Michigan No Fault Law

Overview of Michigan No-Fault Law

The Michigan No-Fault Insurance Law was enacted to ensure payment of specific benefits to individuals injured in motor vehicle crashes, regardless of fault. These benefits, referred to as ‘no-fault benefits,’ function similarly to health and disability insurance, offering coverage for the injured individual and their family whether the injury occurred in their own vehicle, another’s vehicle, or as a pedestrian.

Coverage Provisions

To qualify for no-fault coverage, the injury must result from an accident involving a motor vehicle, typically defined as a vehicle with more than two wheels, powered by a source other than muscular energy, and designed for operation on public highways.

Exclusions

Uninsured Vehicle Owners: Individuals injured while operating or occupying an uninsured vehicle they own are excluded from benefits.

Motorcyclists: Motorcycles, being two-wheeled vehicles, are generally excluded. However, if a motorcycle collides with a motor vehicle, no-fault coverage may apply, typically through the insurer of the motor vehicle involved.

Determining the Responsible Insurer

No-fault benefits are associated with the individual holding the insurance policy rather than the insured vehicle. So, if you are injured in a motor vehicle crash, your own insurance policy will be responsible for paying benefits, regardless of who was at fault. This coverage typically extends to the policyholder, his or her spouse, and relatives residing in the same household. In the rare case that there is no applicable coverage, the Michigan Assigned Claims Plan (MACP) steps in. The MACP will then assign an insurer to provide no-fault benefits, ensuring that you are not left without the necessary economic support in the event of an accident.  However, Depending on the situation, benefits for care, recovery, or rehabilitation may be capped at only $250,000 due to changes in the law enacted in 2019.

Applying for No-Fault Benefits

It is extremely important for individuals injured in motor vehicle crashes to apply for no-fault benefits as soon as possible. To start the process, you must submit an application to the appropriate insurer within one year of the crash. This application should include details such as the time, location, nature of injuries, and a claim for benefits. Standard application forms are available through most insurance companies. In addition to the application, you may need to provide a Wage Verification signed by your employer and an Attending Physician’s Report to be completed by your doctor(s). It’s important to note that failure to submit a complete application within the required timeframe could result in denial of benefits. Most experienced attorneys should be able to assist with this process if needed.

Types of Benefits

Medical Benefits

The insurer covers reasonable expenses for necessary care, recovery, or rehabilitation. Coverage includes hospital stays, medical services, therapy, prescriptions, transportation for medical care and attendant care. As of July 2020, the extent of coverage depends on the policy’s selected medical expense limits.

“Attendant Care” is basically home nursing-type services that may include supervision, physical transfers, assistance with bathing, grooming, toileting, and medication management, just to name a few. Attendant care provided by someone other than through an outside agency is limited to 56 hours per week and is usually paid at an hourly rate. In some situations, additional hours may be contracted for with the insurance company.

Medical Mileage

Claimants may seek reimbursement for mileage incurred traveling to and from medical appointments, with rates varying by insurer.

Funeral Expenses

Policies provide a minimum of $1,750 for funeral expenses, with optional coverage up to $5,000.

Wage Loss Benefits

No-fault policies compensate for lost wages up to 85% of the injured person’s income, subject to a monthly cap adjusted annually. Benefits are payable for up to three years from the date of the crash. 

Survivor’s Loss Benefits

Dependents of individuals killed in accidents may receive benefits for lost income and fringe benefits for up to three years, subject to the same monthly cap as wage loss benefits.

Replacement Services

Up to $20 per day is available for three years to cover household tasks the injured or deceased individual would have performed had it not been for the injuries sustained in a crash. These tasks may include cooking, cleaning, childcare, yard work, snow removal, etc.

Coordinated and Excess Medical Coverage

Policies may offer coordinated or excess medical coverage at a reduced premium, allowing policyholders to lower their insurance costs. Under these types of policies, claimants must first utilize their existing health insurance benefits for medical expenses arising from a motor vehicle crash. They can only seek reimbursement for remaining or uncovered costs from their no-fault insurer after exhausting the benefits provided by their health insurance plan.

Once the health insurer has processed the claims, whether through partial payment, denial, or coverage limitations, the claimant can then submit any outstanding expenses to the no-fault insurer for reimbursement.  For example, if a claimant’s health insurance limits physical therapy to a certain number of visits or excludes specific treatments, the no-fault insurer would cover those expenses not handled by the health insurance plan. Claimants must provide documentation, such as explanations of benefits (EOBs) or denial letters from their health insurer, to demonstrate that health insurance benefits have been fully utilized.

Policyholders need to understand the terms and conditions of their coordinated or excess medical coverage. They should carefully review their health insurance plan to identify any exclusions or limitations affecting their ability to obtain full reimbursement. Additionally, claimants must adhere to strict timelines for submitting claims and maintaining accurate records of expenses to ensure compliance with health and no-fault insurance requirements.

Lawsuits for No-Fault Benefits

Claims for disputed benefits can be filed within one year of when the insurance company formally denies payment of a disputed item. This reassures the insured about the availability of legal recourse, making them feel secure and protected.  Successful claims may result in interest payments and, in some cases, attorney fees if it is determined the insurance company failed to pay a certain benefit timely and/or that the failure to pay was unreasonable.

Auto Negligence Lawsuits

Under specific conditions, individuals may sue a negligent driver for noneconomic damages (e.g., pain and suffering) or certain economic damages. To pursue a claim, the injured party must demonstrate that the other driver was at least 50% at fault and that the injury meets the legal threshold of “serious impairment of a body function.”

The concept of “serious impairment of body function” was clarified in the McCormick v. Carrier case and later codified by the Michigan legislature and sets specific guidelines for determining whether an injury meets the threshold in car accident cases. A car crash injury qualifies as a “serious impairment of body function” if it impacts an important body function (a function that is of great value, significance or consequence to the injured person), the impairment is objectively observable (meaning it is observable or perceivable by someone other than the injured person), and it affects the person’s ability to lead their normal life, i.e., it had an influence on some of the person’s capacity to live in his or her normal manner of living. The court emphasized that the focus is on how the injury changes the individual’s daily activities compared to before the accident, not just the severity of the injury itself. For example, if someone suffers a back injury that prevents them from working, exercising, or caring for their family as they did before, it could be considered a serious impairment under this standard.

Timing

Third-party lawsuits must generally be filed within three years of the accident. Exceptions apply to minors and individuals with mental impairments.

Retaining Legal Counsel

Michigan law permits clients to hire attorneys on a contingent fee basis, typically one-third of the recovery. Clients are responsible for litigation costs, which are generally reimbursed at the end of the case.

Tax Implications

Compensation for personal injury claims, including no-fault benefits and pain and suffering awards, is generally non-taxable. However, interest awarded by the court is subject to income tax.

Michigan’s No-Fault law is some of the most complex in the country, and this is meant to be a summary of the basics of the No-Fault Act. More complicated questions should be directed to a Michigan car crash attorney with vast experience in automobile law.  Contact the Davis Law Center anytime with any questions you may have if you or a family member has suffered personal injury in a car, truck, motorcycle, or pedestrian crash.