Michigan Mini Tort Law Changes: How do They Impact You if You Are Involved in a Car Accident?
Gov. Gretchen Whitmer signed Michigan’s new No-Fault insurance law on June 11, 2019. This enacted a significant new Michigan mini tort law change, which allows you to claim a portion of your vehicle damage back from the insurance company of the person that hit you.
If you are involved in a no-fault vehicle accident, contact a car accident lawyer at Cochran, Kroll & Associates, P.C. for assistance on filing your mini tort claim.
Michigan Mini Tort Claim
The mini tort coverage is often listed as “limited property damage liability” coverage on the Declarations page of your auto insurance policy, and are typically used to pay for vehicle accident repair cost, or if it is covered by your auto insurance, to pay your deductibles for collision coverage.
Previously, a car accident victim could use the mini tort to recover damages up to $1,000 to a motor vehicle from the at-fault driver. (MCL 500.3135(3)(e))
You can buy two types of auto collision coverage in Michigan, namely standard or broad collision.
Standard or Basic Auto Collision Coverage
If you purchased the former, you would have to pay the stipulated deductible whether you were at fault or not. Your insurance company will pay out the value of your vehicle minus the deductible if your vehicle is written off.
However, if you were less than 50% at fault in causing the accident, you can file a mini tort claim against the at-fault owner or driver of the vehicle.
Broad Auto Collision Coverage
Broad coverage is slightly more expensive, but your auto insurance company will waive your deductible if you are less than 50% at fault for a collision, if you carry broad auto collision coverage. As you will have no out-of-pocket expenses, you will not have a Michigan mini tort claim.
Senate Bill 1 – Sweeping Changes
The Legislature passed the new Michigan No-Fault law, also known as Senate Bill 1, on May 25, 2019, Governor Whitmer approved it on May 30th, 2019 and filed with the Secretary on June 11, 2019. The new maximum dollar amount for a mini tort recovery will be increasing from $1,000 to $3,000.
The increase in the mini tort’s maximum recovery limit takes effect on July 2, 2020 and will apply to all car accidents that result in vehicle damage that happens after July 1, 2020.
What is changing?
One of the main driving forces behind the changes relates to the public outcry on the high cost of auto insurance across the board, and the following significant changes have been brought in:
- Opt-Out of No-Fault PIP medical benefits:
If you have Medicare, you may elect to not maintain coverage for No-Fault PIP medical benefits.
- No-Fault PIP Choice:
Drivers had to buy unlimited No-Fault Michigan PIP benefits. Now they will be able to choose different levels of No-Fault medical benefits coverage, namely $50,000 (if enrolled in Medicaid); $250,000; $500,000; or no limit.
- Savings for drivers:
Savings n auto insurance costs on the No-Fault PIP medical portion of their auto insurance bill that will be affected by caps on the No-Fault PIP medical benefits are as follows:
- $50,000 cap – 45% savings
- $250,000 cap – 35% savings
- $500,000 cap – 20% savings
- no limit – 10% savings
- opt-out – 100% savings
The PIP portion is approximately 35% to 45% of your total auto insurance premium. Thus, the savings would not make auto insurance affordable for those who cannot afford it currently.
Savings for car insurance companies:
Auto insurance companies are not transparent on profits by any means, and the new law allows for the companies to avoid reduced premiums if they can prove it would leave them at risk of having too little capital or violate their constitutional rights. The decision will rest with the Insurance Commissioner.
No-Fault medical-provider fee schedule:
A new Medicare-based, No-Fault medical-provider fee schedule will be developed for reimbursement for treatment or rehabilitative occupational training, and this will apply to all charges from any provider that treats or cares for accident victims.
Reimbursement could range from 190% to 250% of the amount payable under Medicare depending on the type of facility involved – Level I or II Trauma Center, a freestanding rehabilitation facility and the percentage of indigent patients treated.
No-Fault in-home, family-provided attendant care will be limited to 56 hours per week.
