Key Points in This Article:
- This bulletin will evaluate the changes to third-party negligence cases under the new Michigan no-fault law.
- With the Public Act 21 of 2019, a number of huge ramifications for Michigan drivers, their families and anyone who uses a car, truck or motorcycle in this state are possible.
- An individual who causes a car wreck is now potentially on the hook for thousands of dollars in medical expenses.
- Beginning next July, insurance carriers must offer minimum BI limits of 250,000 person/$500,000 per occurrence. This is the default limit.
- The new law changes the “serious impairment” definition, incorporating the Supreme Court’s McCormick ruling into the law itself.
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 negligence lawyers, paralegals and staff members are here to help.
This bulletin will evaluate the changes to third-party negligence cases under the new Michigan no-fault law.
At-Fault Drivers Now Responsible for Paying Medical Expenses
Starting in July 2020, Michigan car insurance companies will be able to write policies that have limited PIP (personal injury protection) coverage. PIP pays benefits such as medical expenses following a Michigan car crash.
Currently under the law, all medical expenses from a car or truck accident are paid by the no-fault carrier responsible for paying the claim. There is no dollar limitation. Because the first-party carrier pays all the medical expenses, the insurance company for the at-fault vehicle is only responsible for paying pain and suffering, non-economic damages.
However, because people will be able to select policies with limited PIP coverage beginning next July, medical expenses that exceed the PIP cap they choose can be pursued against the at-fault driver as part of a third-party negligence case. Simply put, injured persons can sue the at-fault driver and owner for excess medical bills and any future medical expenses that may be required due to their car crash injuries. MCL 500.3135(3)(c).
For example, under the new law most individuals will be able to select a $250,000 limit for PIP coverage. Once that coverage limit is exhausted, and the no-fault carrier is done paying medical expenses, all medical bills after that are the responsibility of the negligent person who caused the Michigan car wreck.
So what does this mean? It means an individual who causes a car wreck is now potentially on the hook for thousands of dollars in medical expenses. Any surgical bills, hospital bills, physical therapy expenses and other medical bills beyond the PIP coverage of the injured person is the responsibility of the at-fault driver and owner.
As a result, all Michigan policyholders should purchase as much bodily injury (BI) coverage as possible to ensure they are protected in case they, or someone driving their car, causes an accident. If they fail to do so, they could be forced to file bankruptcy or could be paying out of pocket to pay the injured person’s medical expenses.
Increase Minimum Bodily Injury Limits
Another major change in the law is the increase in the minimum bodily injury limits. BI coverage is the insurance you maintain and is paid if you, or a person operating your vehicle, is negligent in causing a car crash.
Under current law, the minimum is $20,000 per person/$40,000 per occurrence. Beginning next July, insurance carriers must offer minimum BI limits of 250,000 person/$500,000 per occurrence. This is the default limit.
Insurance carriers can offer policyholders to purchase lower limits at $50,000 per person/$100,000 per occurrence, but the applicant must complete and sign a form approved by the state of Michigan. It is recommended that all drivers purchase at least the 250/500 minimum.
The reasons for the large increase in BI limits are simple. First, the current 20/40 limit hasn’t been changed since the 1960’s and was never indexed for inflation. So a large increase was warranted. Second, because many people will have limited medical PIP coverage, at-fault drivers will be exposed to the large medical expenses incurred when they cause a car wreck. The new law wants to protect injured individuals and give them access to fair compensation for their injuries.
A New Definition of Serious Impairment
Another big change in the law is that the threshold injury language spelled out in the Michigan Supreme Court decision of McCormick v. Carrier, 487 Mich 180 (2010), has been codified.
Under Michigan law, to get compensation in a third-party negligence case, the injured person must show he or she has a “threshold injury.” There are three threshold injuries: (1) death; (2) permanent, serious disfigurement; and (3) serious impairment of bodily function. Almost all cases involve this last threshold and the new law changed the “serious impairment” definition, incorporating the Supreme Court’s McCormick ruling into the law itself.
Going forward, to obtain compensation for pain and suffering following a Michigan car crash, the injured person must show:
- An objective impairment observable or perceivable by another person.
- The impairment(s) affects an important body function.
- The impairment(s) affects the person’s general ability to lead a normal life. There is no time requirement for this impairment as the impairment(s) only need to have some influence on the person’s capacity to live a normal life.
- The examination is face- and circumstance-specific for each person and requires a comparison of the injured person’s life before and after the crash.
I will write about this and other changes to Michigan auto accident law more in future articles. However, if you have any questions about the new Michigan No-Fault Law or about a Michigan car crash in general, please call our dedicated team of Michigan car wreck injury lawyers today at 1-800-LEE-FREE (1-800-533-3733). We are standing by, ready to serve and assist you.