Injury Protection (PIP) Insurance
Personal Injury Protection insurance coverage is the part of your auto insurance policy that covers medical expenses and other related expenses, such as lost wages and replacement services, if you’re injured in a car accident. Michigan’s new no-fault law gives drivers a chance to choose the level of PIP insurance coverage they have instead of requiring everyone to buy unlimited coverage. These are the various levels of PIP coverage drivers can choose from:
Coverage up to $500,000 per person per accident
Coverage up to $250,000 per person per accident
Coverage up to $250,000 per person per accident with exclusions if you or your spouse has a qualifying non-Medicaid/Medicare health insurance plan that covers auto accident injuries
Coverage up to $50,000 — available to those enrolled in Medicaid and if their household members have a qualifying health insurance policy or another Michigan auto insurance policy
No PIP coverage — available to those enrolled in Medicaid parts A and B and if their household members have a qualifying health insurance policy or another Michigan auto insurance policy
If you choose unlimited PIP coverage, you will receive the same unlimited, lifelong medical care you would have received under Michigan’s old no-fault law.
Bodily Injury and Property Damage (BIPD)
Bodily injury coverage is the part of an auto insurance policy that covers expenses if a policyholder is at fault for an accident causing injury or death. Under the old law, the mandatory minimum for bodily injury coverage was $20,000 if one person is injured or killed in an accident and $40,000 if two or more people are injured or killed in a single accident. Just as the new law gave drivers options for their PIP coverage, it also gave drivers the ability to choose their BI coverage level. Under the new law, the new minimum coverage for BI is $50,000/$100,000.
Insurance Coverage for Property Damage
There are several types of collision coverage available for Michigan auto insurance policies:
Broadform collision coverage pays for all damage to the insured’s vehicle regardless of fault. If you are at fault for the accident, you pay a deductible. If not, your deductible is waived.
Standard collision pays for all damage to the insured’s vehicle regardless of fault, but the insured must pay a deductible for all claims. If you are not at fault, you can file a mini-tort claim against the other driver’s insurance to recover your deductible.
Limited collision pays only for the damage sustained to your vehicle when you are not at fault for the accident. If you are at fault, your insurance cannot pay for the claim.
Hierarchy for Michigan Auto Insurance Claims
When someone is injured in an accident, ideally, they’re able to make a claim on their own auto insurance policy. But if an injured person doesn’t have no-fault insurance, that doesn’t mean they’re out of luck when it comes to having their damages covered. In these types of situations, there is a hierarchy in place which covers how the uninsured make claims.
If a driver or passenger of a car does not have their own no-fault policy, their next option would be to make a claim on the insurance policy of their spouse or another relative they live with. If that isn’t an option, they would be assigned to the Michigan Assigned Claims Plan. Medical benefits from the Assigned Claims Plan are capped at $250,000 and if the injured person’s medical expenses exceed that amount, they can sue the at-fault driver for those additional expenses.
When an injured pedestrian or bicyclist doesn’t have no-fault insurance, the hierarchy is now the same as it is for drivers and passengers without insurance. Under the old Michigan no-fault law, pedestrians and cyclists were able to make a claim on the driver’s insurance if they weren’t able to make a claim on a spouse’s insurance policy or an insurance policy of another resident they live with. Now, those cases are handled by the Michigan Assigned Claims Plan.
In cases involving motorcyclists, the hierarchy is as follows:
The vehicle owner’s insurance
The vehicle driver’s insurance (if the owner was not driving at the time of the accident)
The motorcycle operator’s insurance
The motorcycle owner’s insurance (if the owner was not driving at the time of the accident)
The Michigan Assigned Claims Plan
What does the new auto insurance law mean for Michigan car accident victims?
Michigan’s reformed no-fault auto insurance law impacts car accident victims in several different ways. For example, under the new law, if you are in a car accident and your total damages exceed your PIP coverage, you could file a lawsuit against the at-fault driver for the expenses not covered by PIP. Or if you have injuries that require in-home care, insurance carriers will no longer be required to pay for more than 56 hours per week for family-provided attendant care effective July 1, 2021.
When you’ve been injured in an accident, you may also be able to sue for pain and suffering damages. However, under Michigan’s new auto insurance laws, you will need to meet the following criteria for an injury being a “serious impairment of body function.” This criteria requires that the injury:
Be objectively manifested (observable through symptoms or conditions)
Be an impairment of an important bodily function
Affects the person’s ability to live their life as they normally would
If an injury meets this criteria for pain and suffering claims, the new law does not have a limit about how long the injury needs to last for.
