No-Fault Coverage May Not Protect You In An Accident

Michigan is a no-fault insurance state. This means that an injured person generally looks to their own insurance company for payment of medical expenses, limited wage loss benefits, and property damage to their vehicle from an auto accident.

An injured person (or their estate) only has the right to sue an at-fault driver if they have suffered death, a serious impairment of body function or permanent disfigurement. In addition to the damages listed above, the owner of the vehicle the at-fault driver was operating is also responsible for certain “excess” economic damages, as well as non-economic damages such as pain and suffering and emotional distress.

Unfortunately, effective July 1, 2020, motorists are no longer required to carry lifetime coverage for medical and rehabilitation expenses. While the law ostensibly requires $250,000 in bodily injury coverage, a vehicle owner can choose to “opt out” and maintain as little as $50,000 in Personal Injury Protection (“PIP” coverage). This means that persons who are seriously injured or even killed in an accident with an uninsured or underinsured driver may never see fair compensation.

For example, suppose an injured person purchases $50,000 in uninsured coverage, and the at-fault driver/owner has the same minimum coverage. In that case, the injured person will be limited to $100,000 maximum insurance compensation.

Suing the other driver or vehicle owner for additional damages is a possibility, but unless that person has significant assets, it is a futile exercise, because that person can generally discharge any judgment in bankruptcy court. Also, to proceed to trial against the uninsured defendant, the injured party would have to refuse any settlement offered by the insurance company – even in the maximum amount of coverage – because the settlement would be conditioned on a release of claims against the at-fault driver and vehicle owner.

This is why Roumel Law urges all motorists to purchase the maximum bodily injury protection available from their insurance company, which is “no limit PIP coverage.” If you or a loved one is harmed by another driver, you will be far better off than the comparatively small savings you might realize by opting for cheaper insurance coverage. It is also imperative to purchase both uninsured and underinsured motorist coverage. We suggest you purchase the maximum amount of uninsured and underinsured motorist coverage your insurance company offers.

This is a summary only. For a full explanation of your benefits under no-fault law, Roumel Law urges you to schedule a formal consultation.