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What is Michigan's "No-Fault" Insurance Policy?

Michigan has a unique auto insurance system. It’s called “no-fault.” You’ve probably heard that term before – but what does it mean?

The premise behind no-fault insurance is that people injured in car accidents receive automatic insurance benefits regardless of fault. When a person is injured in a car accident in Michigan, with few exceptions, their own auto insurance company will automatically pay the following benefits:

  • Medical bills – if you are injured and incur medical bills, your auto insurance company must pay them. If you also have health insurance, it will have to be determined which insurer is primary for paying the bills.
  • Wage loss – if you are injured in a car accident and cannot work, your insurance company will pay you wage loss benefits. The amount of the benefit is normally 85% of your gross pre-accident wages. Wage loss benefits must be paid for up to three years after the accident.
  • Replacement services – if you are injured and cannot perform the household chores you did before the accident, your auto insurance company pays this benefit to the person who is performing the chores for you. The maximum benefit is $20 per day for up to three years after the accident.
  • Attendant care – if you require attendant or nursing care because of your car accident injuries, your auto insurance will pay a nurse or family member to provide the care. The care-provider is paid by the hour at a reasonable hourly wage.
  • Medical mileage – your insurance carrier must pay you mileage for your trips to doctor’s appointments.

The benefits outlined above are paid regardless of who was at fault for causing the accident. That means that even if you were at fault, you will still receive money for medical bills and wage loss as long as your vehicle was insured on the date of the accident.

Sometimes your auto insurance company refuses to pay the benefits it owes. That’s when you need an attorney, a professional who knows the laws and who can fight the insurance company to get the benefits you are entitled to under the law. This type of claim – a direct action against your own insurance company – is called a “first-party auto claim.”

Money for pain and suffering is different. Unlike medical bills and wage loss, to get pain and suffering money you must prove that someone else’s “negligence” caused the car accident; you must prove that someone else was at-fault for causing the accident.

Additionally, to get pain and suffering money in a car accident case you must prove that you suffered a “threshold injury.” That means you must prove that you suffered: (1) a serious impairment of body function; (2) a permanent serious disfigurement; or (3) death. Those terms are complicated, but essentially you must prove that you suffered a “serious injury” to get money for pain and suffering.

Proving the negligence and threshold injury requirements can be complicated. You need an attorney who knows the laws and is experienced in these types of cases to help you achieve a maximum recovery.

A claim for pain and suffering is usually asserted against the insurance company that insured the at-fault vehicle. These claims are known as “third-party auto claims.”