August 15, 2019
The Michigan legislature has recently enacted important changes to the laws governing which insurer is responsible for paying a car accident victim’s personal protection insurance (“PIP”) benefits.
Two sections of the No-Fault Act, MCL 500.3114 and MCL 500.3115, establish rules of priority among insurers. Section 3114, generally, concerns the rules of priority for claimants injured while occupants of motor vehicles or motorcycles, while Section 3115 concerns non-occupant claimants. The recent amendments have changed the priority rules concerning all three categories of claimants.
Section 3114(1) establishes the general rule that a claimant must look first to their own No-Fault insurer or the insurer of or their spouse or resident relative. The recent amendments have not altered this general rule. The exceptions to the general rule provided for in Sections 3114(2) – passengers on public transportation – and 3114(3) – occupants of an employer’s vehicle – also remain unchanged. Section 3115(1), which governs priority for non-occupant claimants, also remains unchanged to the extent that the basic priority scheme remains that the claimant must first look to their insurer or that of a resident relative.
The amendments did, however, result in significant changes to the priority rules for injured claimants without a personal or household policy. For occupants in this category these changes are found in the amendment to Section 3114(4); for non-occupants they are found in Section 3115(1). For both categories of claimants, the respective amendments apply to accidents occurring on or after June 11, 2019; for accidents occurring before June 11, 2019, the prior statutory provisions apply.
Priority for occupants with no personal or household coverage injured while occupying another’s vehicle before June 11, 2019 would be with insurer of the owner, registrant or operator of the vehicle occupied pursuant to the pre-amendment version of Section 3114(4). For non-occupants, priority would be with the insurer of the owner, registrant or operator of the vehicle involved in the accident under the pre-amendment version of 3115(1).
For accidents occurring on or after June 11, 2019 both claimants must look to the Michigan Assigned Claims Plan for payment of PIP benefits. Importantly, such claims are now subject to a $250,000 limit for benefits payable under MCL 500.3107(1)(a), otherwise referred to as “allowable expenses.” These claims include such things as medical expenses, attendant care and home and vehicle modifications. Note however that claims for lost wages under Section 3107(1)(b) and household services under 3107(1)(c) are not similarly capped.
The other significant change concerns occupants of motorcycles injured in accidents involving motor vehicles that occur on or after July 1, 2020. The amendments to the Act do not change the statutory order of priority for such claimants. Rather, the amendment will potentially alter the benefits available to the claimant. Under MCL 500.3114(5) a motorcyclist looks first to the insurer of the owner or registrant of the motor vehicle involved, and second to the insurer of the operator of the motor vehicle involved. The motor vehicle insurer(s) of the operator, owner or registrant of the motorcycle involved occupy the third and fourth priority levels. For accidents occurring before July 1, 2020, the injured motorcyclist was ensured that lifetime PIP benefits would be available from some insurer in the line of priority or through the Assigned Claims Plan. However, effective July 1, 2020, motor vehicle owners have the option to purchase limited No-Fault coverage meaning a motorcyclist would be subject to whatever coverage level the motor vehicle owner purchased, even though the higher coverage might otherwise have been available through a lower priority insurer.
Please note that as of the publication of this article there has been proposed legislation to amend Section 3114(5). House Bill 4812, if it becomes law, would make the motor vehicle insurer of the operator of the motorcycle involved the first priority insurer followed by the motor vehicle insurer of the owner or registrant of the motorcycle. While this amendment would allow a motorcycle operator, owner, or registrant to control the amount of PIP coverage available to them, a motorcycle passenger would still remain subject to whatever coverage limits the motorcycle operator, owner or registrant purchased for their motor vehicle. HB 4812 is currently in committee. This author suspects that there will be further changes to Section 3114(5) before the most recent amendments take effect on July 1, 2020.
In assessing which insurer is primarily responsible, much of the inquiry remains the same: Was the claimant an occupant of a motor vehicle? Was the occupant a passenger on public transportation or occupying a vehicle owned or registered by the occupant’s employer? Was the claimant a named insured on a No-Fault policy or, if not, is coverage available from the claimant’s spouse or resident relative? If priority is pursuant Sections 3114(4), 3114(5) or 3115(1) the claim’s handler must be mindful of the date of injury in determining the applicable law.
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Please direct any questions to Christian Huffman, Editor Pro Tempore of the Law Fax Publication and a Shareholder in our Detroit Office. He can be reached at 313.446.5549 or firstname.lastname@example.org