Michigan No-Fault Laws and Most Common Questions Answered

Written by Steven Matz on . Posted in .

Getting into a multiple-person car accident can be a troubling time. You may not know how to approach the insurance company after a car accident. Fortunately, the at-fault laws in Michigan seek to help victims of car accidents. Matz Injury Law is here to help you when it comes to dealing with car insurance companies. Call us at 1-866-22Not33 or use our contact page to get help with your claim.

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What Does It Mean for Michigan to Be a No-Fault State?

When you are involved in an auto accident, you need to understand the options you have to get compensation for that crash. In the state of Michigan, laws favor injured parties by making it easy for most people to get compensation for their injuries, regardless of who is at fault for the accident. This policy protects against uninsured drivers or unnecessary delays in determining who is at fault.

Michigan’s car accident laws are considered no-fault laws. As a no-fault state Michigan requires its drivers to have insurance to cover their own injuries and damages in a car crash, regardless of who is the at-fault driver.

Michigan no-fault laws apply to car accidents, not other types of accident claims. Because of this law, you must carry personal injury protection insurance or PIP. If you crash, you turn your damages into your insurance company who will pay for your injuries and any damages you caused to the property of others.

While this may seem backward, because your insurance pays for damages you did not cause in an auto accident, it actually provides quite a bit of protection for you. It also means you get even more for the premiums you pay for your auto insurance policy, because it may eventually pay for your injuries in a crash even if you are the at-fault driver.

The no-fault system in Michigan has developed many flaws that lead to delays, denials of claims, and lawsuits over non-payment of benefits to victims who thought that they were 100% covered automatically by their own auto policies.  Attorneys who practice in the auto law field in Michigan spend much of their time in negotiation with no-fault carriers who use the limitations in the no-fault system as a way to try to avoid paying benefits that are being claimed by policyholders.

No-Fault Insurance Priority List

The system is called a “priority” list that works something like a ladder, starting at the top rung and moving downward. Here is the priority system if you were in a motor vehicle (not including a motorcycle) when you were injured in a collision–even a one-car incident, or one where you were driving but were at fault:

Highest priority: your own car insurance, even if you were a passenger; if you didn’t have car insurance, and were in your car when a crash occurred, you are disqualified from the no-fault system and can’t get any of the benefits discussed above;

Second priority: the auto insurance in force on the date of the accident that applies to any relative you live with; it doesn’t matter whether you are listed on the policy–the no-fault coverage applies to any relative in your household who doesn’t have their own auto insurance;

Third priority: the auto insurance covering the owner of the vehicle you were in (if that’s not you, or a resident relative);

Fourth priority: the auto insurance covering the driver of the vehicle you were in (if that’s not the person in one of the first three priorities);

Fifth priority: Michigan Assigned Claims Plan–the State of Michigan will appoint an insurance company to provide your no-fault benefits if none of the first four priorities have insurance, so long as you were not occupying an uninsured vehicle that you owned.

The good news is that you will qualify for no-fault coverage for medical, wage reimbursement, medical mileage, household chore assistance, and attendant care (family member providing assistance to a seriously injured person) if you were in a motor vehicle and got hurt by a collision, whether you were a passenger or the driver, without regard to who caused the collision.

The bad news is that you cannot get no-fault coverage if you were in your own uninsured vehicle when the collision happened.

Please keep in mind that “qualifying” for benefits is just the first step. There are procedures that you must follow to satisfy the insurance company that you are entitled to the benefits. These procedures must be followed, and kept current, in order for you to receive the benefits that may be due to you.

Also, remember that the rules for motorcyclists are different from those of other drivers.

What Is the Difference Between No-Fault and Fault States?

How do at-fault and no-fault states differ when a car crash occurs? In a no-fault state, like Michigan, your insurance coverage will cover your own injuries and medical bills under a personal injury protection policy. The no-fault state laws make this insurance coverage a requirement to drive in the state.

In an at-fault state, the driver who is at fault for the injuries due to their negligence or driving under impairment is the one who pays the cost of any hospital bill or medical concern after a crash. The injured person may have to wait to get compensation until the at-fault driver is completely discovered through the legal system. Some states even split the fault, requiring the injured party to pay for a percentage of their medical care based on the percentage of fault they share in the accident.

This difference is particularly important in a multi-vehicle accident. With no-fault states, you can start working on your claim right away. With an at-fault state, injured parties must wait until law enforcement or attorneys determine who is, in fact, at fault for the crash. Then the claims go to that party’s insurance and the payment for injuries begins.

Why Does Michigan Have No-Fault Insurance?

Why do some states, such as Michigan, have “No-Fault” auto insurance, while others don’t?

In the past, Michigan had a tort liability system in place for car accidents. This system required drivers to carry liability insurance. If they were in an accident that caused injuries to others, their insurance would pay if they were at fault.

Michigan’s no-fault insurance law was unique among the states. It actually required drivers to purchase unlimited lifetime coverage for medical expenses from motor vehicle accidents through the Michigan Catastrophic Claims Association (MCCA).

