Michigan's Auto No-Fault System
The law took effect in October of 1973. Prior to this date, Michigan operated under a tort liability system. This meant that "fault" had to be determined before benefits were paid. While this was battled out in court, benefits such as work loss and money for medical bills went unpaid and once fault was calculated there was a chance that even if you were 1% at fault, you could be completely excluded from receiving any benefits (Contributory Negligence).
The main objective of Michigan's No-Fault system was to increase the level of benefits paid to injured parties, make sure payments of benefits were made promptly and to reduce legal and administrative expenses. Michigan's No-Fault system provides unlimited medical and rehabilitation benefits. It provides wage loss, $20.00 per day for replacement services (ie. household chores, snow shoveling, mowing the lawn, etc) for up to three years after the date of the injury regardless of who is at fault and the damage you do to other peoples property.
There are three main parts to Michigan's No-Fault auto insurance policies:
1. Personal Injury Protection (PIP): This part of your insurance policy will pay all reasonable and necessary medical expenses with no maximum limit. It also will provide wage loss payments up to 85% of the income you would have earned if you were not injured, however, there is a max monthly limit of $5,541.00 as of 10/01/2017 (this number is revised annually (Bulletin 2017-12-INS). In addition, it provides payment for household services if you are unable to do them yourself or for your family.
2. Property Protection (PPI): Michigan No-Fault will pay up to $1 million for damage your motor vehicle does in Michigan to other peoples property, such as buildings and fences, as well as pay for damage your vehicle does to another properly parked vehicle. It does not pay for any other damage to cars.
3. Residual Liability Insurance (PL/PD): No-Fault law protects an insured person from being sued as a result of a motor vehicle accident except in certain situations. In general, you can only be sued, (a) if you cause an accident in Michigan in which someone is killed, seriously injured, or permanently disfigured; (b) if you are involved in an accident with a non-resident of Michigan who is an occupant of a motor vehicle not registered in this state; (c) If you are involved in an accident in another state; or for up to $1,000 if you are 50% or more at fault in an accident which causes damages to another person's vehicle which is not covered by insurance (ie. Mini Tort Law). The PD (property damage) part protects you in the event you cause damage to another person's vehicle outside the state of Michigan. For example, if you travel to Ohio (which is a tort state) and are found to be at fault in an accident, you would be responsible for all of the other driver's car damage.
You often hear people talk about the "minimum coverage" on your auto insurance policy. This refers to Michigan's law requiring you to have at minimum $20,000 per person/$40,000 per accident for bodily injury claims and a minimum of $10,000 for property damage claims (commonly referred to as 20/40/10). A. Young Insurance highly recommends you carry at least $250,000 per person/$500,000 per accident and $100,000 for property damage along with a proper personal umbrella policy in the event something happens that your normal insurance coverage amount won't cover.
For more information on the additional coverage you should have with your auto insurance policy, please visit us next time for part 2 of Michigan's No-Fault Law explained.
A. Young Insurance Agency
A. Young Insurance Agency is an Independent Insurance Agency located in Waterford, Michigan specializing in Home, Auto, Commercial and Life Insurance.
*The views expressed above is a summary of Michigan's No-Fault Law, is for educational use only and is not meant to provide specific legal advice. The information should not be substituted for competent insurance or legal advice from a professional in their respective field.
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