Does the New Michigan No-Fault Law Cover Out-of-State Drivers and Accidents?

As the pandemic continues, many people have chosen to forego foreign travel or even cross-country journeys. Instead, more families are opting for vacations that involve shorter road trips, within their own or nearby states. This means there will likely be more out-of-state drivers on Michigan roadways this summer. Conversely, an increased number of Michiganders may be traveling to neighboring states. Drivers are asking questions about their car insurance coverage, especially in light of the new Michigan No-Fault laws:

• Am I covered if I have a car accident in another state?
• What if I have a car accident with an out-of-state driver in Michigan?
• Who is responsible for damages if the accident is my fault?

Here’s a guide to how Michigan No-Fault works for out-of-state drivers and accidents.

What happens if I am injured in a Michigan accident with an out-of-state driver?

How your injuries are covered depends on the level of Personal Injury Protection (PIP) medical benefits provided by your No-Fault policy. In the past, all Michigan No-Fault policies provided unlimited lifetime coverage of “reasonable and necessary” medical care and related services. However, as of July 1, 2020, policy holders were given the option to choose from six different levels of PIP medical benefits:

Option 1:  Unlimited lifetime PIP medical coverage (same as under the old law)

Option 2:  Limited PIP medical coverage of $500,000

Option 3:  Limited PIP medical coverage of $250,000

Option 4:  Limited PIP medical coverage of $250,000 with Exclusions (for those with other qualified health care coverage)

Option 5:  Limited PIP medical coverage of $50,000 (for Medicaid recipients only)

Option 6:  No PIP medical coverage (for those covered under Medicare Parts A and B)

Therefore, if you are injured in an accident, your medical coverage will be determined by the PIP coverage option you selected. This applies whether the accident involved another Michigan driver or an out-of-state driver.

What if I am involved in a Michigan accident where an out-of-state driver is injured?

Under the previous No-Fault law, out-of-state drivers were eligible for Personal Injury Protection (PIP) medical benefits in Michigan if their auto insurance company had certification to write policies in Michigan.

However, as of June 11, 2019, non-Michigan residents who are injured in Michigan are not eligible for Michigan PIP (Personal Injury Protection) benefits unless their vehicle is both registered and insured in Michigan.  Accidents involving out-of-state drivers that occurred prior to June 11, 2019 are handled according to the old No-Fault rules.

Now, out-of-state residents who are injured in Michigan accidents are not eligible for Personal Injury Protection (PIP) benefits unless they own a vehicle that is both registered and insured in Michigan. Otherwise, out-of-state drivers are limited to the Personal Injury Protection (PIP) medical coverage provided by their own auto insurance or health care plan.  

What are the options for out-of-state drivers who are injured in Michigan under the new law?

As of June 11, 2019, an out-of-state resident who is injured in a Michigan accident may seek compensation by filing a lawsuit against the at-fault driver. However, a non-Michigan resident must meet certain conditions:

• The out-of-state driver’s injuries must meet the new definition of a “threshold” injury” (see section below) established by the new law. This applies to both economic and non-economic damages.* 
• An out-of-state resident cannot recover any damages if they are found to be more than 50% at fault for the accident.

Michigan residents do not have to suffer a threshold injury to collect Personal Injury Protection (PIP) benefits. Additionally, Michigan residents to not have to meet the threshold injury to recover excess economic damages, such as medical bills in excess of their PIP medical limits.   However, they must meet the specified criteria in order to recover non-economic damages.

*Under No-Fault, economic damages are direct expenses such as medical bills and related care, while non-economic damages are intangible costs such as pain and suffering. 

What is the standard for a “threshold injury” under the new No-Fault law?

“Threshold injury” is the legal term for the level of harm a victim must suffer in order to claim non-economic damages such as pain and suffering. Michigan No-Fault law defines this as “death, serious impairment of a body function or permanent serious disfigurement.” However, the 2019 No-Fault reforms included a new definition of “serious impairment of a body function” for accidents occurring on or after June 11, 2019.

The new criteria state the impairment must be “noticeable to an objective observer” and severe enough to “affect the injured person’s general ability to lead their normal life.” The law does not state how long an impairment must last to qualify as a threshold injury. Therefore, someone who suffers a temporary injury serious enough to impair bodily function and alter their lifestyle may be eligible for pain and suffering damages.

How does the new law for out-of-state drivers affect Michigan residents?

With the new No-Fault law, a Michigan driver who causes an accident with an out-of-state motorist may have a higher exposure for damages if sued by the injured party.  This is because out-of-state residents are no longer eligible to receive the benefit of Michigan’s generous Personal Injury Protection (PIP) benefits unless they own a vehicle that is registered and insured in Michigan.

Consequently, non-Michigan residents suing for damages arising out of a Michigan motor vehicle accident, can now seek recovery of their economic damages. Depending upon where they are from, some of their economic damages may be covered, or limited, by their own auto insurance. Therefore, a Michigan driver with insufficient liability coverage may be faced with an overwhelming financial obligation.

In addition, Michigan drivers with lower levels of Personal Injury Protection (PIP) medical coverage may find themselves unable to afford their own medical bills if they are seriously injured.

Accordingly, Michigan motorists should review their No-Fault policies and other health care plans to make sure they will be covered in case of a serious accident.

Likewise, policy holders should purchase as much liability insurance as possible so they will not face financial devastation in the event of a lawsuit.

Does my No-Fault insurance cover me if I have an accident in another state? 

Yes, under certain conditions. Michigan residents with PIP have always been covered by their policy if they were in an accident in the United States or its territories regardless of what vehicle they were in.

Notably, under the new statute an out-of-state resident that is an occupant of a Michigan registered/insured vehicle involved in an out-of-state accident, may be entitled to PIP under the Michigan Policy.

Additionally, the Property Protection Insurance (PPI) that is part of every Michigan No-Fault policy, does not cover property damage that results from an out-of-state accident.

Michigan No-Fault law is complicated, but finding the right car accident lawyer is simple.

Call 1-800-CALL-SAM today for a free, no-obligation remote consultation from the safety of your home.

Sources:

https://www.michigan.gov/AutoInsurance

http://www.legislature.mi.gov/(S(wrdl0c22uqs2ucbcmbu2uk10))/mileg.aspx?page=getobject&objectname=mcl-500-3113

http://www.legislature.mi.gov/(S(to4njcqyfgj4mneef2jgzufk))/mileg.aspx?page=getobject&objectname=mcl-500-3135