Passing along savings from No-Fault medical-provider fee:
Auto insurance companies must document savings realized from lower fees and pass them to drivers as lower premiums. These documents must be filed with the Director of the Department of Insurance and Financial Services (DIFS).
Auto insurance premium rates and pricing factors that cannot be considered:
The changes prohibit auto insurers from basing premium rates on such non-driving factors as postal zone, gender, homeownership, occupation, education level, credit score, or marital status.
The Michigan mini tort law’s maximum recovery limit will increase from $1,000 to $3,000.
Tolling of the one-year-back rule:
Equitable tolling is a common principle of law stating that a statute of limitations shall not bar a claim in cases where the plaintiff, despite the use of due diligence, could not or did not discover the injury until after the expiration of the limitations period. Currently, a car accident victim that has been denied benefits who sues to recover benefits may only recover benefits one year back for the commencement of action. (MCL 500.3145(1)) Under the new law, tolling will be available immediately but does not apply if reasonable diligence is not shown. It states the “limitation . . . is tolled from the date the person claiming the benefits makes a specific claim for the benefits until the date the insurer formally denies the claim.”
Michigan Catastrophic Claims Association:
The MCCA will remain liable for catastrophic injury benefits payable under policies issued or renewed before July 2, 2020, and for policies after July 1, 2020, for unlimited No-Fault PIP medical benefits options. If you cap or opt-out of medical benefits on your policy, you will still be required to pay annual MCCA assessments to cover deficits. Calculations are provided to govern MCCA refunds.
Higher liability limits:
The Michigan auto insurance you take out to protect yourself if you cause a car accident and injure another driver currently has mandatory bodily injury liability limits. These include a minimum limit of $20,000 for bodily injury or death to one person in a one-car crash or $40,000 for two or more persons in a one-car crash.
These limits now increase to $50,000 and $100,000 respectively.
Also, you can now elect your liability coverage (no less than the mandatory minimum limit) with a new default residual bodily injury limit of $250,000 and $500,000.
Independent medical examinations by insurance company doctors:
New rules apply to IMEs of car accident victims by insurance company-hired IME doctors, namely:
- The IME doctor must be licensed in Michigan;
- Specialization and board certification of auto insurance company hired doctors must match that of the professionals providing care to the patient to be examined.
- Significantly, the IME doctor must have spent at least one year before the examination devoting the majority of professional time to clinical practice and the specialty, if applicable, or teaching at an accredited medical school in the specialty.
- It is expected that these rules will take immediate effect, not next year as is the case with most of the changes.
A new Anti-Fraud Unit is to be created to investigate all criminal and fraudulent activities in the insurance market.
This will also take effect immediately.
Insurance Commissioner involvement when insurers refuse to pay No-Fault benefits:
The Insurance Commissioner is required by law to create a page on the Department of Insurance and Financial Services (DIFS) website.
It must describe how the Insurance Commissioner “may be able to assist a person who believes that an automobile insurer is not paying benefits, not making timely payments, or otherwise not performing as it is obligated to do under an insurance policy.”
Also, the Insurance Commissioner must create a website page that “allows a person to report insurance fraud and unfair settlement and claims practices.”
These requirements will take effect immediately.
Suing for excess medical benefits:
You can now sue for excess medical costs and economic expenses, that will exceed the dollar amount of the No-Fault PIP cap amount they have selected.
This puts Michigan in line with most other states in this regard, and the amount of coverage available in the liability limits of the negligent driver becomes much more critical.
Serious Impairment of Body Function threshold for pain and suffering compensation:
You will be required to satisfy the new definition of a “serious impairment of body function” to be able to sue for pain and suffering compensation.
The impairment is defined as one that
- “is objectively manifested, meaning it is observable or perceivable from actual symptoms or conditions by someone other than the injured person”;
- is an impairment of an important body function, which is a body function of great value, significance or consequence to the injured person;
- affects the injured person’s general ability to lead his or her normal life.
- Although temporal considerations may be relevant, there is no temporal requirement for how long an impairment must last.