In 2020, the law changed and Michigan became a no-fault state. The legislature recognized that having PIP benefits on someone’s own insurance helps ensure that injured parties get medical coverage as quickly as possible. This new auto insurance law eliminated the fault system and flipped the responsibility around, and now drivers must carry personal insurance protection to protect themselves and pay for their own injuries. It also eliminated the requirement to buy coverage through the MCCA.

This is supposed to make getting your benefits easier and faster than if you have to sue the other driver to win those benefits, like you may have to do in states that don’t have no-fault auto insurance. The idea behind no-fault is that each of us buys the coverage we want, and we use our own insurance to pay for collision damage, wage loss, medical bills and several other benefits. We don’t have to worry about what coverage if any, the other driver had to get those basic reimbursements.

With this insurance reform, Michigan became a no-fault state because lawmakers found that the tort liability system was hurting motorists and accident victims. Often they ended up struggling with medical bills when they had accidents due to uninsured drivers or when they could not prove the cause of their accident. Under the new law, these medical expenses are the responsibility of your insurance provider, even if the other driver was fully at fault.

What Are the Benefits of No-Fault Insurance?

When you are in a no-fault insurance state, like Michigan, you do not have to worry about the cost of any bodily injury you sustain in a car crash. Your insurance company will step in and cover these costs, up to the limits of your policy’s coverage. These coverage benefits include:

  • Medical expenses: Medical bills, hospital bills, and the cost of ongoing health care treatments and medications after your initial visit to the doctor are all part of this coverage.
  • Damage to others’ property: You are liable for any damage you cause to another person’s property, and your insurance will cover this.
  • Lost wages: Wage loss can add up quickly after a motor vehicle accident, and your PIP coverage will pay some of this.
  • Child care coverage: If you need to pay someone to care for your children while you are dealing with the aftermath of the accident, the new law requires your insurance company to pay for this.
  • Household modifications: If your injuries require you to use a wheelchair or a walker, you may not get enough help through your health insurance, Medicaid, or Medicare to pay to modify your house, but this law requires your insurance to cover the modifications to your house you might need to live there safely.
  • Nursing care: Michigan’s no-fault insurance law requires your insurance provider to pay for attendant care if you need long-term care after the crash.

How Much Compensation Can I Receive?

Under the new no-fault policy law, you are required to carry personal injury protection up to certain coverage amounts. These coverage limits indicate how much reimbursement you receive after a crash. Your coverage options include:

  • Unlimited coverage
  • $500,000 per person, per accident
  • $250,000 per person, per accident
  • $250,000 per person, per accident, with exclusions

For the final choice, the exclusions include named insured people who choose to use their own health coverage, that is not Medicare, to cover their injuries and any family member who chooses to exclude the coverage and has good health insurance in place.

In addition, the law requires that PIP insurance coverage will pay for certain types of property damage. No-fault insurance will pay up to $1 million for damage your car does to other people’s property under the property protection clause. This might include damage to buildings and fences after the crash. It also includes damages your vehicle causes to a parked vehicle. If any other car gets damaged in the crash, PIP coverage does not apply.

Do I Need a Lawyer to Start No-Fault Benefits?

No. You can start your no-fault claim on your own. If you are hurt in a motor vehicle accident, you can contact your insurance company and set up your claim for medical, wage loss and other no-fault benefits. There is no rule that you have to have a lawyer do this for you. In fact, attorneys are required to explain to you that it is not necessary to have a lawyer in order to make this application for benefits.

You may hire a lawyer to help you apply for benefits if you wish. Many people find that the no-fault system is difficult to understand and to work their way through. Others find very quickly that the information the insurance company wants before it will start paying seems unreasonable or overwhelming.

Still, others are concerned that statements they may make when they apply for benefits on their own could be used against them later on in the case. These can be very legitimate concerns, and you may well need to hire a lawyer to help you receive benefits that are in dispute. Just because you can apply for benefits on your own doesn’t mean that the insurance company is going to pay them. You may very well end up needing a lawyer to help you from the very beginning, if not as your claim continues.

Of course, your case against the other driver for pain and suffering damages is another matter. We don’t recommend to anybody that they try to deal directly with the other person’s insurance company without hiring a lawyer first when it comes to discussing damages for the injuries themselves.

Source: Formal Ethics Opinion C-223

Does it Have To Be a Permanent Injury To Qualify?

“Do I have to have a permanent injury to qualify for money damages against the other driver in a Michigan no-fault case?”

This is a question we answer in one form or another just about every day in our practice. In a Michigan motor vehicle crash case, you may qualify for money damages against the owner, driver, or both of the other vehicles if:

  1. The other driver was at least 50% responsible for the collision
  2. You had no-fault coverage on your vehicle (if you were a pedestrian or bicyclist, that doesn’t apply)
  3. You suffered a serious impairment of body function, permanent serious disfigurement, serious neurological injury or death

The area that causes the most questions is “serious impairment.” Some Michigan judges and courts used to think that “serious” meant “permanent,” or even “disabling.” In recent years, however, the Michigan Supreme Court clarified the definition somewhat. It seems clear now that an injury from a car accident is “serious” if it can be verified by a doctor, and if it alters the way a victim has to live his normal life.

