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Who Is Entitled to No-Fault Benefits?

Who Is Entitled to No-Fault Benefits?

An analysis of your no-fault coverage and any no-fault PIP claims you might have begins with understanding when no-fault PIP benefits are payable. This issue is commonly referred to as “entitlement to benefits.”

The pivotal statutory section regarding entitlement to no-fault benefits is MCL 500.3105, which is considered the “gateway” to the no-fault first-party system. Within that section, subsection 3105(1) is the key provision. In one sentence, this subsection sets forth the following entitlement test:

“Under personal protection insurance an insurer is liable to pay benefits for accidental bodily injury arising out of the ownership, operation, maintenance or use of a motor vehicle as a motor vehicle, subject to the provisions of this chapter.” 

Subsection 3105(2) states that no-fault PIP benefits “are due under this chapter without regard to fault.” It is this later subsection that gives “no-fault” its name.

As is apparent, the entitlement language of Subsection 3105(1) is very broad and goes beyond bodily injuries sustained in traditional motor-vehicle collisions. This section has been interpreted to extend entitlement to benefits for non-collision situations, such as cases involving vehicular maintenance, vehicular loading and unloading, and vehicular occupancy.

The Five-Part Test Regarding Legal Entitlement

Case law decided under Subsection 3105(1) has, over many years, produced a five-part test that determines whether an injury victim is entitled to recover no-fault PIP benefits. The five elements of this test are as follows:

(1) There must be a “motor vehicle” involved in the accident, as that term is defined in the statute [MCL 500.3101(2)(e)];

(2) The claim must involve some form of bodily injury, rather than some latent medical condition or disease [see Wheeler v Tucker Freight Lines, 125 Mich App 123 (1983)];

(3) The bodily injury giving rise to the claim must be accidental in the sense that it was not caused intentionally by the claimant [see Mattson v Farmers Insurance Exchange, 181 Mich App 419 (1989) and Miller v Farm Bureau, 218 Mich App 221 (1996)];

(4) There must be a sufficient causal nexus between the injury and the use of a vehicle such that the use of the vehicle is one of the causes of the injury, even though there may be other causes, provided that the connection between the injury and vehicle use is more than incidental or fortuitous [see Shinabarger v Citizens Insurance Co, 90 Mich App 307 (1979); Thornton v Allstate, 425 Mich 643 (1986); Marzonie v ACIA, 441 Mich 522 (1992); Bourne v Farmers, 449 Mich 193 (1995); and Morosini v Citizens, 461 Mich 303 (1999)]; and

(5) The injury must be closely related to the transportational function of a motor vehicle [see McKenzie v ACIA, 458 Mich 214 (1998)].

The Parked-Vehicle Exclusion

Although Subsection 3105(1) sets forth a broad legal entitlement to insurance benefits, this test narrows considerably if a “parked vehicle” is involved in the injury-producing scenario.

Accidents involving parked cars and other vehicles are addressed in MCL 500.3106(1), which states that an accidental bodily injury arising out of a parked vehicle is not compensable with no-fault benefits unless the injury falls into one of the three exceptions set forth in Subsection 3106(1). These exceptions consist of injuries stemming from:

  • Vehicles parked in a way that causes an unreasonable risk of injury (MCL 500.3106(1)(a));
  • Injuries occurring as a result of contact with vehicle equipment or with property being loaded or unloaded (MCL 500.3106(1)(b)); and
  • Injuries occurring while the victim is occupying, entering into, or alighting from a vehicle (MCL 500.3106(1)(c)).

It’s important to understand that the Michigan Supreme Court has given these exceptions a relatively narrow interpretation. In 2011, the Court decided Frazier v Allstate Ins Co, 490 Mich 381 (2011), which denied PIP benefits to a woman who sustained injury when she slipped on ice as she was attempting to close the front passenger door of her car.

The Court found that the door was not “vehicle equipment,” and thus the Plaintiff was not entitled to collect benefits through the vehicle equipment exception found in Section 3106(1)(b). Further, the Court determined that, because she was already outside of the vehicle, she was no longer in the process of alighting from the vehicle, and thus she was not entitled to benefits under Section 3106(1)(c).

Case law has also recognized a fourth, common-law exception to the parked-vehicle bar, which  involves injuries sustained in the course of vehicular maintenance. See Miller v Auto-Owners, 411 Mich 633 (1981). Unfortunately, the statute does not define a “parked vehicle,” and therefore, that is sometimes an issue.

It is also important to note that Subsection 3106(2) contains a very strict exclusion dealing with work-related injuries.  This exclusion provides that PIP benefits are not payable if the injury gives rise to the payment of workers’ compensation benefits and the employee sustained the injury while loading, unloading, or doing mechanical work on a vehicle or while entering into or alighting from the vehicle, unless the injury arose from the use or operation of some other motor vehicle. This work-related exception does not apply, however, when an employee sustains injury while actually operating a vehicle.

Out-of-State Accidents

No-fault PIP benefits are payable in certain situations involving a car accident in another state. This issue is addressed in MCL 500.3111 of the Michigan No-Fault Act, which states that no-fault PIP benefits:

“are payable for accidental bodily injury suffered in an accident occurring out of this state, if the accident occurs within the United States, its territories and possessions or in Canada.”

To qualify for benefits under this category, however, the injured person must also fall into one of two classifications:

(1) the injured person is a named insured under a Michigan no-fault policy or the spouse or a resident relative of a person who is a named insured under a Michigan no-fault policy; or

(2) the injured person is an occupant of a vehicle whose owner or registrant insured that particular vehicle under a Michigan no-fault policy.

Out-of-State Residents Injured in Michigan

There are a number of circumstances where citizens of other states who are injured in motor-vehicle accidents occurring in Michigan are entitled to recover Michigan no-fault PIP benefits. For example, benefits are payable to nonresidents who are:

(1) injured while occupying a motor vehicle insured with a Michigan no-fault PIP policy, or,

(2) injured while a non-occupant (pedestrian, bicyclist, motorcyclist) as a result of the operation of a motor vehicle that is insured with a Michigan no-fault PIP policy.

In addition, MCL 500.3163 of the Act provides that out-of-state residents may be entitled to PIP benefits if they are insured by an auto insurance company who is authorized to do business in the State of Michigan. In such a scenario, the out-of-state resident can recover Michigan no-fault PIP benefits if they travel into Michigan in an out-of-state vehicle and sustain an injury in a motor-vehicle accident which occurs in Michigan. To determine whether your insurer sells auto insurance in Michigan, visit the list of insurers authorized to sell car insurance in Michigan.

Even if out-of-state residents are entitled to collect PIP benefits, Section 3163 provides that in certain circumstances, out-of-state residents may be subjected to a $500,000.00 cap on collectable benefits. This is a complicated issue that needs to be analyzed carefully if an out-of-state claimant is drawing benefits under the provisions of Section 3163 of the Act.