When an accident victim receiving no-fault benefits is cut off or their claim for benefits has been denied, the old law required that the amount of damages they could sue to recover be limited to one year before the claim is made. Under the new law, that date is changed to one year before the claim is formally denied. There have also been some changes to how long it takes before insurance benefits are considered overdue. The new law provides insurance companies with 90 days from the date a claim is submitted to make a decision about paying out benefits. Under the old law, insurers had 30 days.
In cases when a car accident victim is required to pay an insurance deductible for property damage to their car even if they weren’t at fault for a crash, they can make a mini-tort claim against the at-fault driver’s insurance to recover the cost of that deductible. Under the new law, the maximum mini-tort recovery is increased from $1,000 to $3,000
Michigan’s reformed no-fault law also put new requirements on independent medical examiners (IMEs), the independent doctors hired by insurance companies to examine car accident victims. IMEs now must:
Be licensed in the state of Michigan
IMEs must have spent the majority of of their professional time in the year prior acting as an IME teaching in an accredited medical school or practicing medicine in a clinical setting
If a person is to be treated by a specialist, the IME must specialize in the same area as the specialist
Accidents and Out-of-State Drivers
The changes to Michigan’s no-fault laws not only made significant changes for Michigan residents, it made changes for out-of-state drivers who are injured in the state. Under the new law, out-of-state drivers injured in car accidents need to file a lawsuit against the at-fault driver for their damages. However, if the out-of-state driver is over 50% at-fault for the accident, the out-of-state driver is not able to sue.
Contact a Michigan Car Accident Lawyer
When you’ve been injured in a car accident, don’t try to go it alone. Insurance companies are only interested in doing what’s right for them, not necessarily what’s best for you. Very often, they’ll try to pressure car accident victims into settling for an amount that doesn’t cover all of their necessary expenses.
At Goodwin & Scieszka, you’ll be able to get help from an auto accident lawyer experienced in handling Michigan auto accident cases. We’re ready to fight for you to get the compensation you need. Contact us today for help with your case.
FAQs About Michigan No-Fault Reform
What are the best levels of auto insurance coverage to have?
If you’re considering reducing your auto insurance coverage to save money, remember that you could be losing valuable protection if you’re involved in a car accident. If you’re catastrophically injured in an accident, the $250,000 or $500,000 limits of PIP coverage can be reached very quickly. Goodwin & Scieszka highly recommends continuing to buy unlimited PIP coverage to ensure you and your family will be fully protected if you’re seriously injured in a car crash.
Another thing to keep in mind is the fact that since many other drivers will likely reduce their own PIP coverage, it’s a good time to think about the level of residual bodily injury (RBI) coverage you have. This coverage helps protect your assets if you or a family member is at fault for a car accident and the other party files a lawsuit for damages that exceed their PIP coverage. We recommend increasing your RBI coverage to maximize your protection. Another inexpensive option to protect your assets in the event of a car accident is the umbrella coverage tied to your homeowners insurance.
If you have any questions about your auto insurance coverage, contact your insurance agent or Goodwin & Scieszka for more detailed assistance.
How much will I save on my auto insurance?
Bringing down the cost of auto insurance premiums was a key goal in reforming Michigan’s no-fault law. But since auto insurance premiums are based on several different factors, there is no one definitive answer to this question. The level of PIP coverage you choose plays a significant role in how much you can expect to save. Insurers are required to provide financial savings on PIP coverage for eight years.
The updated law also prohibits insurers from using non-driving factors in determining premiums, such as zip code, occupation, credit score, marital status, and level of education. Drivers will also save money through reduced payments to the Michigan Catastrophic Claims Association (MCCA) and fee schedules between insurers and healthcare providers.
What happens if I don’t choose to make any changes to my auto insurance policy?
If you don’t choose to make any changes to your auto insurance policy, insurance companies have default levels of PIP and BI coverage they will choose for you. The default level for PIP is unlimited coverage and $250,000/$500,000 for BI coverage.
How does the new law protect consumers?
In addition to helping reduce premiums for many drivers and barring the use of non-driving factors when determining premiums, the new Michigan no-fault laws created a fraud investigation unit to handle cases of fraudulent activities in the insurance market. The Department of Insurance and Financial Services (DIFS) website is also required to have pages where consumers can report unfair settlements and fraudulent activity and where consumers can learn about how the Insurance Commissioner can help if insurers are not fulfilling their obligations. DIFS also added more educational resources to their website to help consumers better understand the changes to the law.
Download Our Infographic
Click above to download our infographic with helpful information about the changes under the new no-fault insurance laws.