Michigan’s auto insurance laws are confusing. With so many rules it sometimes can be overwhelming. Michigan is a no-fault state, meaning a person can obtain certain benefits following a Michigan car crash, without regard to fault.
What are No-Fault Benefits?
Michigan no-fault benefits include the payment of hospital bills, doctor bills, lost wages, prescriptions, household replacement services and other benefits. When someone is injured in a car accident, the car insurance pays these benefits.
Do I Have To Purchase No-Fault When I Buy A Car?
But does a person have to buy Michigan no-fault insurance? What if you don’t want it? One of the questions we often get at the Lee Steinberg Law Firm is whether you have to buy Michigan no-fault insurance when buying car insurance.
The short answer is yes. Under Michigan law, every single auto policy is a no-fault insurance policy. When you get car insurance in Michigan, it automatically has the no-fault insurance built in. But the amount of coverage and the types of benefits you can get vary.
Michigan no-fault benefits are also known as personal injury protection, or PIP benefits. And starting July 1, 2020, Michigan drivers could purchase different amounts of PIP coverage. Prior to then all no-fault policies offered unlimited PIP coverage. There was no maximum amount. But that is no longer the case. In general, PIP coverage has the following coverage limits:
- Unlimited coverage
- $500,000 PIP coverage
- $250,000 PIP coverage
- $50,000 PIP coverage – for eligible people on Medicaid
Again, PIP coverage covers the medical expenses from a car accident. So if a person has $250,000 in PIP coverage, then that person’s car insurance – whether it is State Farm or Allstate – will cover up to $250,000 in medical expenses related to the accident.
If I Don’t Have Auto Insurance, Can I Still Get Michigan No-Fault Benefits?
Even if you don’t have auto insurance, you can still get PIP benefits through an auto insurance company. If you live with a family member who has a Michigan no-fault policy, then that car insurance will pay your benefits. In other cases, the state of Michigan will assign a car insurance company to pay benefits. This is done through the Michigan Assigned Claims Plan, also known as the MACP.
What If I Don’t Want PIP Coverage or No-Fault Coverage?
But is it possible to not purchase PIP coverage? What if you have health insurance and don’t want PIP benefits. If that is the case, then under the new Michigan no-fault law you can elect to “opt out” of purchasing PIP coverage. This choice is available to certain individuals who have “qualified health coverage” (QHC) as defined under MCL 500.3107d.
QHC is (1) health insurance that does not have exclude or limit coverage for car accident injuries and has a deductible that is $6,000 or less or (2) Medicare.
However, to opt-out of PIP coverage a policyholder must make an “effective selection” that specifically states they don’t want to PIP coverage. To do this, the person applying for car insurance must provide proof of qualified health coverage.
Earlier this month, the Department of Insurance and financial Services (DIFS) issued an important bulletin that provided more clarification about what constitutes an “effective selection” and how it is done.
Under Bulletin 2021-25-INS, an applicant must complete, sign and return to the car insurance company or agent a PIP Medical Coverage Selection Form. If no selection is made, then the applicant automatically gets unlimited PIP benefits.
However, if the applicant does seek to exclude PIP benefits, but then fail to provide proof of the qualifying health coverage, then the car insurance company must issue a policy with $250,000 in PIP benefits for all household members.
This clarification is important because a lot insurance agencies were selling no-fault policies with no PIP coverage even though the applicants were not providing proof they had a health insurance plan that would cover car accident treatment. This Bulletin will hopefully put an end to this.
People injured in car accidents in Michigan are obligated to be protected from huge medical bills. This is their right under the law. Opting out of PIP medical coverage, but also failing to have health insurance is against the law.
So as a review, you do always get a Michigan no-fault policy when you purchase car insurance in Michigan. However, the amount of no-fault benefits, or PIP benefits, varies depending on the policy purchased. In some instances, people can opt out of paying for medical coverage all together. However, they must have qualifying health coverage.
Call Lee Free With Any Michigan Car Accident Questions
The Michigan car accident lawyers at the Lee Steinberg Law Firm are standing by, ready to assist you for your case. Please call us at 1-800-LEE-FREE (1-800-533-3733) and we can answer your questions about the Michigan no-fault law, insurance questions, car accident injuries questions and anything else about Michigan car accident law. The call is free and we never change a penny until we win your case.
