- February 1, 2023
- No Fault
- Personal Injury
What You Need to Know About Michigan No-Fault Law Reform
How Law Changes Affect Michigan No-Fault Insurance
Some drivers in our state may know there have been changes in the law regarding car insurance, but they don’t know the details. You may even wonder if Michigan is still a no-fault state. It is. However, there has been reform to the no-fault law.
Because our state is among the states with the highest car insurance rates, changes to the no-fault law can work to your benefit. Michigan ranks 7th in the nation1 when it comes to the premiums for full coverage. This data is, in part, what inspired lawmakers to make changes to Michigan’s no-fault law (MCL 500.3105)2. To reduce the financial burden on policyholders, lawmakers in Michigan have been enacting reforms to the no-fault car insurance policy over the last few years. The newest changes came down the pike on July 1, 2021.
It’s crucial to understand the changes to Michigan’s no-fault laws so you can choose the best coverage for your needs. Below we explain many important elements of the changes to the law. You can also find a helpful resource provided by the Michigan Department of Insurance and Financial Services: Michigan’s Guide to Auto Insurance 3 and their comprehensive FAQs 4. The Guide is complex, but exploring some of the most critical aspects of these changes may assist you in making decisions about your auto insurance coverage.
Topics Related to Michigan’s No-Fault Law Reform
- When the Michigan no-fault law changed
- Levels of PIP you can choose
- What the option of unlimited PIP means
- Changes to home health care coverage
- Compensation for medical costs that exceed PIP coverage
- Compensation for damage to your car
- How Michigan’s comparative negligence rule affects coverage
- Switch to a fee schedule based on Medicare amounts
- Answers to common questions about changes to Michigan’s no-fault law
Let’s Start at the Beginning: Michigan Is a No-Fault State
Michigan is a no-fault state, meaning that every owner of a car in the state is required by law to purchase certain basic coverages to pay for expenses in the event of an auto accident. “No-fault” means that insurance companies pay for expenses and damages no matter who caused the accident. When someone is injured in an accident, the Personal Injury Protection (PIP) of an auto insurance policy coverage pays for medical care.
The new no-fault law will allow drivers to select PIP medical coverage options ranging from unlimited to no coverage. Those who opt out and select no coverage can do so because they have Medicare and it will pay for healthcare costs related to an accident. At the other end of the spectrum is the unique option of unlimited PIP coverage. Michigan alone offers this level of coverage.
We Protect the Injured in Michigan
The changes in Michigan’s no-fault law impact every driver and their insurance policy, as well as any other individuals injured in car accidents, including bicyclists, motorcyclists, pedestrians, and more. Because the changes affect all insurance policies, it’s important to be aware of how they impact you if you or someone you love has been injured in a car accident.
That’s where the capable and professional team at Goodman Acker steps in. Our car accident attorneys in Detroit have decades of experience filing claims and communicating with insurance adjusters on behalf of injured clients. We understand how important it is that you secure the full amount of compensation you need.
Expenses add up after injuries, including medical bills, property damage, lost wages, and more. We’re able to inform you on how the Michigan no-fault law will change how much you can recover. The answer will be encouraging or disappointing, depending on the nature of your accident. Regardless, our team is available to represent you and fight for the results you’re entitled to receive.
When PIP Coverage Impacts the Amount of Compensation after an Accident
Not only are all the changes to Michigan’s no-fault law challenging to understand, the process of reaching a settlement with an insurer, or going to court, is even more complex. Rely on our expertise. There’s a reason so many people injured in car accidents in Michigan turn to us for help. We have a proven record with a 99% success rate and have obtained millions in compensation for our clients. If you need help after an accident, don’t hesitate to contact us at (248) 286-8100. Get a free consultation and talk to our team about your case.
Timing of the Michigan No-Fault Law
Anytime there is a change in the laws governing car accidents and insurance, it impacts almost everyone in Michigan. That’s why concerns about those changes are well founded because they touch so many lives. We’ve heard questions like…
- Is Michigan a no-fault state in 2022?
- When did the Michigan no-fault law change?
The answers are simple:
- Yes, Michigan is still a no-fault state in 2022.
- The Michigan no-fault law changed initially in July of 2020 and again in July of 2021.
There is much more about the law changes we want to explain…
Michigan’s No-Fault Law and Unlimited Personal Injury Protection
In theory, Michigan’s no-fault law is there to protect you and ensure you receive proper medical attention if you’re injured in a car accident, regardless of who was at fault. However, in practice, this would seem to mean that all Michigan drivers must pay for unlimited personal injury protection (PIP) medical benefits. With the changes to the law, you are not required to pay for unlimited PIP coverage. That will save you money.
PIP coverage is intended to cover all the injured person’s reasonably necessary medical care, treatment, recovery, rehabilitation, home health care aides, etc., for an indefinite period. The first change to this policy took effect on July 1, 2020. That reform to Michigan’s no-fault law allowed motorists to choose different levels of PIP coverage. While Michigan is the only state that allows the option for unlimited PIP, drivers can also select lower levels.
