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No-Fault Insurance
Wayne State University Law School
Miller, Wayne J.

MI No-Fault Insurance. Professor Miller. Winter 2013
 
 
 
1)    WHAT IS NO FAULT
a.       Basic Concept: To guarantee payment of certain economic losses to all victims of a motor vehicle accident regardless of who is at fault
                                                               i.      Funding of a no-fault system requires that no-fault laws impose certain limitations on the rights of accident victims to bring tort liability claims for noneconomic losses against the negligent drivers who caused the injury
                                                             ii.      Insurers wanted No-Fault Legislation to move away from Tort Liability systems
1.      Before: Claimant could only collect upon proof of negligence—FAULT system
2.      Applied to ALL losses
a.       Economic Losses (wages, medical expenses)
b.      Non-economic loss (pain & suffering)
3.      Could only collect if you could establish that someone else was at fault
4.      Only persons not at fault could get their expenses paid
5.      In some cases, nobody is at fault or another person who is responsible may not be financially responsible to compensate the victim. 
6.      Insurance companies did not like pure fault because the system was jammed with frivolous lawsuits for minor injuries (with no-fault, the insured party’s insurer simply pays out for economic losses)
2)    QUID PRO QUO: THE NO FAULT BARGAIN
a.       What No-fault pays and what it does not pay
                                                              i.      PAID: Economic Losses
1.      Economic Losses covered by No-Fault/PIP portion of your insurance
2.      Economic Losses under MCL 3107(1)
a.      Allowable Medical Expense Benefits
                                                                                                                                       i.      No Duration Restraints—insurer will pay you as long as the injury impairs you
                                                                                                                                     ii.      No Dollar Limit
b.     Work/Wage Loss Benefits
                                                                                                                                       i.      Reimburses your wages while you cannot work due to injury
                                                                                                                                     ii.      Duration: MAXIMUM 3 Years
                                                                                                                                   iii.      Monthly Pay: MAXIMUM $5000 (if you can prove you earned this amount)
1.      The $5000 figure changes yearly by statute.
2.      Injured party limited to collect what was in statute the year of injury (does not increase yearly for person already collecting)
c.      Replacement Services
                                                                                                                                       i.      Injuries that prevent you from doing household necessities
                                                                                                                                     ii.      If legitimate, awarded $20/day (set amount)
                                                                                                                                   iii.      MAXIMUM 3 YEARS
                                                           ii.      NOT PAID: Non-economic Losses
1.      Essentially relate to diminished quality of life
2.      Covered under RESIDUAL INJURY portion of your insurance (if you cause injury to another and it is not covered by their PIP, they can sue you. Residual Injury protection covers that. Minimum amount is $20,000 but you should get more)
3.      Covers
a.       Death (estate has a claim)
b.      Permanent serious disfigurement or scarring
c.       Serious impairment of bodily function
d.      Excess of what PIP covers for loss sustained in accident
4.      Injury severity standard = Tort threshold
a.       Unless the injury crosses the threshold, the innocent victim is NOT permitted to recover noneconomic damage
3)    NO-FAULT IN MICHIGAN
a.       We have a “Modified no-fault” system
                                                               i.      Guarantees a certain level of economic loss benefits to all victims while imposing a threshold injury requirement on all victims who pursue tort claims for noneconomic loss against the negligent driver.
                                                             ii.      [Among the states that have adopted such a system] there are different kinds of statutory threshold injury requirements for noneconomic loss claims: “dollar threshold” and “verbal threshold”
                                                           iii.      Michigan = modified no-fault system (w/ “verbal threshold”)
b.      MANDATORY COVERAGES (NO-FAULT AND 2 OTHERS)
                                                               i.      PERSONAL PROTECTION INSURANCE/PERSONAL INJURY PROTECTION
1.      This is NO-FAULT. FIRST PARTY CLAIMS
2.      Insure person files the claim with their personal insurer
3.      Covers injuries and costs regardless of fault
4.      Covers ECONOMIC LOSSES (Allowable medical expenses, work/wage loss, and replacement services)
                                                             ii.      RESIDUAL INJURY
1.      For Third-Party Claims
2.      So if you injure someone, they can come after your for non-economic losses.
3.      Your insurer will pay them up to whatever your policy mandates (20k min)
                                                           iii.      PROPERTY PROTECTION INSURANCE (PPI)
1.      Covers when your car causes damage to property besides another moving vehicle & improperly parked vehicles
2.      Includes buildings and signs
3.      $1Mil max
4.      If your car is properly parked, and someone hits it, their PPI will cover it if they leave their info.
c.       OPTIONAL COVERAGES
                                                               i.      COLLISION
1.      No Fault does NOT cover repairs to your vehicle if in an accident
2.      Most people elect to get collision coverage
3.      When in crash, pay deductible and insurer covers the rest
                                                             ii.      COMPREHENSIVE
1.      Pays if your car is stolen, broken into, hit by falling object, animal, or damaged by fire, flood or vandals.
                                                           iii.      UNDERINSURED
1.      Other party in accident not insured, fled scene, or simply unknown
2.      You make the claim under your own policy
                                                           iv.      UNDER INSURED
1.      Other party’s minimum coverage doesn’t cover your own expenses
2.      Your provider will pay the excess
4)    PIP BENEFITS
a.       ALLOWABLE MEDICAL EXPENSES
                                                               i.      3107(1)(a)
(a) Allowable expenses consisting of all reasonable charges incurred for reasonably necessary products, services and accommodations for an injured person's care, recovery, or rehabilitation. Allowable expenses within personal protection insurance coverage shall not include either of the following:
(i) Charges for a hospital room in excess of a reasonable and customary charge for semiprivate accommodations except if the injured person requires special or intensive care.
(ii) Funeral and burial expenses in excess of the amount set forth in the policy which shall not be less than $1,750.00 or more than $5,000.00
                                                             ii.      Allowable for life and with no dollar limit
                                                           iii.      Examples
1.      Medical Expenses
2.      In-home nursing
3.      Residential accommodations (wheelchair accessibility)
4.      Rehabilitation
5.      Special Motor vehicle
6.      Medical Transportation
7.      Guardianship expenses
b.      WORK LOSS BENEFITS
                                                               i.      3107(1)(b)
(b) Work loss consisting of loss of income from work an injured person would have performed during the first 3 years after the date of the accident if he or she had not been injured. Work loss does not include any loss after the date on which the injured person dies. Because the benefits received from personal protection insurance for loss of income are not taxable income, the benefits payable for such loss of income shall be reduced 15% (unless you can prove that taxation would be lower)
                                                             ii.      Current monthly max= 5189.00
c.       REPLACEMENT SERVICES
                                                               i.      3107(1)(C)
(c) Expenses not exceeding $20.00 per day, reasonably incurred in obtaining ordinary and necessary services in lieu of those that, if he or she had not been injured, an injured person would have performed during the first 3 years after the date of the accident, not for income but for the benefit of himself or herself or of his or her dependent
                                                             ii.      Housework, yard work, home maintenance, babysitting, etc.
d.      SURVIVOR LOSS BENEFITS
                                                               i.      3108
                                                             ii.      Payable for 3 years; subject to same maximum monthly benefit ceiling; which is applicable to work loss claims.
                                                           iii.      Comprised of:
1.      Tax income;
2.      Loss of fringe benefits;
3.      Replacement service component.
                                                           iv.      NOTE: Only those persons who are classified as “dependent” on the decedent may make a claim for survivor’s loss benefits.
                                                             v.      Also qualify for payment of funeral and burial expenses under Sect. 310

