Michigan’s No-Fault Law was designed to take care of certain financial needs of an injured person or injury party when the injury occurs during the ownership, operation, or maintenance of an automobile accident regardless of who caused the injury. These financial losses, more commonly referred to as economic losses, can arise not only in the traditional sense when one is driving or riding in a motor vehicle, but also when you are a pedestrian involved in a motor vehicle accident, when you are entering or exiting a vehicle, filling up a vehicle with gas, changing the oil, or under many other circumstances. There is a system of priorities set forth in the law to determine which insurance company is responsible for these benefits so it is advisable to consult with an attorney to determine if the No-Fault Act applies, and who is responsible for damages that occur. Regardless if you are actually in a car or truck, on a motorcycle or bicycle, or simply a pedestrian, these benefits are available to you.
The only exception is if you were operating your vehicle and did not have insurance when an accident occurred. The law requires you to have insurance on any vehicle that is being operated on the roadway. If you do not have insurance when an accident occurred, you may not have any rights of recovery under the No-Fault Law.
The automatic economic benefits that are available, also known as no-fault benefits or PIP benefits, consist of four basic categories, three of which apply to bodily injury and one to property damage. Below is a brief description of these benefits.
- Medical and Rehab Expenses
All of an injured party’s medical expenses and rehabilitation expenses are available for reimbursement under the No-Fault Act as long as they are reasonable and related to a motor vehicle accident. The law provides that benefits are payable for all allowable expenses consisting of all reasonable charges incurred for reasonably necessary products, services and accommodations for an injured person’s care, recovery or rehabilitation. This does not only include doctor and hospital charges, but allowable expenses can also include transportation costs in an effort to obtain medical treatment. When an injured person is being cared for at home, the no-fault carrier can be responsible for those charges as well, with certain limitations.
“Reasonably necessary products” has been defined to include such things as prescription and non-prescription drugs, pain medication, orthopedic devices, prosthetic devices, beds, even van modifications. An insurance company may be responsible for going into a home and making modifications if one has suffered severe injury that does not allow for mobility in a house.
“Services” may include medical doctors and hospital services, chiropractic treatment, attendant care services often performed by spouses or other relatives who are providing care in the household necessary for the injury person’s care, recovery, or rehabilitation. Services also include medical tests reasonably necessary to insure a proper diagnosis, the costs of medical reports if required by the insurance carrier, practical nursing services which could include home aid care, guardian and/or conservator fees. Keep in mind, the no-fault insurer is not relieved paying no-fault benefits for products, services, and accommodations when the injured person is a child or has a spouse merely because the parent or spouse is legally obligated for the maintenance.
“Recovery” for rehabilitation has been defined to include not just physical and occupational rehabilitation, but vocational rehabilitation as well, and may include apartment rental costs if one has to leave their home to seek the necessary medical treatment.
- Lost Income
Work loss benefits are payable to an injured person if the injury is a result of an accident, and the injured person has a loss of income from work that the person would have performed during the first three years after the date of the accident.
Work loss is not based upon future earning capacity, but rather actual lost earnings. This means that if an injured person can show he or she would have been employed at a certain rate, then work loss benefits are payable at that rate. An injured person may also be eligible for work loss benefits if they are temporarily unemployed at the time the accident occurred. Additional benefits are available if an injured person is required to work fewer hours or lighter duty for less pay. Under those circumstances, the no-fault carrier must pay a wage differential.
The rate of reimbursement is 85% of the gross up to a certain maximum per month, which varies from year to year. There is a 15% reduction because work loss benefits are not taxable income. Benefits may be available whether you miss one hour, one day, or one year of work because of an accident related injury, but cannot exceed three years.
- Replacement or Household Services
An injured person is entitled to expenses not exceeding $20/per day that are reasonably incurred in obtaining ordinary necessary services in lieu of those that would have normally been performed for the benefit of an injured person or their dependents. What this means is if you had to hire someone to do things you normally would have done yourself, you can seek reimbursement from the insurance carrier but only up to $20/per day. This must be supported by a doctor and itemization is necessary for the insurance company in establishing what services were being performed, who performed the services, when they were performed, how long they took.
- Survivor and Funeral Expenses
The No-Fault Act has a small funeral expense allotment if one is killed as a result of a motor vehicle accident. A survivor such as a spouse or child can receive benefits consisting of loss of contributions of tangible things of economic value (not including services) if one is dependent on a deceased and would have received that support were it not for the accident. This potentially could include $20.00 per day replacement services for expenses reasonably incurred by the dependent in order to obtain services to replace those provided for by the decedent.
- Property Damage
The law allows one to recover from a negligent driver for damage done to a vehicle, but on a very limited basis. The No-Fault Mini-Tort Act allows for a recovery up to $1,000 or the extent of the deductible not waived by the insurance company, whichever is less.
Time Limitations. There are other detailed and complex issues that you may have to deal with when involved in an accident. Most important is the specific time limitations that must be adhered to or an injured party can forever lose their rights for recovery. No-fault benefits are payable within 30 days after an insurer receives reasonable proof of the loss sustained. However, the insurance carrier must be notified within one year of the date of the accident, and, once they are notified, the insurance carrier must be notified within one year after each expense is incurred or that expense will not be reimbursed. There are multiple one year back-rules that need to be explained by an experienced attorney to make sure your rights are protected.
Coordinated Coverages. There is also an issue of coordinated coverage when policy language specifies such coordination. This issue involves which insurance company is responsible: the auto carrier or the medical insurance company that is often provided through employers. If there is no coordination, there may be a chance for benefits to be paid directly to the injured person despite the fact that the traditional insurance company has paid benefits. However, these issues have become more and more complicated by such federal acts as the ERISA Plan Acts that can shift the first priority for payment in a coordinated policy from the medical insurance company to the car insurance company.
- Non-Economic Benefits/Pain and Suffering
There may be a right for an injured person to recover for non-economic loss, such as pain and suffering or economic loss that exceeds the available benefits under the No-Fault Act, such as wage losses that exceeded the no-fault carrier’s compensation because of the monthly maximums.
To recover for non-economic loss, an injured party must sustain a threshold injury of either death, permanent serious disfigurement, or a serious impairment of body function. Sometimes these injuries are readily apparent and sometimes they can be subtle and may rise to the threshold some months or even years after an accident. Therefore, it is important whenever you sustain any type of injury to consult an attorney to determine in more detail what your rights are under Michigan’s No-Fault law.
What happens if another driver is negligent and causes you serious injuries, but has no insurance on their vehicle or has a small policy limit for liability protection? If you have optimal coverage under your own policy, you may still have rights and a source from which to collect compensation.
If you are unsure of your current coverage, we strongly encourage you to contact your insurance agent to confirm you have optimal coverage. Obtaining optimal coverage is reasonable in cost, and most importantly, provides you with an extra level of protection.
Robert L. Blamer is a partner in our Livonia office and head of the Firm’s plaintiff’s practice group. He focuses his practice on helping injured people in many types of negligence actions, workers’ compensation claims, and Social Security disability claims. He may be reached at (734) 261-2400 or firstname.lastname@example.org.