How Michigan no-fault insurance works

If you are injured in a Michigan automobile accident, you will most likely be eligible to receive no-fault insurance benefits. These benefits are payable regardless of who was at fault for the accident.

The types of benefits you are entitled to receive include the following:

  1. Medical Expenses. This includes all expenses arising from the accident that are reasonably necessary for your care, recovery and/or rehabilitation. This includes doctor and hospital bills. It can also include such items as transportation costs to see doctors, home modification costs for those severely injured who need modifications to live in their home, and home health care expenses related to your accident.
  2. Wage Loss. This benefit compensates you for employment income you would have received but for injuries received in the accident. The amount of the benefit is normally 85% of the total income you would have received but for the accident. Wage loss can be payable for up to three (3) years.
  3. Replacement Costs. These are expenses not exceeding $20.00 per day incurred in obtaining necessary services in lieu of those that, if you had not been injured, you would have performed for yourself or for a dependent of yours. For example, if you mowed your yard before you were injured, but you now have to hire someone to mow your yard after your injury, this would be a replacement cost. This benefit is payable for up to three (3) years.
  4. Survivor’s Loss Benefits. These are benefits paid to surviving dependents of a person fatally injured in an automobile accident. These benefits include financial support that dependents would have received from the deceased plus up to $20.00 per day for replacement services. This benefit is intended to replace the contribution of all tangible things of economic value the dependents would have received from the deceased. This benefit is payable for three (3) years after the date of the accident. The computation of the amount of this benefit is complicated and is subject to setoffs, such as social security survivor’s loss benefits. Therefore, you should seek the advice of an attorney to calculate the amount of this benefit.
  5. Funeral and Burial Expenses. Each no-fault policy must provide a funeral benefit of not less than $1,750.00. Check your policy for the amount of the benefit provided by your policy.

The above is a summary of benefits paid without regard to fault. No-fault benefits are intended to compensate for economic losses you may experience as a result of the accident. If you suffer serious personal injuries, you may also have a liability claim against a party at fault for the accident. This type of claim would be to seek compensation for your non‑economic losses, such as compensation for impairments, disabilities and/or pain that may result from the accident. Economic losses not paid as part of the no-fault benefits can also be recovered in this type of claim against a party at fault. Liability claims against third parties are claims based on fault unlike claims for no-fault benefits, such as medical expenses and wage loss. In fault claims, you must prove negligence on the part of the party you claim to be at fault. Generally, in a case of this type, it is necessary to show a serious injury that will fit into one of three (3) categories. These categories are: 1) death; 2) serious impairment of body function; or 3) permanent serious disfigurement.

Negligence claims against third parties are complicated and you should consult an attorney to determine if you have a claim that can be sustained under Michigan law.

There are time limits that apply to both no-fault and fault claims. You therefore should act promptly after an accident to preserve your legal rights.

© 2014 Schroeder DeGraw PLLC

Auto Insurance Policy Check

CHECK YOUR AUTO INSURANCE POLICY TO SEE HOW MUCH
UNDERINSURED AND UNINSURED MOTORIST COVERAGE YOU HAVE

If I could give only one piece of advice regarding purchasing auto insurance, it would be to check your policy to see the limits of coverage you have for underinsured and uninsured motorist coverage. Underinsured and uninsured motorist coverages are crucial parts of your auto insurance policy, but are often misunderstood and overlooked.

Underinsured motorist coverage comes into play when you are in a serious accident caused by the fault of another. If you suffer serious personal injuries, you may have a liability claim against the other party at fault. However, if the party at fault carries only the minimum liability insurance of $20,000.00, and has few assets of their own, you may be left with a large claim but no way to recover the money necessary to pay your claim. For example, let’s assume you sustain a serious personal injury for which the appropriate compensation that should be paid by the party at fault is $500,000.00. If the at-fault party has no assets to collect and only $20,000.00 of liability insurance, then you are likely to recover only the $20,000.00 of insurance. The at-fault party could file bankruptcy or simply evade payment and you would likely never be compensated for the other $480,000.00 you are owed. You simply would be at the mercy of the insurance limits of the other driver, as far as getting compensated is concerned.

However, there is a solution to this problem if you have taken the appropriate steps before an accident occurs. The solution is underinsured motorist coverage, which you can purchase as part of your own insurance policy. Underinsured motorist coverage will compensate you for the amount of your compensable personal injury damages that are not paid for by the other driver’s insurance or recoverable assets. In the previous example, $20,000.00 would be paid by the at-fault party’s insurer, with $480,000.00 being uncompensated. However, if you have $500,000.00 in underinsured motorist coverage, then $20,000.00 is paid by the at-fault party’s insurer and the other $480,000.00 is paid by your own insurer so that you receive compensation for all of your damages. With underinsured motorist coverage, you are no longer at the mercy of the at-fault driver’s insurance limits. You can insure yourself against the risk of being injured by someone who has inadequate insurance to fully compensate you for your damages.

The other piece of good news is that this coverage is very inexpensive to add to your existing policy. Check with your agent to make sure this very important coverage is included in your policy for limits that are high enough to make a difference if you are seriously injured. It does little good to have $20,000.00 of underinsured motorist coverage since the other driver already is required to carry that much insurance. If you are seriously injured in an accident due to the fault of another, having purchased adequate underinsured motorist coverage will have been one of the best decisions you ever made.

One point of confusion is that there is also coverage called “uninsured motorist benefits”. Uninsured motorist coverage covers you in the event you are injured by the fault of another who has no insurance. In contrast, underinsured coverage covers you when you are injured by an at fault party who has insurance, but the insurance is inadequate to pay all of your damages. Uninsured motorist coverage does not apply if the other party carries even the minimum insurance required by law. Therefore, it is important that you have both underinsured and uninsured motorist coverage on your own auto insurance policy. You need both coverages to protect yourself against uninsured and inadequately insured drivers. Both coverages are inexpensive. Make sure you have enough of each coverage to provide substantial compensation for your damages in the event of a serious injury.

© 2014 Schroeder DeGraw, PLLC