Auto Law In Michigan- A Primer Of The Michigan No-Fault Laws
by Bret Schnitzer
The Michigan no-fault system was adopted in 1978 to make sure that wage loss, medical treatment and household services were paid promptly and within 30 days without regard to fault.
A Michigan no-fault policy provides unlimited reasonable and necessary medical payment. It provides wage loss benefits for up to three years to a statutory maximum rate, and it provides up to $20 per day for replacement services if you are injured in an auto accident, regardless of fault. In exchange for these benefits, Michigan motorists gave up the right to sue in auto accidents except when someone is killed or met a threshold which is now defined as a serious impairment of an important bodily function that is objectively manifested and affects your ability to live your ordinary life. Because of this, disputes over who was at-fault in an accident will not hold up payment of medical bills, wage loss and household services. In Michigan damage to vehicles also falls under the no-fault system and requires Michigan drivers tot buy collision and/ or comprehensive insurance to cover damage to their own car or be limited to the $1,000.00 mini tort cap.
The Michigan Catastrophic Claim Association (MCCA) was established in 1978. The MCCA pays for claims paid by an insurer that exceed a certain amount. All insurers that sell auto insurance in Michigan must pay the MCCA an annual fee for each vehicle insured. That fee is known as the MCCA assessment,
No-Fault Insurance Is Required By Law
Michigan law requires no-fault insurance. Every registered car must be insured. Every car owner must buy basic coverage in order to get license plates. It is a misdemeanor to drive or let your car be driven without basic no-fault coverage. The insurance industry lobbied hard for this requirement in the No-Fault system. I am sure you can understand why. To make it a crime not to have No-Fault insurance creates a unique opportunity for the insurance industry to makes lots of money in our State.
If you are convicted of driving without basic no- fault insurance coverage, you may be fined up to $500, put in jail for up to one year, or both. Additionally if you do not have the No-Fault insurance on the vehicle you own and operate you do not get any no-fault benefits and you cannot sue the at fault driver either. Additionally, and the insurance companies can actually sue you for the no-fault benefits they pay out to all the injuries parties in the accident. Pretty harsh isn’t it!
If you are unable to produce proof of insurance when requested to do so by a law enforcement official, you may be found guilty of a civil infraction. The court may order your license suspended for at least 30 days or until you are able to provide such proof. You may have to prove you purchased a pre-paid non-cancelable insurance policy before you may renew your vehicle’s registration.
The No-Fault Minimum Policy Has Three Parts
Personal Injury Protection (PIP)
This part of your no-fault policy pays all reasonable and necessary medical costs if you are hurt in an auto accident. It also pays, up to 85% of the wages you would have earned if you had not been hurt, for up to three years. There is a maximum wage amount adjusted every year. You may also be entitled to up to $20 per day in replacement services. This is to pay for services you are no longer able to provide for yourself or your family because you are injured, such as housekeeping and yard work.
You may coordinate PIP coverage with other health or disability coverage you have to reduce your PIP premium. Medicaid, Medicare, and some self-funded health plans, however, do not allow coordination with PIP coverage. If you do coordinate your health coverage, and you are injured in an auto accident, your no-fault policy will pay your medical expenses or lost wages after you have used all the benefits under your health or disability plan. When you coordinate, these auto insurance coverage may be called excess medical and wage loss.
Property Protection (PPI)
This no-fault coverage pays up to $1 million for damage your car does in Michigan to other people’s property, such as buildings and property. It does not include other vehicles unless they were properly parked.
Residual Bodily Injury and Property Damage Liability Insurance (BI/PD)
This coverage pays your defense costs and any damages you are found liable for as the result
of an auto accident, up to the limits of the policy.
In general, these are the circumstances under which you could sue.
If the other driver was at fault in an accident in Michigan in which someone is killed or seriously injured.
Serious Injury is defined “as a serious injury to an important bodily function that is objectively manifested and affects your ability to live your ordinary life.”
A basic no-fault policy pays up to certain amounts for which you are found to be legally responsible.
Up to $20,000 for a person who is hurt or killed in an accident.
Up to $40,000 for each accident if several people are hurt or killed.
Up to $10,000 for property damage in another state.
This coverage is often described as 20/40. These are the minimum amounts of coverage you must have. Sometimes courts award more than these amounts. If this happens, you would be responsible for paying the amount not covered by your policy. To protect themselves, people often buy extra liability insurance. You should also by uninsured and underinsured motorist coverage to protect you from motorists that do not have any insurance or have lower limits of insurance.
It’s Your Choice: Additional Insurance You May Want to Buy
You can choose several types of auto insurance in addition to basic no-fault coverage. Four of the most common types are:
Residual Liability Insurance – Increased Limits
Physical Damage Insurance for Your Car (Collision and Comprehensive)
Limited Property Damage Liability Insurance (Mini-Tort)
Uninsured Motorists Insurance/ Underinsured Motorist Coverage
Insurance for Damage to Your Car
Your basic no-fault insurance policy does not pay to repair or replace your car if it is damaged. However, if your properly parked car is hit by another car, the other driver’s property protection insurance pays for repairs. Except for this situation, the only kinds of automobile insurance that will pay for repairs to your car are collision and comprehensive. Comprehensive coverage is sometimes referred to as other than collision coverage.