- This examination is inherently fact and circumstance specific to each injured person must be conducted on a case-by-case basis and requires comparison of the injured person’s life before and after the incident.”
Significantly, it “is intended to codify and give full effect to the opinion of the Michigan Supreme Court in McCormick v. Carrier, 487 Mich 180 (2010).”
This new definition will take effect immediately.
What is not changed by the Michigan mini tort law change?
It is important to note that aside from the increased mini tort recovery amount and its effective date, other important elements of the mini tort, you need to know about:
Importantly, none of these requirements were changed by the new No-Fault law:
- If you use the mini tort to recover damages, you must prove which driver was at fault. (MCL 500.3135(3)(e))
- The mini-tort recovery only applies “to the extent that the damages are not covered by insurance.” (MCL 500.3135(3)(e)) If you are fully covered and your deductible is waived, you are not covered by the mini tort.
- Mini tort damages are assessed on a “comparative fault” basis; thus, your percentage fault will determine your recovery. (MCL 500.3135(4)(a))
- You cannot recover under the mini tort if you are uninsured. (MCL 500.3135(4)(e)). If the at-fault driver is uninsured at the time of the crash, then you are not restricted by the mini-tort recovery limit and can sue for the full amount of the vehicle damage, as well as other out-of-pocket expenses such as car rentals and loss of use of the vehicle.
Disqualifications for Michigan No-Fault PIP Benefits
Almost all drivers are entitled to generous no-fault benefits if injured in a motor vehicle accident under the Michigan No-Fault Law, which includes
- wage loss benefits
- the payment of all medical expenses related to an injured person’s care, recovery, and rehabilitation
- reimbursement for prescriptions,
- medical mileage and
- payment to family members or other individuals providing replacement services and attendant care.
MCL 500.3113 describes the individuals disqualified from obtaining Michigan no-fault benefits as described by statute.
Exception #1: Joyriding
Described as “a person willingly operating or willingly using a motor vehicle or motorcycle that was taken unlawfully, and the person knew or should have known that the motor vehicle or motorcycle was taken unlawfully” is disqualified from getting no-fault benefits.
If you steal a car, or take it without the owner’s permission, and applies to all passengers too. The insurance carrier must provide proof that the passenger knew or should have known that they were in a stolen vehicle.
Exception #2: Uninsured
MCL 500.3113(b) requires the owner or registrant of the motor vehicle or motorcycle involved in the accident to have car or motorcycle insurance at the time of the accident. It also includes ‘constructive owners’ of the vehicle.
This exception is especially important due to the large number of uninsured drivers on Michigan roadways.
Exception #3: Non-Michigan residents.
Here, a person who is
- a non-Michigan resident,
- was an occupant of a car, truck or motorcycle not registered in Michigan, and
- the car, truck or motorcycle was not insured by an insurer that has filed an MCL 500.3163 certificate to sell Michigan no-fault insurance, is not entitled to PIP benefits.
However, non-Michigan based insurance companies, such as Allstate or State Farm, are 3163 insurers because they are authorized to transact car insurance in Michigan. In this case, an out-of-state policy automatically transforms into a Michigan no-fault policy when a non-resident is operating their car in Michigan.
Exception #4: Excluded driver
The recently added exception states that a person listed as an excluded driver for a motor vehicle or motorcycle he or she is operating at the time of the accident is not entitled to no-fault benefits.
Exception #5: Uber
It states a person who was “the owner or operator of a motor vehicle for which coverage was excluded under a policy exclusion authorized under section 3017” is not eligible for no-fault benefits. Under MCL 500.3017, an auto insurance carrier can exclude coverage for accidents when drivers use a digital network app to provide customers with rides, such as is the case with Uber or Lyft.
The process for claiming a mini-tort is relatively simple if insurances are in place; however, it is always wise to consult a car accident attorney at our law firm to protect your interests.
If you have been involved in an automobile accident, please contact our law office at 1-866-MICH-LAW (1-866-642-6261) for a no obligation case evaluation. Cases are handled on a contingent fee basis.