The Michigan No-Fault Automobile Insurance Law took effect on October 01, 1973 under Governor William Milliken. Prior to this date, Michigan operated under a tort liability system, in which fault in an accident had to be determined before benefits could be paid. The tort system was cumbersome and inefficient and gave rise to excessive legal and administrative fees. Additionally, most at-fault parties had insufficient insurance to cover the injured party’s damages, which resulted in under-compensation.
Under current Michigan law, no-fault insurance is required in order to register a vehicle. Payments for collision damage, medical treatment, and wage loss are administered by one’s own insurance carrier. Adoption of no-fault law resulted in an increase in benefits paid to the injured person, more efficient distribution of payments, and reduced premiums for legal and administrative costs. Disputes over who is at fault are irrelevant when making a claim for benefits. In exchange for this uncomplicated access to no-fault benefits, the injured party can sue only in the case of serious injury, disfigurement, or death.
Currently, 12 states* and Puerto Rico have no-fault auto insurance laws. Michigan’s law is unique because it offers unlimited medical and rehabilitation benefits, while other states place a monetary cap on these benefits. Under Michigan no-fault law, an insured is entitled to personal injury protection (PIP) coverage, residual bodily injury coverage, and property protection insurance. (These benefits will be discussed more extensively in a separate entry.)
There have been many challenges to the Michigan No-Fault law, on both the judicial and legislative levels. Although the law has been tweaked in multiple areas, its main structure has prevailed since implementation nearly 42 years ago.
*Florida, Michigan, New Jersey, New York, Pennsylvania, Hawaii, Kansas, Kentucky, Massachusetts, Minnesota, North Dakota, Utah