A new and disturbing trend is emerging in the world of Michigan car insurance, in particular for policyholders in Detroit and surrounding communities. The trend centers around insurance agencies selling Michigan car insurance policies without liability and no-fault PIP coverage.
Under Michigan law, every car insurance company must provide liability coverage of at least $20,000 per person and $40,000 per occurrence.
In addition, the car insurance company must provide Michigan no-fault PIP coverage, which gives car owners and their passengers the ability to receive lost wages, reimbursement of medical expenses and other benefits following a car or truck accident.
However some Michigan car insurance agencies are selling car insurance policies without these mandatory coverages. This week, our firm met with a client who purchased car insurance through LA Insurance, a metro Detroit agency that sells car insurance policies to so-called higher risk drivers. The agency, which gets a commission for each policy it sells, directed her to a car insurance company called USA Underwriters.
Strangely, according to the Michigan Department of Insurance and Financial Services, the address for the LA Insurance agency was exactly the same as the licensing address for USA Underwriters. The address is listed in Royal Oak Michigan. So clearly the insurance agent and the underlying insurance company have a close relationship.
A review of the declaration page provided by our client highlighted some very disturbing things. First, the policy only included collision and comprehensive coverage for her two cars. Collision and comprehensive provide coverage for the property damage that occurs to a car in a car crash or due to a weather event, like a hail storm.
The policy did not have any liability or no-fault coverage. Liability coverage covers you in if you cause an accident and get sued. This insurance coverage provides you an attorney to fight the claim and money to pay the claim.
No-fault coverage provides you and other people with a huge array of no-fault benefits. As I mentioned above, this includes wage loss benefits, payment for hospital and doctor bills, payment for family members caring for an injured relative and other benefits.
Our client’s policy did not contain any of this. In fact, the declaration page specifically excluded both liability coverage and PIP coverage.
Our client, who was injured in a car accident earlier this summer, turned to USA Underwriters for Michigan no-fault benefits, in particular for the payment of medical expenses she has incurred due to her injuries. USA Underwriters immediately denied her claim, stating it did not have to pay no-fault benefits because the insurance company did not provide this coverage.
Our law firm is fighting this denial and inquiring into the legality of the Michigan insurance policy sold to our client through LA Insurance. Although MCL 500.3009 does allow the exclusion of liability coverage for certain named persons, the complete exclusion of bodily injury and PIP coverage are not allowed.
In addition, our client was never told by her insurance agent or the insurance company that she was not provided with bodily injury or PIP coverage when she purchased the policy. Typically, a specific warning must be given. It does not appear this written warning was provided either.
This development is very troubling. Insurance agents have a duty to act in the best interest of their clients. Instead, some agents are selling junk insurance policies to unsuspecting people, all in the name of making a couple bucks.
Buyer beware. It is important to check your insurance policy thoroughly when buying Michigan car insurance. Make sure it includes both liability and no-fault insurance. Ask your insurance agent questions. Understand what the insurance policy says and what it means.
If you have any questions about your car insurance policy, please contact us at 1-800-LEE-FREE (1-800-533-3733).