y protection insurance, and residual liability insurance. Security shall only be required to be in effect during the period the motor vehicle is driven or moved upon a highway. Notwithstanding any other provision in this act, an insurer that has issued an automobile insurance policy on a motor vehicle that is not driven or moved upon a highway may allow the insured owner or registrant of the motor vehicle to delete a portion of the coverages under the policy and maintain the comprehensive coverage portion of the policy in effect
b.      This doesn’t mean that your vehicle must be registered in order to obtain no-fault benefits. This just means if you are owner or registrant of a motor vehicle within the meaning of THIS STATUTE, you must be insured.
c.       If you have an MV that is required to be registered, you must have insurance. If you have this insurance, it covers your use of all motor vehicles.
                                                               i.      What is a Motor Vehicle
1.      3101(2)(e): “Motor vehicle” means a vehicle, including a trailer, operated or designed for operation upon a public highway by power other than muscular power which has more than 2 wheels.
a.       NOT A MOTOR VEHICLE
                                                                                                                                       i.      Motorcycle or a moped.
                                                                                                                                     ii.      Farm tractor or other implement of husbandry which is not subject to the registration requirements in MI.
                                                                                                                                   iii.      ORVs
b.      Technically a motor vehicle
                                                                                                                                       i.      Anything with more than 2 wheels that is operated on a public highway.
                                                                                                                                     ii.      Statute says operated OR designed for operation
                                                                                                                                   iii.      Ex// Golf cart: Has more than 2 wheels, motorized. If operated on highway, it is a MV
                                                             ii.      Which Motor Vehicles must be REGISTERED?
1.      MCL 257.216 – this section defines what vehicles must be registered.
a.       “Every motor vehicle, pick-up camper, trailer coach, trailer, semi-trailer and pole trailer, when driven or moved upon a highway, is subject to the registration and certificate of title provisions of this act except the following…”
b.      Exceptions: (1) certain vehicles relating to the manufacturing and transporting motor vehicles; (2) vehicles crossing a highway from one property to another property; (3) certain implements of husbandry; (4) certain special mobile equipment; (5) overhead trolley vehicles; (6) vehicles owned by the U.S. government; (7) certain trailers weighing less than 2,500 lbs; (8) certain vehicles being driven only for purposes of obtaining inspections or weight receipts; (9) car dealer owned vehicles
                                                           iii.      Registration not an element of being a motor vehicle
1.      Lee v. DAIIE (P injured back while unloading a U.S. Gov’t owned mail truck).
a.       Supreme Court held that registration is not required in order for a vehicle to be considered a “motor vehicle” under the no-fault statute à there is no linkage between the definition of motor vehicle and the requirement of registration.
b.      In other words, something can be a motor vehicle even though it does not have to be registered.
c.       Accordingly, no-fault benefits can be payable for the use of such a non-registered vehicle, assuming all other conditions pertinent to entitlement and non-disqualification have been satisfied