No-Fault PIP Exclusions Under Michigan Law - Lee Steinberg Law Firm

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No-Fault PIP Exclusions Under Michigan Law

pip exclusions

In Detroit and Michigan, if you are involved in an accident involving a car or truck, you will almost always be entitled to the payment of no-fault PIP benefits for your injuries. These benefits can include:

  • The payment of doctor bills
  • The payment of hospital bills
  • The payment of rehabilitation and physical therapy
  • Reimbursement for prescription and co-pays
  • The payment of 85% of gross wages for up to 3 years
  • The payment of household replacement services for up to 3 years
  • Nursing care and attendant care

No-fault benefits are paid by an auto insurance carrier like State Farm or Allstate. Under Detroit and Michigan law, your own car insurance company is responsible for paying these benefits. If you don’t have car insurance, then you can go through the car insurance company of a resident relative. A resident relative is a family member you live with, like a spouse, sibling, or parent.

If there is no car insurance in the household, then an injured person can make a claim for PIP benefits through the Michigan Assigned Claims Plan (MACP). The MACP is a non-profit entity run by the insurance industry. After completing an Application for Benefits, the MACP will assign an insurance company – such as Farm Bureau or Citizens – to pay the claim for no-fault benefits.

Not Everyone Can Get No-Fault Benefits in Michigan

But is everyone involved in a car crash entitled to Michigan no-fault benefits? Just because you are injured in an accident, does this mean you automatically qualify for the payment of medical bills and lost wages? As you might suspect, the answer is no.

Indeed, the Michigan No-Fault Law is complicated and involves a lot of rules and exceptions. There are situations where even innocent people involved in a car wreck cannot obtain compensation and benefits. It may not be fair, but it’s the law.

A list of exceptions is found at MCL 500.3113. To make things simple, I have included the entirely of MCL 500.3113 here:

500.3113 Person not entitled to personal protection insurance benefits.

Sec. 3113.

  A person is not entitled to be paid personal protection insurance benefits for accidental bodily injury if at the time of the accident any of the following circumstances existed:

  (a) The person was willingly operating or willingly using a motor vehicle or motorcycle that was taken unlawfully, and the person knew or should have known that the motor vehicle or motorcycle was taken unlawfully.

  (b) The person was the owner or registrant of a motor vehicle or motorcycle involved in the accident with respect to which the security required by section 3101 or 3103 was not in effect.

  (c) The person was not a resident of this state, unless the person owned a motor vehicle that was registered and insured in this state. 

  (d) The person was operating a motor vehicle or motorcycle as to which he or she was named as an excluded operator as allowed under section 3009(2).

  (e) The person was the owner or operator of a motor vehicle for which coverage was excluded under a policy exclusion authorized under section 3017.

As you can see, there are times where a person injured in a car or truck crash is not entitled to no-fault benefits. I will explain these exceptions below.

1.  Stolen Vehicles or Vehicles Taken Without Permission

Under Michigan law, if a person steals a vehicle or even takes a car for a “joyride”, then that person is not entitled to PIP benefits if they are involved in a car accident. This includes individuals injured in a motorcycle accident.

In Spectrum Health Hospital v. Farm Bureau, 492 Mich 503, 21 N.W2d 117 (2012), the Michigan Supreme Court held that any person who takes a vehicle contrary to the Michigan Penal Code, like the joyriding statutes, that person has taken the vehicle unlawfully for purposes of MCL 500.3113(a). This means a person injured in a car crash is not entitled to no-fault PIP benefits. 

2.  The Owner of an Uninsured Car Involved in the Accident Is Not Entitled to PIP Benefits

MCL 500.3113(b) is a very important law. It says that a person involved in an accident with their own uninsured vehicle is not entitled to Michigan no-fault benefits. This includes not only title owners but registered owners as well.

It even includes individuals who are considered constructive owners. Constructive owners are individuals who have an intent to use a car or truck for more than 30 days. In Twichel v. MIC Gen Ins. Corp., 469 Mich 524; 676 N.W.2d 616 (2004), the Michigan Supreme Court held that a person was considered an owner of a car if they had taken possession with the intent to use it for more than 30 days, even if they had the vehicle for less than 30 days. These types of owners are treated the same as a title owner or registered owner. 

