Michigan No-Fault

Originally adopted in 1973, Michigan’s unique Automobile No-Fault Insurance law was designed to ensure prompt payment of medical bills, work loss, and replacement services by your auto insurance company without having to resort to a lawsuit if you were involved in a motor vehicle crash. These insurance benefits, known as “economic loss” benefits, included hospital and doctor bills, the cost of any needed in-home attendant care, vehicle and home modifications to accommodate wheelchairs and other medical necessities, and other allowable expenses. The insurance company was obligated to pay for allowable expenses for life, so long as the cost was reasonable and the need for the services were related to the motor vehicle crash. The law also provided for the payment of work loss and replacement service benefits for 36 months. The tradeoff for getting paid promptly by your insurance company was you could only sue the negligent driver or vehicle owner for non-economic losses like “pain and suffering” if your injuries met a certain level of severity.

Over the years, the No-Fault system became increasingly complicated. Insurance companies began to adopt “Delay, Deny & Defend” tactics as standard practice, leading to an increase in lawsuits as the only way for many accident victims to protect their rights. Insurance companies also raised premiums over the years based on non-driving factors, driving up the cost of insurance and ultimately making insurance too expensive for many motorists.

Many lawmakers believed that Michigan’s unique No-Fault system was not working – largely due to high insurance premium prices. Instead of tackling unfair insurance company practices head on, the State Legislature created a new tiered coverage system, which is unlikely to reduce consumer insurance prices and dramatically reduces protections for drivers.

On June 11, 2019, significant amendments to Michigan’s Auto No-Fault insurance law went into effect. While not all of the changes take place immediately, every motorist in Michigan will be affected by these sweeping changes to the law.

Key dates to know about:

• June 11, 2019: The first round of No-Fault changes took immediate effect. The new law does not include a “grandfather clause,” so many of the changes will affect people who were injured in accidents years ago—even though they paid higher premiums for better coverage.
• After July 1, 2020: The first date when insurance companies will begin offering new premium prices under the tiered system. The coverage for medical expenses will range from just $50,000 up to $500,000. Unlimited coverage options will still be available, but the cost for such policies is unknown.
• After July 1, 2021: Hospitals, doctors, and many health care providers will have to align their charges under government price controls. That might sound like a good thing for accident victims, but it establishes an impossible and unsustainable price structure that will ultimately limit available care options. 

Questions about the new No-Fault law and how it will impact you or your loved ones?

Contact us today to learn how we can help. Our team has been handling No-Fault cases since the original law was passed over 40 years ago. We understand the law, the recent changes, and what needs to be done to ensure your rights are protected. 

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