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How Does Michigan’s No-Fault Law Affect My Claim?

Michigan has no-fault laws regarding car accidents, which means that your own car insurance will cover your injury-related costs whether or not you were at fault in causing or contributing to your accident. While no-fault laws aim to limit the number of individuals facing lawsuits and make the state court system more efficient, these laws can have a significant effect on your injury claim after a car accident.

This has never been more true than after July 2020, when a revamped no-fault insurance law went into effect in Michigan. These changes complicate the no-fault system, as consumers have more options for coverage. It also complicates the process of seeking full compensation for many injured motorists, and we expect to see more third-party claims moving forward.

No matter what type of no-fault coverage you have in Michigan, the claim process can be challenging and stressful. You should allow the Michigan car accident attorneys at Michigan Injury Lawyers to handle this process for you. The following are only some ways that no-fault laws in Michigan can affect your claim.

Overview of No-Fault Changes in Michigan

Since 1973, most drivers in Michigan only had the option to purchase unlimited no-fault coverage.

Under the changed law, Michigan drivers now have the choice of one of the following:

  • Unlimited personal injury protection (PIP) coverage
  • PIP coverage limited to $500,000
  • PIP coverage limited to $250,000
  • PIP coverage limited to $250,000 with certain medical exclusions (if you qualify)
  • PIP coverage limited to $50,000 (if you qualify)
  • Opting out of PIP coverage completely (if you qualify)

Most drivers will need to choose unlimited or limits of $500,000 or $250,000. Having limited coverage will certainly change the claim process for car accident victims who sustain severe injuries.

Filing a First-Party Claim with Your Own Insurance Company

In many states, a victim injured in an accident caused by another person’s negligence would file a claim with the insurance company of the responsible party. However, no-fault laws require that you instead seek recovery from your own insurance company for your medical bills and other losses arising from your injuries. You must do so by filing a PIP claim with your insurer. This process is quite different than that in other fault-based states.

You pay premiums to your insurer, so you should expect the company to provide benefits when you file a claim. However, this is often more complicated than it sounds. People often face challenges when trying to obtain the full benefits they need through a first-party claim. You will still need to prove the severity of your injuries, and justify your medical treatment, missed work, and other losses to receive proper coverage. There also might be other sources of coverage, such as health coverage, that come into play, only complicating the matter further.

This is the last thing you need to be dealing with while you recover from an injury, so you should let our car accident lawyers handle the first-party claim process for you.

Recovery May be Limited

Unfortunately, your no-fault insurance policy may not fully cover all of your losses, especially if your injuries were serious. For example, no-fault policies do not compensate policy-holders for non-economic damages caused by your injuries.

Non-economic damages can include:

  • Physical pain and suffering
  • Emotional distress and mental trauma
  • Loss of enjoyment of life
  • Permanent disfigurement or disability

In cases involving relatively minor injuries, the non-availability of non-economic damages may not be an issue. However, if your injuries are serious or even catastrophic, you deserve to recover for more than just your financial losses.

In addition, if you selected a limited coverage policy after July 2, 2020, and you suffer catastrophic injuries, your medical bills and other losses might exceed your $250,000 or $500,000 limit. In this situation, it is critical to have an attorney evaluate your options to recover for your remaining losses.

Third-Party Lawsuits

In many other states, injured accident victims always have the right to file a personal injury claim against negligent parties that caused their collision. In Michigan, however, no-fault laws limit rights to sue the negligent party to those who have suffered severe injuries.

If you need to seek damages for pain and suffering and similar non-economic damages, you may only be able to sue for the full range of your damages if your injury caused a serious impairment or disability in your life. Michigan law always has a “liability threshold” for recovering non-economic damages through a third-party claim, and this remains true after the law changed.

We will likely see an increase in third-party lawsuits in Michigan due to the changed no-fault laws. If an injured motorist has a limited policy, they will now be able to file a lawsuit against an at-fault driver for their losses that exceed their policy limits.

For example:

  • You purchase a $250,000 PIP policy
  • Your severe injuries in an accident caused by a distracted driver that result in losses of about $380,000
  • Your no-fault coverage should cover up to $250,000, and you will need to file a third-party claim against the distracted driver for the remaining $130,000

In a third party claim, you must prove negligence and liability on the part of the other driver, which can be difficult. You always want representation from the right attorney during this process.

Contact Our Michigan Car Accident Attorneys for Help

While no-fault laws may seem harsh, in previous years, they were generally successful in making the claim process more streamlined and efficient. However, with the new PIP options, the process of obtaining full compensation for your losses might become significantly more complicated. In addition, injured victims in outlier cases may face numerous challenges in the recovery process.

The legal team at Michigan Injury Lawyers takes on complex car accident claims, whether a case involves first-party no-fault claims, fault-based third-party claims, or both. If you have any questions about your car accident claim, please do not hesitate to call (888) 454-0801 today or contact us online.