Michigan No-Fault Insurance: What It Covers (And What It Doesn’t)

Michigan No-Fault insurance can be extremely confusing. Michigan is one of the few no-fault states left in America. However, the law still provides substantial benefits to people injured in an auto accident in Michigan.

An experienced Michigan no-fault lawyer can walk you through the details of your situation and explain which benefits you can and cannot get. However, this article describes the basics of the Michigan No-Fault Law, what benefits it covers, and which benefits it does not.

Medical Expenses (PIP Benefits)

The cornerstone of Michigan's no-fault law system is that the insurance company must pay for medical expenses related to the crash. This includes hospital bills, doctors’ bills, surgery, physical therapy, prescriptions, and out-of-pocket costs.

The amount of medical expenses the applicable no-fault carrier must pay depends on the amount of personal injury protection (PIP) coverage purchased.

What Medical Expenses Does PIP Pay For?

Personal injury protection coverage pays for all “allowable expenses” for an injured person’s care, recovery, or rehabilitation (MCL 500.3107(1)(a)). Medical bills fall within allowable expenses.

Examples of medical expenses covered by PIP include:

• Hospital bills
• Physical therapy and rehabilitation
• Surgery
• Long-Term care
• Medications
• Home modifications
• Durable medical equipment

PIP Reimbursement Limits & Options

A common question we receive is: "What reimbursement limits are applicable to Michigan PIP benefits?"
In general, there are five different options a person can choose for PIP medical coverage. However, these options are subject to strict eligibility requirements:

• Unlimited: There is no dollar limit for medical expenses. The car insurance company must pay for all medical bills not covered by a private health insurance plan.
• $500,000 Limit
• $250,000 Limit
• $50,000 Limit: Applicable for only certain Medicaid beneficiaries.
• $0 or Opt-Out: No medical coverage. This is for individuals who meet specific eligibility requirements, such as being a Medicare beneficiary.

Wage Loss Benefits

Also known as lost wages, the auto insurance carrier must also pay the injured person’s lost wages for the time missed from work due to the car or truck accident.

• The Rate: The wage rate is 85% of the injured person’s gross wages. This means the injured person gets almost all their lost wages.
• Payment Timeline: These payments must be made within 30 days of the insurance company receiving proof of loss. They are paid by the insurance company bi-weekly or monthly; however, sometimes the payment dates can vary.

What is Considered Wage Loss?

Wage loss includes regular wages, overtime, and cost-of-living adjustments. However, fringe benefits such as health insurance and pensions are not wage-loss benefits under Michigan's no-fault law. In addition, other nontaxable income is not a wage loss benefit and cannot be recouped either.

How Much Time Do I Have to Make a Wage Loss Claim?

Under Michigan law (MCL 500.3145), a person must file a claim for no-fault benefits within one (1) year of the accident. The notice must be in writing, and the name and address of the claimant must be given. The notice must also indicate the injured person’s name and the time, place, and nature of the injury.

Replacement Services

Household replacement services are things the injured person would have performed for themselves or their dependents had it not been for their injury in a car, truck, or motorcycle accident.

They include, but are not limited to:

• Preparing meals
• Grocery shopping
• House cleaning
• Yard work and lawn mowing
• Running errands

How Much Do Replacement Services Pay?

A person may obtain up to $20.00 per day in household replacement services. This benefit is available for three years, beginning on the date of the accident.

Who Can Receive Replacement Services?

Family members and friends are entitled to compensation for the services they provide around the home on behalf of the Michigan car accident victim.

Transportation Services

In addition, the insurance carrier must pay for transportation services. This is considered an allowable expense under MCL 500.3107(1)(a).

However, this does not mean they have to pay for a new car. They also don’t have to pay until the transportation charge is incurred. This means you have to pay for the service and then seek reimbursement from the auto insurance company. A great Michigan no-fault lawyer can assist with transportation to help you keep your doctor’s appointments.

Which Car Insurance Company Pays All These Benefits?

This is an important question. An injured person must file a first-party claim against the correct auto insurance carrier. Failing to do so can result in the loss of all no-fault benefits.

There is an Order of Priority to determine which insurance carrier is responsible. After the significant 2019 reforms, the current order is the following:

1. Your own auto insurance: If you have car insurance, your car insurance company is responsible for paying PIP benefits. This is true even if your vehicle had nothing to do with the accident.
2. The auto insurance company of a resident relative: This includes a spouse, sibling, child, parent, and possibly other relatives. Again, it doesn’t matter if their car had nothing to do with the crash.
3. The Michigan Assigned Claims Plan (MACP): If an injured person does not have auto insurance and does not live with a relative who has car insurance, then they MUST turn to the Michigan Assigned Claims Plan. The MACP is run by the Michigan Automobile Insurance Placement Facility.

What Does the Michigan No-Fault Law NOT Cover?

The no-fault law does not cover everything. In fact, there are many things the no-fault law does not provide for people injured in a car crash.

Vehicle Damage & Deductibles

A major point of confusion is: "Who pays the deductible in Michigan no-fault insurance?"

Under Michigan’s no-fault law, the at-fault driver does not have to pay for your vehicle damage in most cases. Instead, you must purchase Collision Coverage. If the car is totaled, the insurance company will pay the vehicle's net present value.

However, there is recourse for the deductible:

• If the other driver was at fault, you can make a Mini-Tort claim against them.
• Under the mini-tort law, you can collect up to $3,000 for property damage.
• This money is typically used to cover your collision deductible.

Towing

The at-fault driver does not have to pay for towing or storage fees. This is paid for by your own auto insurance, but only if you purchase this coverage. Many people don’t have this protection and end up paying expensive towing and storage fees at the tow yard.

Rental Car

Again, the at-fault driver doesn’t have to pay for a rental car. Your own auto insurance isn't required to provide rental money unless you purchased specific Rental Reimbursement Coverage.

Pain and Suffering

The no-fault law has some confusing rules when it comes to obtaining pain and suffering compensation. Like other states, the negligent driver must pay for the pain and suffering they caused. However, this payment is not automatic. The injured person must prove they sustained a threshold.

Under Michigan law, a threshold injury is defined in three ways:

1. Serious impairment of body function
2. Permanent serious disfigurement
3. Death

The most frequently litigated of these is the “serious impairment of body function.” According to rulings like McCormick v. Carrier, an injury doesn’t need to be permanent to meet the threshold. Instead, it must affect the person’s lifestyle in a meaningful way.

Top Rated Michigan Car Accident Lawyers

For over 50 years, The Lee Steinberg Law Firm has helped injured victims win their cases to collect the compensation they need and deserve. We care about the health and well-being of our clients.

The results of a personal injury in Michigan can be traumatic; let us help you get the compensation you need to recover. Please call our Michigan no-fault lawyers at 1-800-LEE-FREE (1-800-533-3733) or fill out so we can answer any questions you may have about your accident. You pay nothing until we settle your case.