Collision coverage pays to repair or replace your vehicle if it is damaged in an accident. This coverage is available with or without a deductible. A deductible is the amount you agree to pay toward the cost of the repairs before the insurance company steps in and pays the rest.
When you buy car insurance, the law requires that you be offered at least two types of collision coverage:
Limited Collision Without a Deductible
This collision coverage pays to repair your car if you are 50% or less at-fault in an accident.If you are more than 50% at fault, you receive no benefits.
Broad Form Collision Coverage
This collision coverage pays to repair your car regardless of fault. If you are more than 50% at- fault, you must pay a deductible. If you are 50% or less at-fault, you pay nothing.
Many companies offer other choices in collision coverage. These include:
Limited Collision With a Deductible
If you are 50% or less at-fault, this type of colli- sion coverage will pay to repair your car, and you must pay a deductible. If you are more than 50% at-fault, you will receive no benefits.
Regular collision will pay regardless of fault, except you must always pay a deductible.
Comprehensive coverage pays if your car is stolen, collides with an animal or is accidentally damaged other than in a collision, such as by falling objects, fire, flood, and vandalism. Many companies require a deductible on this type of coverage. The higher the deductible, the lower is the cost of your policy. Personal items in your car, which are damaged or stolen, are usually not covered under automobile insurance policies. They may be covered under other types of insurance, such as homeowners.
“Mini-Tort” Limited Property Damage Liability Insurance
Under Michigan law, if you are 50% or more at- fault in an accident, you can be sued for damages to another person’s car which are not covered
by collision insurance. Most companies offer this coverage, which is sometimes called mini-tort coverage. At the present time it is capped at $1,000.00 which does not allow for much repairs.
Coverage Uninsured Motorists Insurance and Underinsured Motorist
Coverage for uninsured/Underinsured motorists is an optional coverage, that compensates you for pain and suffering and excess wage loss. This coverage applies only if a hit and run vehicle or an uninsured motorist strikes you. If you are killed in such an accident, benefits may be paid to your survivors. Underinsured applies only if the other vehicle has insurance but it does not coverage that covers the actual value of your injuries. This insurance generally requires you to get the policy limits from the underinsured motorist and get permission before you settle from your own underinsured carrier or you are barred from getting the underinsured policy. This requires legal representation to protect your legal rights properly.
Your Driving Record and Insurance History
Under Michigan law, an insurance company must accept an applicant at regular rates unless he or she fails to meet specific eligibility requirements
Because no-fault insurance pays for wages lost due to an automobile accident, some companies charge less if a person’s income is below a certain amount. If you are over 60 years old, you may waive part of your wage loss coverage if you have no earned income.
People use their cars for different purposes. Some drive to work, others drive only for pleasure. The less you drive, the less you may be charged for insurance.
Kind of Car
Certain cars cost more to repair or to replace, so collision and comprehensive insurance costs more. Also, some companies charge extra for insuring sports cars or high performance models.
What You Can Do To Lower Your Insurance Rates
Coordinate Any Health or Accident Benefits With Your Auto Policy
The no-fault law requires insurance companies to offer a discount if you coordinate other health
or disability benefits with your no-fault policy. If you have an auto accident and have coordinated these benefits with your personal injury protection coverage, your no-fault policy pays only for that part of your lost wages and medical expenses not paid by your other coverage. Because your auto insurer pays less in claims, your auto insurance cost is less. Before you coordinate policies, make sure your other insurance will provide benefits for an auto-related injury.
Keep Your Driving Record Clean
Drive carefully and obey all traffic laws. Tickets or substantially at-fault (more than 50%) accidents on your driving record increase the cost of your insurance. Remember: Your insurance company will get a copy of your motor vehicle record (MVR) from the Secretary of State when you apply for a policy and may check your MVR when you renew your policy.
Decide Whether You Need Physical Damage Coverage
If you have an older car, or one in poor condition, you may not want to pay for physical dam- age coverage. Call a bank or finance company to find out the price you would get for your car on a straight sale. From that price, subtract the deductible you would have to pay if you had a loss. Then subtract the cost of the insurance for one year. The amount you come up with is the most you would actually net if your car were totaled.
Consider Choosing a Deductible or a Higher Deductible on Your Collision or Comprehensive Coverage
You can buy collision coverage with a deductible of $250, $500, $1,000.00 or more. You can buy comprehensive coverage with similar deductibles. The higher the deductible, the less the insurance coverage will cost. Keep in mind that someday, you may have
to pay the deductible. Choose an amount you can afford.
What you should do if you have an Accident
The police should always be called. If possible, exchange names and insurance information with the other driver.Do not give any statements to the insurance companies or their investigators. Take photographs of your vehicle damage and any injuries and call us
Law Offices Of Bret A. Schnitzer, P.C.
Call us for a free consultation at (313) 389-2234. We provide the No Fee Guarantee. We do not charge any attorney fees until we collect for you.