We take that to mean that even if you go back to most of your regular activities at some point after an auto crash injury, you may still qualify for damages if you can show that proven injuries are making it clearly more difficult to function than you did before the accident.

Injured Motorcycle By An Uninsured Driver

It’s possible. This would happen if you had valid liability coverage on your motorcycle, and were struck by a vehicle (that means car or truck, not another motorcycle) that DID NOT have insurance. In that specific case, you could apply for insurance through a car or truck that you owned and insured (or that was owned and insured by someone else who let you drive the their motorcycle), even though your car or truck was not involved in the accident.

This rule applies no matter who was at fault, as long as you can prove that a “motor vehicle” (not a motorcycle) was involved in the collision with you. It also applies to your motorcycle passenger, if any.

Source: MCL 500.3114(5)(c), (d)

Can I get Michigan No-Fault benefits if I am in an auto accident in another state?

If you have Michigan no-fault benefits yourself, or through a resident relative’s policy, that coverage “follows” you to any state, U.S. territory, or to Canada. This means that you qualify for medical benefits, wage loss and the same “first party” coverage that you would have in an accident that happened in Michigan. This is true even if your vehicle was not involved in the out-of-state accident.

For example, if you went to another state for a vacation, and were injured while riding a bus, you could still qualify for Michigan no-fault benefits as long as you were covered by a Michigan policy at the time. This is especially helpful to remember if you have children who are away at school in other states. As long as they are covered on your policy here in Michigan, they are eligible for no-fault coverage if they get hurt in a motor vehicle accident in the other state. So don’t remove your children from your policy until they move away for good!

Of course, you may also qualify for other benefits or compensation as well, depending upon the facts of your particular situation.

The No-Fault system has its problems and limitations, but it is very valuable coverage as far as it goes. One of the good features has been described in this posting—it follows you like an umbrella to keep you protected when you travel to other states or to Canada.

Will Replacement Services Benefits Cover My Cost to Hire Someone to do My Job if Hurt in Accident?

Not likely. Replacement services are allowed for up to $20/day under no-fault in Michigan. The benefits are supposed to help you pay others to do chores you would have done yourself if you hadn’t been hurt in an accident. You usually will need a doctor’s prescription to support your claim, and your insurance company will also usually want to see your medical records to help prove that you can’t do your customary household duties.

But these benefits only apply to activities that do not produce income. So you can see that the insurance company isn’t going to reimburse you to hire another worker to take your place on a crew while you are off, or pay someone else to go out and take bids for construction jobs for you. Twenty dollars a day isn’t much of a benefit to begin with, and it is limited to what we usually think of as household chores, not to replace things you do for money.

Can I Get No-fault Benefits if I Am Injured While Working on My Car?

Yes, the No-Fault Law says that PIP benefits are available for injuries that occur during the maintenance of a vehicle. It is not necessary that the vehicle is in motion to bring this provision into effect. For example, in one case, a man had his car up on a jack so that he could replace his shock absorbers. It slipped off the jack and landed on him. At first, the car insurance did not want to pay his medical expenses, claiming that the car wasn’t running, or even being used as a motor vehicle at the time, meaning that no-fault benefits should be denied.

But the appeals court said that the No-Fault Law makes it clear that “maintenance” of a vehicle is an activity that is covered by benefits if someone is injured while working on an insured vehicle. Replacing shock absorbers is certainly maintenance. Benefits were ordered to be paid to the injured person.

Other cases have said that “maintenance” covers such activities as hooking up your car to be towed, or to looking under the hood to see why the car won’t start. Even though the cars weren’t running at the time the person was injured doing those things, the courts have said that these activities are covered by no-fault insurance.

Were You Injured and Need Representation? Call Matz Injury Law

Steve and Jared Matz are compassionate auto injury and personal injury lawyers. We know how to work with PIP auto insurance companies to ensure injured individuals and their families get a fair amount of compensation after a crash.

Our passion is to help injured individuals get their full PIP benefits and any other compensation they deserve after a crash. We want to help you get back on your feet, so you can enjoy life once again. We understand the unique no-fault laws in Michigan and can help you navigate working with insurance companies or seeking help for complex accidents that have many parties present. We are located in Southfield and proudly serve the greater Detroit area.

If you or a family member have been injured in a car accident and need knowledgeable representation and a thorough explanation of the no-fault insurance laws in Michigan, call our law firm today at 1-866-22Not33 or use our contact page today. We are eager to guide you through your auto accident case.

Written By Steven Matz

Steven J. Matz is a founding shareholder of Matz Injury Law. The firm’s concentration is on personal injury litigation, with an emphasis on traumatic brain injury. Mr. Matz earned a Bachelor of Arts degree with high distinction and highest honors in 1974 from the University of Michigan and a Juris Doctor degree in 1977 from The George Washington University National Law Center. Mr. Matz lectures and publishes in a number of areas, including ethics, marketing, trial tactics, and head injury. Mr. Matz has served on the Michigan Association for Justice Executive Board and currently serves the Michigan Attorney Discipline Board as a Hearing Panel Chairman and Master. He is also a member of the State Bar Committee for Character and Fitness.
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