Michigan No-Fault Reform: New PIP Level Options
With the Michigan no-fault law reform, residents are now allowed to select different levels of PIP coverage. PIP will pay for medical costs only, not other expenses like wages lost if your injuries prevent you from working. Those levels are the below amounts per person, per accident:
- No PIP coverage – for drivers who have coverage under Medicare, both Parts A and B
- $50,000 - for those enrolled in Medicaid
- $250,000, with exclusions – for drivers who have qualified health insurance coverage that is not Medicare
The lower cost option for Medicaid recipients is based on the rationale that if you’re injured in a car accident, your health insurance will be responsible for covering your treatment rather than your car insurance policy. Medicare insurance recipients are allowed to opt-out of PIP coverage entirely. However, anyone can still opt for unlimited PIP.
A Note of Caution on Selecting Limited PIP Options in Michigan
What if your injuries are severe and require long-term, expensive care? In situations like this, there may be some drawbacks to selecting a limited PIP option. Just because Michigan’s no-fault law reform provides you options, it doesn’t mean you should choose a low amount. If you’re seriously injured in a car accident and you’re not already on Medicare or Medicaid, you may find your health care costs exceed the caps of coverage offered by your health insurance plan.
If you have health conditions that require continued care indefinitely, you may be forced onto Medicaid to cover your care. If you can avoid this predicament, you should. To qualify for Medicaid, you must have limited financial resources. While relying on Medicaid won’t cost you more to cover your health care needs, your resources may have to be reduced to qualify for, and continue to receive, these medical benefits. If you had resources above the income cut-off for Medicaid before your accident and you reach the cap of your health insurance coverage, you may have to reduce your assets to qualify for Medicaid.
Learn more about Michigan laws related to car accidents:
Changes to Home Health Care Coverage in the New Michigan No-Fault Law
The most significant change occurring on July 1, 2021, has to do with coverage for home health care5. The new law stipulates that coverage of only 56 hours per week of home care is allowable when that care is provided by a relative, friend, business associate, or anyone living in the same household as the injured party. This type of care is referred to as “attendant care” by Michigan’s government resources regarding this change. The prior law allowed for the coverage of 24-hour care for those catastrophically injured in a car accident. It’s important to know that this new change to Michigan’s no-fault law does not apply to attendant care provided by commercial agencies.
The other exception to this rule is if the victim’s family or an attorney for the victim challenges this limitation of coverage. In some cases, insurance companies will agree to cover home care beyond 56 hours if more care is shown to be medically necessary. Insurers may also cover additional attendant care hours because the care provided by family or friends is considerably less costly than professional nursing care.
There is another option available to you. You can choose to purchase a rider, which is an addition to your original policy coverage. This rider could specifically provide added coverage for attendant care beyond the 56-hour cut-off. This addition also will increase your premium. Part of the Michigan no-fault law reform requires all insurers to offer this rider to anyone purchasing PIP at the level of $50,000 in coverage, or more.
Other Options for Damages that Exceed PIP Limits
When You Need Excess Coverage for Medical Care
If you have accident-related medical bills above the PIP medical benefits coverage level you selected, you’re permitted to sue the at-fault driver in a third-party tort lawsuit. This will hold the at-fault driver responsible for covering the payments for their present and future excess medical bills and any health care bills that go above and beyond their PIP coverage. If you think you may have a lawsuit, you should discuss your case with one of our attorneys. We will explain how Michigan law applies and what you can expect in compensation.
Options for Excess Coverage Related to Property Damage to Your Car
With the changes to Michigan’s no-fault law, you can collect up to $3,000 in compensation for damages to your car. The reform to the law in July 2021 increased the amount to $3,000 from a $1,000 cap (MCL 500.3135(3)(e)). If you pursue this legal action, it is called a “mini tort lawsuit.” While this option may apply to your case, you should understand conditions that must be met to pursue this type of lawsuit:
- Your car must be insured.
- You must have costs your insurance won’t cover.
- Your car must have sustained physical damage.
- The at-fault driver must be known.
- This claim doesn’t include coverage for medical costs related to injuries (which are covered by PIP).
- Comparative fault is applied to the assessment of damages. For example, if you sue the other driver for $1,000, and the case finds that the at-fault driver was only 75% at fault, you would receive only $750.
An Exception to Michigan’s Mini Tort Rule Regarding Uninsured Drivers
The $3,000 limit does not apply to uninsured, at-fault drivers who can be sued for the total amount of damage done to another vehicle in the collision. Since there’s no insurance to cover the vehicle damages, the uninsured at-fault driver is held personally liable. However, if you are also uninsured, you cannot bring a lawsuit. If you were injured or your car was damaged in a collision and you weren’t at fault but were driving without insurance, you can’t recover any damages or file a lawsuit against the at-fault driver.
Does Michigan’s Comparative Negligence Rule Mean I’m Not Covered?
Michigan is a “modified comparative negligence” state, also known as a “comparative fault” state. This rule applies only when the cost of your medical care exceeds the amount your PIP covers. To be clear, Michigan’s no-fault law ensures costs for your medical care will be covered up through the limit of your PIP. This is true even if you are 100% at fault for the accident.
