Michigan No-Fault Insurance and Laws Explained

michigan no fault insurance

The Michigan no-fault insurance system was designed to help people who have been injured in an accident. It is a unique system that makes sure car accident victims get the help they need promptly and without focusing on fault.

With the recent changes to car insurance laws in Michigan, an experienced attorney at Lipton Law can assist you with explaining those changes and help you build your case. Give us a call today at 248-557-1688 for more information.

Is Michigan a No-Fault State for Car Accidents?

The simple answer is yes, Michigan is a no-fault state. The no-fault system requires drivers in Michigan to carry personal injury protection (PIP) insurance to cover their own medical expenses after a car accident. They also need property protection insurance to pay for any damage their car does to the other party’s property. Injured accident victims also have limits on their ability to sue others for their medical expenses after an accident.

How Does No-Fault Insurance Work in Michigan?

no fault insurance michigan

Without the right knowledge and experience, it can be difficult to determine who pays for car damage in a no fault state. If you have an auto accident in Michigan, no-fault insurance pays for your medical expenses, lost wages, replacement and repair services, and the damage done to other people’s property. Under no-fault reform in Michigan, it doesn’t matter who the at-fault driver is. Basic no-fault insurance policies will pay for repairs to your vehicle.

Recent Changes to Michigan No-Fault Insurance

Michigan lawmakers have made changes to the insurance laws in the last few years. Below are changes that have been made.

Assigned Claims

Car accident victims who claim Michigan no-fault insurance benefits through the Michigan Assigned Claims Plan will be limited to a cap of $250,000 on medical benefits. This plan aims to assign car insurance companies with providing benefits to Michigan drivers who otherwise had no source of car insurance coverage.

Attendant Care

Under the recent Michigan auto insurance reform, after July 1, 2021, auto insurance companies are no longer obligated to pay for more than 56 hrs per week of in-home, family-provided attendant care.

Bodily Injury Liability

As of July 1, 2020, drivers will be required to carry bodily injury liability insurance with no less than $250,000 for bodily injury or wrongful death of a person in any one accident. They must also have at least $500,000 for bodily injury or death of two or more people in an accident. However, the no-fault law also states that a driver can purchase lower limits of $50,000 and $100,000.

Catastrophic Claims

Michigan’s unique no-fault insurance law previously required owners of vehicles registered in Michigan to buy unlimited lifetime coverage for any medical bills from a car accident. However, Michigan law no longer requires owners and registrants to purchase this coverage, but the option remains available to them.

Excess Medical Bills

If Michigan drivers have accident-related medical bills that exceed the PIP medical coverage benefits of their no-fault policy, they can sue the at-fault driver in a third-party tort lawsuit. They can sue for payment of their present and future medical bills, under the Michigan no-fault auto insurance law.

Medicare-Based Fee Schedule

Effective July 1, 2021, the no-fault reform bill requires medical providers to conform their pricing to the new Medicare-based fee schedule. This will be a certain percentage of what is payable under Medicare. Their reimbursement under the Michigan No-Fault medical fee schedule is limited to 200% of the “amount payable” under the Medicare pricing structure for treatment and training provided “after July 1, 2021 and before July 2, 2022.” The following year, the percentage will drop to 195%. After July 1, 2023, the percentage will be permanently set at 190%.

Opt Out for Medicare Patients

On July 1, 2020, drivers who are on medicare have the option to opt-out altogether from PIP medical benefits coverage. This change was put into place with the intent that those drivers would turn to Medicare for medical coverage for injuries suffered in a car accident.

Personal Injury Protection Choice

Drivers will choose whether they want to keep unlimited coverage or whether they would like to cap their coverage. The coverage caps are $50,000, $250,000, or $500,000 under the new no-fault policies. Prior to this change, drivers were required to purchase unlimited PIP medical benefits. This would cover all car accident-related medical care for as much and as long as it was “reasonably necessary” for the injured person to fully recover.

Qualified Health Coverage

After July 1, 2020, drivers gained the ability to select certain coverage levels and options. Drivers and their family members may need to have health insurance coverage that counts as “qualified health coverage”. Qualified health coverage is either coverage under both Medicare Parts A and B, or their own car insurance that does not exclude or limit coverage for accident-related injuries. It must also have an annual deductible of $6,000 or less.

Third-Party Lawsuits for Car Accident Injuries in Michigan

michigan no fault car insurance

To receive compensation from the at-fault driver, you will need to file a “third-party” lawsuit against him or her. It is called a third-party because they are not one of the contract parties between you and your insurance company.

Michigan’s no-fault insurance law only allows third-party lawsuits when there are serious injuries involved. You and your attorney will have to show you have suffered a “serious impairment of body function” before you can win a third-party case. The court will consider the following to determine whether your injury is serious enough to bring a third-party claim.

  • The nature of your injury
  • How it affects your life
  • What kind of medical treatment you need to recover

Your first-party claim covers your medical expenses and certain other expenses so they will not be included in your lawsuit. Your third-party lawsuit picks up there the no-fault policy leaves off, including:

  • Wage loss: No-fault benefits for last wages only last 3 years. Your third-party lawsuit will help you recover what you could have earned if you were working, if you were disabled beyond those 3 years.
  • Pain and suffering: The at-fault driver caused you to go through the pain of your injury. So, while money doesn’t help undo it, a pain and suffering award can help compensate you for what happened.
  • Disability and disfigurement: Most third-party cases involve some permanent or lasting injury. The scare of these injuries can affect your self-worth and the way others view and interact with you. A lawsuit can compensate you for this change in your life.

Experienced Michigan Car Accident Lawyers

If your accident claim has been rejected, don’t fret. Our team at Lipton Law are experienced and knowledgeable in Michigan car insurance laws. We can also help you with your no-fault benefit claims. Give us a call today at 248-557-1688 for a consultation with one of our Detroit car accident lawyers.