What insurance company pays Michigan PIP benefits?

A. Priority Duty to Pay Benefits

One of the most important issues to address when processing a claim for PIP benefits is to determine what no-fault insurer is legally responsible for paying PIP benefits.  In that regard, the Michigan No-Fault Act contains a “priority of payment” system that determines which no-fault insurer has primary liability for payment of PIP benefits.  This priority system is set forth in §3114 and §3115 of the No-Fault Act.  The major highlights of those sections are discussed below.

B. The General Rule of Priority

The general priority rule contained in these statutory sections is that an injured person receives PIP benefits from his or her own no-fault insurer, or from a no-fault insurance policy issued to the injured person’s spouse or a relative of either domiciled in the same household.  This general rule applies regardless of whether the injured person was driving or occupying his or her own motor vehicle, is a passenger in another vehicle, is a pedestrian, or is a bicyclist.

C. Exceptions to the General Priority Rule

There are a few exceptions to the general priority rule referenced above.  For example, if the injured person was occupying a vehicle furnished by his or her employer, then the employer’s no-fault insurer must pay PIP benefits.  Likewise, if the injured person was operating a motorcycle and is injured in an accident involving a motor vehicle, the motorcyclist must turn to the insurer of the owner, registrant, or operator of the motor vehicle involved in the accident, as was more fully discussed in connection with Section 2.

D. Injured Persons Who Do Not Have Auto No-Fault Insurance

Before the 2019 legislative changes, for injured persons who did not have a personal no‑fault insurance policy or were not domiciled with a relative who had a no‑fault insurance policy, the insurance company responsible to pay benefits was determined based upon whether the injured person was an occupant or non-occupant of a motor vehicle at the time of the accident.  If such a non-covered person sustained injury while an occupant of a motor vehicle, then the injured person obtained no-fault PIP benefits from the owner or operator of the vehicle occupied.  However, if such a non-covered individual sustained injury while a non‑occupant of a motor vehicle (i.e., a pedestrian or bicyclist), then the injured person would obtain PIP benefits from the “vehicle involved” in the accident.  However, under the 2019 legislation, these non-covered injured persons will now draw their benefits directly from the Michigan Assigned Claims Plan (ACP), unless they are excluded from receiving benefits from that Plan because of the application of the opt-out rules that were more fully discussed in connection with Section 3.

E. The Assigned Claims Plan (ACP)

If no-fault coverage is not available through any of the previously mentioned payment sources, and if the injured person is not statutorily disqualified from receiving benefits, then the injured person may be entitled to claim PIP benefits through the Michigan Assigned Claims Plan (ACP).  When a claim is submitted to the ACP, it is randomly assigned to one of several automobile insurance companies who participate with the Plan.  As of the date of this publication, the address, telephone number, and website of the ACP is as follows:

There are important legal issues pertaining to the operation of the ACP, particularly under the 2019 legislation, that are discussed briefly below:

1. ALTERED PRIORITY RULES – The 2019 legislation has resulted in the alteration of certain priority rules applicable to the Act from those that existed under previous law. In this regard, the following should be noted:

(a)        Vehicle occupants not otherwise insured with PIP coverage and who are not Medicare opt-outers or $250K excluders will draw benefits from the ACP, not from the vehicles occupied.  [§3114(4)].

(b)       Pedestrians or bicyclists not otherwise insured with PIP coverage draw benefits from the ACP, not from the involved vehicle.  This appears to be true even if the pedestrian or bicyclist is a Medicare opt-outer or a $250K excluder.  [§3115(1)].

(c)        Motorcyclists can claim PIP benefits through the ACP when any of the vehicles in the listed order of priorities had no insurance or where the applicable insurance policy was a Medicare opt-out or a $250K exclusionary policy.  As previously explained, a motorcyclist may be able to draw benefits from the ACP even when the motorcyclist was a Medicare opt-outer or a $250K excluder. [§3114(6)].

2. THE ASSIGNED CLAIMS PLAN BENEFIT CAP – Under the 2019 legislation, there is a $250,000 cap that applies to all persons claiming PIP benefits through the ACP. It would appear that this cap applies only to allowable expenses payable under §3107(1)(a), and not claims for wage loss benefits payable under §3107(1)(b), or replacement service expenses payable under §3107(1)(c).  The only exception to the $250,000 cap is if the injured person claims benefits through the ACP when, pursuant to §3107d or §3109(a)(2), that person is injured during the 30‑day window when the injured person experienced a lapse in qualified health insurance or other health and accident coverage.  In that limited situation, the ACP cap amount is $2,000,000.  [§3172(7)(b)].

3. EXCLUDED CLAIMANTS—MEDICARE OPT-OUTERS OCCUPYING MOTOR VEHICLES—Those persons who are described as Medicare opt‑outers, and who are injured while occupying a motor vehicle, are not entitled to claim PIP benefits through the ACP. [§3114(4)]. The only exception is if these persons are injured during the previously mentioned 30-day health coverage lapse window, in which case the ACP will pay benefits up to $2,000,000. [§3172(7)(b)].

4. $250K EXCLUDERS OCCUPYING MOTOR VEHICLES—Those persons who were previously described as $250K excluders and who are injured while occupying a motor vehicle are not entitled to claim PIP benefits through the ACP. [§3114(4)]. The only exception is if these persons are injured during the previously mentioned 30-day health coverage lapse window, in which case the ACP will pay PIP benefits up to $2,000,000. [§3172(7)(b)].

5. NON-OCCUPANT OPT-OUTERS AND EXCLUDERS—What happens to Medicare opt-outers and $250k excluders who are injured as non-occupants of a motor vehicle? These persons will likely be entitled to claim PIP benefits through the ACP up to the $250,000 cap because the exclusionary language contained in the occupant priority provisions, §3114(4), is not contained in the non-occupant priority provisions of §3115(1).

6. NEW ACP CLAIM PROCEDURES—The ACP claim making process will become much more complicated under this legislation in several ways, including, but not limited to, the following:

(a)        Claims must be made on a special form provided by the ACP. [§3172(3)].

(b)       The claimant must provide “reasonable proof of loss.” The ACP must specify in writing the materials that constitute reasonable proof of loss within 60 days after receipt of an application. There is no limitation on how the ACP can define this requirement. [§3172(3)].

(c)        Benefits may be suspended if a claimant “fails to cooperate” with the ACP in one or more of the ways specified in the legislation, including failing to submit to an examination under oath. [§3173a(1)].

(d)       A person making a claim through the ACP must do so within 1 year from the date of accident. [§3174].

7. DATE OF EFFECT—The new rules for ACP claimants are effective immediately for any accident occurring after June 11, 2019, except as to those claimants whose ACP eligibility will be affected by the new PIP choice policies that will be sold beginning July 1, 2020.

F. Priority When Other Benefit Payment Sources Are Involved

Sometimes an injured person is entitled to various types of medical expense coverage and insurance benefits under other health and accident insurance or under various governmental benefit programs.  In those situations, the question of who pays the benefit is dependent upon the provisions in the No-Fault Act regarding coordinated health and accident coverage and governmental benefit setoffs.  This subject will be addressed in the discussion regarding Section 5.