This is a very important rule. If you are an owner of a motor vehicle – like a car or truck – and involved in a car accident, you cannot obtain PIP benefits if the vehicle did not have auto insurance. Under the law, you are required to carry no-fault insurance on your car.

If you fail to do so, you face severe penalties. Not only do you have to pay a ticket, but you cannot turn to any auto insurance carrier for the payment of medical bills and lost wages.

What makes this rule so bad though is it prevents uninsured owners from collecting pain and suffering compensation too. Under MCL 500.3135, an uninsured owner who is operating that car and is injured in a wreck cannot even make a claim for pain and suffering. This is true even if someone else was at-fault for causing the wreck, such as a drunk driver.

MCL 500.3113(b) effects thousands of drivers every year. It essentially takes away a car owner’s ability to collect anything for their injuries if they are injured from a car accident and did not have insurance on the vehicle involved in the wreck.

3.  Out-of-State Residents in General Cannot Obtain PIP Benefits

Under MCL 500.3113(c), a person who is not a resident of Michigan is not permitted to obtain no-fault benefits unless that person owns a car or truck that is registered in Michigan.

Essentially, this means that a person who is injured in Michigan, but a resident of another state, cannot make a claim for PIP no-fault benefits unless this person happens to own a car registered in Michigan. Because almost no out-of-state residents have a vehicle registered in Michigan, this eliminates the ability for just about all out-of-state residents from making a no-fault claim.

This is a drastic change in the law. Prior to the reforms made in the Michigan no-fault law in 2019, many out of state residents could still obtain PIP benefits for injuries that occurred in Michigan. But this is no longer an option for most people. Instead, they must rely on their own health insurance carriers or the at-fault driver (in some situations) for the payment of medical bills following a Michigan car accident.

4.  Individuals Excluded From the Insurance Policy Can’t Make a PIP Claim

This rule means any person excluded on the insurance policy cannot make a claim for no-fault benefits if they are injured while driving the excluded vehicle. This makes sense. The insurance company charges a premium based on risk. If a person is excluded from the policy, that risk is not part of the premium cost. The insurance company is not going to cover an individual it does not assess a risk for.

Excluded drivers are listed on the declaration page of the insurance policy. Make sure to never exclude a person who may operate the vehicle. If a person is going to use a car or truck, make sure they are not excluded. The penalties for allowing them to drive can be severe. 

5.  Uber or Lyft Drivers Can’t Make a PIP Claim Unless they Have Separate Insurance Coverage

MCL 500.3113(e) has to do with injuries that occur while a “transportation network company” driver is logged into a “transportation network company” digital network or while the driver is providing a prearranged ride. Transportation network companies are Uber and Lyft.

Under this law, the personal car insurance of an Uber or Lyft driver does not have to pay PIP benefits for injuries that occur when the driver is using the Uber or Lyft app. Under MCL 500.3017:

(1) An authorized insurer that issues an insurance policy insuring a personal vehicle may exclude all coverage afforded under the policy for any loss or injury that occurs while a transportation network company driver is logged on to a transportation network company digital network or while a transportation network company driver is providing a prearranged ride.

In effect, this means a person driving for Uber, Lyft, Door Dash, Grub Hub, Instacart or similar companies must purchase auto insurance for the time they are working for these companies. This is true even when using their own personal vehicle. Their own personal auto insurance won’t cover them while on the job.

For example, a person owns a Chevy Malibu and insures the car with Progressive. The owner also uses that vehicle for Uber. Progressive does not have to pay for any injuries or damages that may occur while the owner uses the Malibu to drive for Uber. 

Instead, the owner must purchase separate insurance for times he or she uses the vehicle for Uber. Ride sharing companies like Uber and Lyft help drivers obtain this insurance.

But it’s essential you purchase this insurance while driving for one of these companies. If you fail to do so, and get into a car wreck, your personal auto insurance won’t pay for anything. 

The Lee Steinberg Law Firm has been helping car accident victims for over 40 years obtain the no-fault benefits and pain and suffering compensation they deserve.

Call our office today. You pay nothing unless we win your Detroit and Michigan car accident case. Let us help you by calling 1-800-LEE-FREE (1-800-533-3733).