Q.—Michigan is a No Fault state. What does No Fault mean?
A.—No Fault law is a mandate that every owner of a motor vehicle have insurance. This insurance covers out of pocket expenses, known as economic damages.
Q.—What are the exact economic damages that are covered ?
A.—Payment of economic damages is known as first party benefits. It includes lost wages, payable at a rate of 85% of a person’s gross pay for a maximum of 3 years. It also pays all medical expenses, including attendant care that is reasonable and necessary. Medical benefits also include payment of mileage for transportation to and from doctors, hospitals, therapy, etc. Payment of medical care is a life time benefit. It also pays replacement services for individuals who perform work for the injured person, which the injured person usually does (e.g. snow shoveling, housework, etc). Replacement services are a payable for a maximum of 3 years at a maximum rate of $20 per day.
Q.—What is coordinated benefits?
A.—In order to reduce the amount of a person’s premium for automobile insurance, coordinated coverage is offered. Coordinated medical coverage requires that medical expenses be submitted to your health insurance carrier first. The automobile insurance carrier will pay expenses not covered by your health insurance. Similarly, coordinated wages require you to collect under a long term disability policy first and the automobile insurance pays the difference between the 85% and amount paid by long term disability policy.
Q.—The other car caused the accident. Is he responsible for my medical expenses and lost wages?
A.—No. Michigan No Fault law says that your own insurance company on your own car is responsible for all first party benefits. The person, who caused the collision, cannot be held responsible. For example, if you are a passenger in car that was involved in an automobile accident, your own insurance company is responsible for paying your first party benefits. This is true even if your vehicle was not involved. If you do not own a vehicle, then the insurance company of any relative within your household. If no one owns an automobile in your household, then first party benefits are paid by the automobile insurance company on the vehicle you are occupying. If the vehicle you are occupying has no insurance, then you can apply to the State of Michigan Assigned Claims for benefits.
Q.—I was driving without insurance on my car. Can I still get first party benefits?
A.—No. Michigan law mandates that everyone has automobile insurance. If you violated the law and operated a motor vehicle without insurance, you cannot collect first party benefits. Additionally, operating a motor vehicle without insurance is a crime. Finally, a person operating a motor vehicle, that he owns, cannot sue the person who caused the collision.
Q.—I was involved in an automobile collision while in the course of my employment. Who is responsible for paying my medical expenses and lost wages?
A.—Michigan law provides that an automobile insurance carrier does not have to pay any benefits that are suppose to be paid under Worker’s Compensation law. This means that medical expenses are paid by worker’s compensation. Worker’s compensation also pays wages, and the automobile insurance carrier will pay the difference between the amount owed under worker’s compensation and 85% of the lost wages. Michigan Worker’s Compensation does not pay replacement services. This is paid in its entirety by the automobile insurance company.
Q.—Can I sue the person, who caused the collision?
A.—Yes, but your rights are limited. You can collect loss wages beyond the 3 years that is paid by first party benefits. You can also collect money for your pain and suffering if you suffered a “serious impairment of a body function.” A “serious impairment of a body function” is defined in M.C.L. 500.3135 as “an objectively manifested impairment of an important body function that affects the person’s general ability to lead his or her normal life.” This is known as third party benefits.
Q.—First party benefits, third party benefits. This is confusing. What should a person do?
A.—Michigan No Fault law is complex. You should call an attorney at 1-800-541-3000 to discuss your legal rights in detail.
Q.—My car was damaged. What about my car?
A.—Michigan law allows you to sue a person who causes a collision for maximum of $500 in damage to your automobile. If you have more than $500 in damages, you need to file a claim with your own insurance company under the collision portion of your own automobile policy.
Q.—If a person is involved in an automobile collision, what should they do?
A.—First, a police report needs to be made. If the police do not come to the scene of the collision, a report needs be made at the police station within 24 hours after the collision. Second, the collision needs to be reported to your automobile insurance company to get first party benefits started. The insurance company will send you a form to complete, called an application for no-fault benefits. Finally, it is important to seek medical treatment for any injuries immediately.
Q.—I need to hire an attorney. What do they charge?
A.—First party benefits that are paid voluntarily, should not result in an attorney fee. Otherwise, Michigan Supreme Court has issued a rule that limits the attorney to 33 1/3% of the net recovery. A written contract explaining the full fee is provided at the initial interview.