However, once you reach that limit, the comparative negligence rule applies. Not only does this formula apply to medical costs exceeding your PIP coverage, it also covers damage to physical property (namely, your car) and compensation for pain and suffering.
The comparative fault rule (M.C.L. §600.2959) states that if you are partially at fault for the accident, your compensation – after you reach the PIP limit -- will be reduced by the percent of fault that is yours6. For example, if the compensation in your case (after your PIP coverage limit) is $100,000 and you are deemed 20% at fault, the amount of compensation (beyond your PIP coverage limit) you can receive is $80,000. If you are over 50% at fault, you cannot pursue any compensation in a legal case (beyond the PIP coverage).
How the Michigan No-Fault Law Shifted to a Medicare-based Fee Schedule
Another change concerns how health care providers will be allowed to charge for their services. Medical charges will now have to adhere to the new Medicare-based fee schedule7, a percentage of what is payable under Medicare. This change will affect all doctors, hospitals, clinics, and other medical providers.
This reform in Michigan’s no-fault law will curtail the practice of inflating bills for private health insurance holders. It is a positive change that will protect consumers, especially those who will need long-term care after catastrophic injuries sustained in a car accident.
Hospitals will be prevented from charging far more for the same services because a private insurance company is footing the bill. Health care providers will be required to keep charges for medical services up to 240% of what they charge Medicare for the same services until June 2022. After that, this will be set up to 235%, and then up to 230% over the next two years.
This change in the Michigan no-fault law helps consumers who otherwise face the risk of insurers capping their benefits or raising their premiums.
Your Complete Guide to Michigan’s No-Fault Law Reform
While we provide helpful explanation about many elements of the changes to Michigan’s no-fault law, the details of the law are even more complex. And there are other ways it can impact you. The intent of the law was to help Michigan’s drivers, and several of these impacts are positive.
When you need help with legal matters, you’ll find our team at Goodman Acker always strives to communicate as honestly as possible with our clients. We work to inform them on how new laws and regulations can impact their claims. We will do the same for you. As part of that effort, we’ve provided a list of common questions associated with Michigan’s new no-fault law. Click on any topic to see a more detailed discussion of the issue.
Common Questions About Changes to Michigan’s No-Fault Law
What are my choices for PIP coverage under the new Michigan no-fault law?
Will I see savings on my car insurance bill under the new Michigan no-fault law?
Do I have to have PIP coverage under the new Michigan no-fault law?
Does the new Michigan auto insurance law limit attendant care hours?
What are my Michigan rights if I was injured in an out-of-state accident?
What are my rights as an out-of-state resident injured in a Michigan car accident?
Who pays for an injured person’s no-fault benefits?
Who pays for an injured motorcyclist’s benefits?
Who pays for an injured pedestrian’s benefits?
Who pays for an injured bicyclist’s benefits?
How will independent medical examinations change under Michigan’s new auto insurance law?
Over 150 Years of Combined Experience Ready to Help You
These new changes can be confusing, so it’s important to educate yourself; Michigan’s no-fault law continues to evolve and face ongoing reforms. If you or a family member has been injured in a car accident, get in touch with our team at Goodman Acker.
For more than 150 years, our attorneys have been dedicated to helping crash victims recover compensation for their injuries and get back on their feet. We understand that you’ve been through a traumatic event, and it can be life-altering for both you and your family. Our legal team is compassionate and understanding, and we’ll walk beside you throughout the legal process.
To find out more about how we can help you, call us for your free initial consultation at (248) 286-8100
1 Car Insurance Rates by State 2022. Forbes Advisor. https://www.forbes.com/advisor/car-insurance/rates-by-state/
2 Michigan Compiled Laws 500.3135. Tort liability for noneconomic loss; exceptions; cause of action for damages; "serious impairment of body function" defined. (M.C.L. §500.3135). https://www.legislature.mi.gov/(S(x2i5n2s5og4jdahuhkljskml))/mileg.aspx?page=getObject&objectName=mcl-500-3135
3 State of Michigan. Department of Insurance and Financial Services. Michigan’s New Auto Insurance Law. https://www.michigan.gov/autoinsurance
4 State of Michigan. Department of Insurance and Financial Services. Michigan’s New Auto Insurance Law - Frequently Asked Questions. https://www.michigan.gov/autoinsurance/frequently-asked-questions
5 U.S. Centers on Medicare and Medicaid Services. Medicare.gov. What’s Home Health Care? https://www.medicare.gov/what-medicare-covers/whats-home-health-care
6 Michigan Compiled Laws 600.2959. Comparative fault; reduced damages. (M.C.L. §600.2959). http://www.legislature.mi.gov/(S(oftojrotudaymamkxhfknko4))/mileg.aspx?page=getobject&objectname=mcl-600-2959
7 U.S. Centers on Medicare and Medicaid Services. CMS.gov. Fee Schedules – General Information. https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/FeeScheduleGenInfo