Key points from this article:
- Despite being banned in 2018, LA Insurance offices are again selling Michigan no-fault insurance policies that expire after only 13 days.
- People who buy these policies are not aware they are sold as 6-month policies that contain a requirement that a second payment must be made by the 13th day or it is cancelled.
- DIFS needs to examine and review the underwriting and selling practices at LA Insurance branch offices again. These agencies prey on the economically disadvantaged.
An old trend is rearing its ugly head again in the world of Michigan no-fault insurance. LA Insurance, the car insurance agency that caters to the most economically distressed drivers in Michigan, continues to sell short term policies despite announcements by the company it would no longer do so.
Beware of 13-Day Auto Insurance Policies
For years, LA Insurance offices throughout metro Detroit and across Michigan sold 7-day auto insurance policies to individuals for the sole purpose of allowing motorists to obtain a car registration. These “jump-start” auto plans allowed the purchaser to get insurance knowing the car insurance would lapse just seven days later. The motorists would then operate their cars without Michigan no-fault insurance illegally for the remaining 51 weeks of their vehicle’s registration.
These 7-day policies were very expensive given their extremely short-time frame. They provided a way for motorists to obtain insurance when purchasing a car or renewing a registration. But they were also confusing to many drivers in Michigan because many policyholders did not understand the short time-frame of these policies.
This practice of selling 7-day policies was banned in September 2018 by the state Department of Insurance and Financial Services (DIFS). This new regulation was supposed to end the sale of short-term politics and cut down on the number of uninsured drivers in Michigan.
However, despite the new rules, LA Insurance agencies are back at it. They are now selling 13-day policies – Michigan no-fault insurance policies that expire after only 13 days.
What makes these plans so perverse is that most customers don’t know what they are purchasing. They are sold as 6-month policies that contain a requirement that the customer makes a second payment by the 13th day. If you don’t make that payment, then the Michigan car insurance policy is cancelled.
But many customers don’t understand this. They think they are getting a 6-month policy that requires a monthly payment 30 days later, just like a rent or mortgage payment.
Real-Life Consequences of a 13-Day Policy
A few days ago a woman called our office. She was involved in a serious car crash in Waterford, Michigan when another car crashed into her vehicle. She originally purchased auto insurance for her car at a local LA Insurance branch. She was told she had to make a payment the next month, but really it was a 13-day policy.
Almost two weeks after the 13-day policy lapsed, the car accident occurred. When she called her insurance carrier to file a claim, she was told by National General that her policy had lapsed and she had no insurance. She was in shock.
Despite the denial by National General, our office is going to pursue her claim for Michigan no-fault benefits. However, our client should not have to go through such turmoil and uncertainty. Because she was hospitalized, she has thousands in outstanding medical bills, over a month of lost wages and mounting out-of-pocket costs. All of these items are supposed to be paid by National General but have not been because of the 13-day policy LA Insurance sold her. She paid a few hundred dollars just to get the policy, and that policy unbeknownst to her turned out to be only good for less than two weeks.
It is readily apparent that DIFS needs to examine and review the underwriting and selling practices at LA Insurance branch offices once again. This author is not aware of other agencies selling similar short-term policies anywhere in Michigan. These agencies prey on the economically disadvantaged. They take advantage of people who have nowhere else to turn and are not properly informed about the car insurance they are purchasing from agents wanting to make a quick and profitable sale.
Contact Us Now About Your Michigan No-Fault Insurance
If you have any questions about LA Insurance, 13-day auto no-fault policies, cancelled policies or lapsed Michigan policies, please give us a call at 1-800-LEE-FREE (1-800-533-3733). Our dedicated team of Michigan car crash injury lawyers can answer your questions about the Michigan no-fault law and no-fault policies.