Michigan No-Fault Reform Order of Priority
Bulletin #1 – Changes in The Order-of-Priority
On May 30, 2019, Governor Whitmer signed a major overhaul to the Michigan no-fault system, completely transforming Michigan car accident law. The legislation took effect on June 11, 2019 as Public Act 21 of 2019. There are a number of huge ramifications for Michigan drivers, their families, and anyone who uses a car, truck, or motorcycle in this state.
Over the next few months I will be writing about these changes and the effects they will have on all of us. The new law becomes effective in different stages, so the effects will be incremental over time.
Please call our office at 1-800 LEE-FREE (1-800-533-3733) with any questions about the new law. Our dedicated staff of Michigan car accident lawyers, paralegals and staff members are here to help.
Changes in Order of Priority:
The topic I am covering with this article is the change in the order of priority for PIP claims. There is a certain order for determining who pays a Michigan no-fault claim following a car accident. Since the No-Fault Law was enacted in 1973, the order was fairly straight forward. However, beginning June 11, 2019, the order of priority changed.
Under the old law and new law, you always start with your own auto insurance carrier when determining who is responsible for paying no-fault benefits. If a person is injured in a motor vehicle accident, the auto insurance companies for that person pays the claim. In other words, you always look to your own auto insurance first for paying no-fault benefits following a car crash in Michigan. If you do not have car insurance, but did live with a relative who had car insurance, then that insurance company is responsible for paying no-fault PIP benefits.
Under the new Michigan No-Fault Reform Order of Priority Law, that order is the same. There is no change. When you are injured in a car accident, you still turn to your own insurance company first for the payment of benefits, such as medical expenses health insurance does not cover, lost wages, prescription reimbursement, replacement services, attendant care and other similar benefits. If you don’t have auto insurance, but a relative you lived with does have car insurance, you still go through the resident relative’s auto carrier for the payment of benefits.
Occupants Injured in a Michigan Car Accident:
However, there are major changes if there is no insurance in the household. Under the old law, if you were an occupant (driver or passenger) in a car when a car crash occurred, and did not have any car insurance in the household, then the auto insurance carrier for the owner of the vehicle you occupied, or the insurance carrier for the driver of the vehicle, paid the claim. If the owner or driver also did not have car insurance, then you turned to the Michigan Assigned Claims Plan (MACP). The MACP, a plan administered by various Michigan insurance companies, would assign an auto insurance carrier to pay your claim.
But this changes under the new law. Starting June 11, 2019, if you or a resident relative does not have auto insurance, then you immediately must turn to the MACP for the payment of your no-fault claim.
In addition, under the new Michigan No-Fault Reform Order of Priority Law, the MACP is obligated to pay at most $250,000 in allowable expenses. Unlike under the old system, where benefits were unlimited, there is now a PIP cap. This cap effects all accidents after June 11, 2019.
Non-Occupants Injured in a Michigan Car Accident:
For individuals injured in a car accident as a non-occupant, the order of priority is now the same as those injured as occupants. Again, if the injured person does not have auto insurance, and does not resident with a relative with auto insurance, then the injured claimant must turn to the MACP.
This order differs from the old law, where the injured person first sought benefits from the owner or driver of the striking vehicle. This is no longer the case. Beginning June 11, 2019, a pedestrian or bicyclist injured by a motor vehicle must now go straight to the MACP if there is no applicable no-fault PIP coverage in the household.
And as is the case for occupants, non-occupants are now capped at $250,000 in allowable expenses. That is all the MACP is obligated to pay.
The order of priority for motorcyclists injured due to a car or truck in Michigan has not changed under the new law. Like before, a motorcyclist draws benefits from the insurer of the motor vehicle included in the motorcycle accident. If the owner or driver of the motor vehicle is not insured, then the auto carrier of the owner and or operator of the motorcycle pays the claim. If there is no insurance at that level, then you go to the MACP.
However, beginning on July 1, 2020, individuals will be able to select insurance policies with limited PIP coverage. This means motorcyclists injured in a car accident will be stuck with the no-fault benefits selected by the motor vehicle owner involved in the accident. This is true even if the no-fault policy selected by the owner of the motor vehicle is more limited than then a no-fault policy selected by the motorcyclist.
For example, a motorcyclist purchases unlimited PIP coverage for this own car. However, one day, while riding his Harley Davidson, he is rear-ended by a Ford Mustang. The owner of the Ford Mustang only purchased $250,000 in PIP coverage. The motorcyclist is stuck with this lower limited PIP coverage because of the order of priority.
Strangely, if a motorcyclist opts out of PIP coverage entirely under their own auto policy (which is a possibility beginning July 1, 2020), there is nothing in the law that prevents him or her from obtaining PIP benefits under the policy of the involved motor vehicle.
The order of priority for a Michigan no-fault accident claim has always been confusing. With the new law, the confusion continues. However, unlike before where injured people were entitled to unlimited medical coverage, those days are almost over. And in cases involving the Michigan Assigned Claims, unlimited coverage is already a thing of the past.
Please contact the Michigan no-fault injury lawyers at 1-800-533-3733 (1-800-LEE-FREE) for a free consultation. We are here to answer your questions. We have represented thousands of individuals injured in a Michigan car wreck. There is no fee unless we win your case and we are ready to start right now.