Which Car Insurance Company Pays In Michigan No-Fault Case

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Bulletin #6 – Which Car Insurance Company Pays My No-Fault Case?

Which Car Insurance Company Pays My No-Fault Case?

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 a number of huge ramifications for Michigan drivers, their families and anyone who uses a car, truck or motorcycle in this state.

Over the past year, I have been 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 lawyers, paralegals and staff members are here to help.

This bulletin will discuss the rules for who pays car accident compensation, including which car insurance carrier must pay no-fault PIP cases under the new rules.

With the introduction of the new Michigan auto insurance policies effective July 2, 2020, a lot of changes are occurring which effect Michigan car accident cases and Michigan no-fault injury claims. For the first time, individuals can purchase limited medical coverage, also known as PIP (personal injury protection) from their auto insurance companies. This major change forever alters the way auto insurance companies have to approach cases and the way Michigan car accident lawyers litigate car accidents for their clients.

One of the major changes under the new law is which car insurance company is responsible for paying the no-fault claim. This is known as the order of priority, and these priority rules have changes drastically.

Under the old law, your own car insurance had to pay all no-fault PIP benefits. These benefits include the payment of hospital and medical expenses, lost wages, out-of-pocket costs, co-pays, replacement services and other benefits. Under the new law, it’s still the same. If you have State Farm Insurance on your car or truck, then State Farm must still pay your no-fault claim, up to the PIP coverage limit you have in your policy.

If you don’t have auto insurance of your own, but live with a resident relative who does have car insurance, then under the old rules and new rules that auto carrier pays the claim. For example, if you don’t have car insurance but you live with your sister who has Allstate, then Allstate Insurance must pay your no-fault claim. This is true even if your sister had nothing to do with the accident.

However, this is where the new law has changed things in a very dramatic way. Under the old law, if there was no insurance in the household then a person occupying a vehicle during a crash would turn to the insurance company for the owner or driver of the occupied car. But that’s no longer the case.

Under the new rules, if there is no insurance in the household, then the injured person must go to the Michigan Assigned Claims Plan (MACP) for the payment of the no-fault claim. The MACP is a non-profit entity that is actually controlled by the insurance industry. Under the law, eligible individuals will get a servicing insurance company assigned to their claims – such as Allstate or Farm Bureau. The MACP is responsible for paying $250,000 in PIP benefits.

To obtain benefits from the MACP, a claimant must complete an application which can be found here. It is advised to contact an experienced and helpful Michigan car accident injury lawyer to assist in completing the application. Not filing the application accurately and completely will result in the MACP delaying your case or failing to assign your claim to an insurance company for payment. 

So as a review, the order of priority for the payment of Michigan no-fault claims for individuals occupying a motor vehicle accident is the following: 

New Order of Priority – Occupant of Motor Vehicle:

  • Your own car insurance or the insurance if you are named insured;
  • Car insurance of a resident relative;
  • Michigan Assigned Claims Facility (MACP)

The rules for individuals who were not occupying a car or truck at the time of the accident – such as a pedestrian or bicycle rider – have also changed.

Under the old rules, again you started with your own auto insurance and then went to the car insurance of a resident relative. If there was no insurance at those levels, you then went to the car insurance of the owner or driver of the motor vehicle involved in causing the injuries.

However, this has changed under the new rules. Like individuals who are occupying a car or truck, pedestrians and other non-occupants must go straight to the Michigan Assigned Claims if they don’t have car insurance of their own or live with a resident relative with auto insurance. The order of priory is the following:

New Order of Priority – Non-Occupant of Motor Vehicle:

  • Your own car insurance or the insurance if you are named insured;
  • Car insurance of a resident relative;
  • Michigan Assigned Claims Facility (MACP)

The order of priority is now the same for both occupants and non-occupants. And again, the most the MACP must pay for an individual injured in a car accident is $250,000 for PIP benefits.

Who Will Pay My Medical Bills If I Don’t Have PIP Coverage?

So what happens if all the PIP medical coverage gets used up? What happens then? There is still hope. Under the new law, if another person caused the accident then the medical expenses, lost wages and other costs not covered by PIP can be asserted in the negligence case. In other words, the liability insurance company for the at-fault party would be responsible for these bills and expenses. So not only does a plaintiff injured in a crash file a lawsuit against an at-fault driver for the pain and suffering caused by the wreck, but an injured plaintiff can also include all past and future medical expenses as well.

Because the cost of medical care is astronomical, the new car insurance policies sold in Michigan have a default bodily injury (BI) liability coverage amount of $250,000 per person and $500,000 per accident. Individuals can also purchase more insurance to cover themselves in case they cause a car crash, and it is advisable all Michigan motorists do so to protect themselves.

Michigan automobile law has changed in a very profound way. The new auto insurance policies now sold have changed who is responsible for paying no-fault claims and how much must be paid. Please contact the experienced and aggressive Michigan car accident injury lawyers at the Law Offices of Lee Steinberg, P.C. so we can answer any questions you may have.

Our toll-free number is 1-800-LEE-FREE (1-800-533-3733) and we never charge anything until we win your case. That is our promise to you and all of our clients. We look forward to speaking with you.