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Top 9 risks of driving uninsured In Michigan

Insurance attorney warning:  uninsured motorists risk losing rights to pain and suffering damages and No-Fault medical and wage loss benefits

“You can’t afford to not have Michigan No-Fault auto insurance.”

That is what I say whenever someone asks me: “What’s the harm in driving uninsured in Michigan?”

Not surprisingly, as the state’s economic outlook gets bleaker and auto insurance costs gets pricier, I hear the question with increasing frequency from people from all over Michigan.

The truth is that the amount that a Michigan driver will pay for No-Fault auto insurance pales in comparison to what she or he will pay – in real dollars or forfeited benefits and rights – for not having auto insurance.

Here are the top 9 dangers associated with driving uninsured in Michigan that all drivers should know about:

  1. Uninsured drivers cannot sue for pain and suffering damages.
  2. Uninsured drivers must pay for all of their own medical bills.
  3. Uninsured drivers are not reimbursed for lost wages.
  4. Uninsured drivers must pay for all of their own vehicle damage.
  5. Uninsured drivers may be sued and held personally liable to     pay for another person’s pain and suffering damages.
  6. Uninsured drivers may be sued and held personally liable to     pay for another person’s medical bills and lost wages.
  7. Uninsured drivers may be sued and held personally liable to     pay for another person’s vehicle damage.
  8. Uninsured drivers could be sentenced to jail for up to one year and ordered to pay a fine between $200 and $500.
  9. Uninsured drivers could have their drivers’ licenses’ suspended or revoked.

Below I discuss in greater detail each of the top 9 dangers of driving uninsured in Michigan.

1. You can’t sue for pain and suffering.

If you are seriously injured in a Michigan auto accident while driving your own uninsured car or truck, then you will be barred from suing the at-fault driver who caused the accident for pain and suffering damages.

This is true even if the at-fault driver is 100% at-fault and you are 100% innocent.

Under Michigan’s No Fault Law:

“Damages [for “noneconomic loss” which is also known as pain and suffering damages] shall not be assessed in favor of a party who was operating his or her own vehicle at the time the injury occurred and did not have in effect that motor vehicle the security  required by section 3101 [i.e., No Fault auto insurance] at the time the injury occurred.” (MCL 500.3135(2)(c))

2. You must pay for all of your own medical bills.

If you are seriously injured in a Michigan auto accident while driving your own uninsured car or truck, then you will be personally liable to pay for your accident-related medical bills because you will be disqualified from receiving Michigan No-Fault medical benefits.

Under Michigan’s No Fault Law, the owner or registrant of a car or truck must carry “personal protection insurance benefits,” which are commonly known as No Fault benefits. (MCL 500.3101(1)).

Generally, No Fault benefits entitle an auto accident victim to have a No-Fault auto insurance company pay unlimited, lifetime medical benefits to cover the victim’s accident-related medical expenses so long as those medical expenses are “reasonably necessary” to the victim’s accident-related care, recovery and/or rehabilitation. (MCL 500.3107(1)(a))

No Fault medical benefits frequently cover expenses associated with the following medical-related services, products and accommodations: emergency room visit; ambulance transportation; doctor and specialist appointments; surgeries; injections and procedures; X-Rays, CT Scans and MRIs; 24/7 in-home nursing or attendant care; and, home and vehicle modifications.

However, under Michigan’s No Fault Law, if an auto accident victim was driving her or his own uninsured vehicle at the time of the accident, then the victim loses her or his right to collect No-Fault medical benefits:

“A person is not entitled to be paid personal protection insurance benefits [i.e., No Fault medical benefits] for accidental bodily injury if at the time of the accident … [t]he person was the owner or registrant  of a motor vehicle … involved in the accident with respect to which the security required by section 3101 [i.e., No Fault auto insurance] … was not in effect.” (MCL 500.3113(b))

Consequently, an uninsured auto accident victim, not her or his No Fault auto insurance company, will be personally liable to pay for her or his own accident-related medical bills and expenses.

3.You  are not reimbursed for lost wages.

If you were disabled from working due to serious injuries suffered in a Michigan auto accident and, at the time of the accident, you were driving your own uninsured car or truck, then you will not be reimbursed by a No-Fault auto insurance company for your lost wages because you will be disqualified from receiving wage loss benefits.

Under Michigan’s No-Fault Law, the owner or registrant of a car or truck must carry “personal protection insurance benefits,” which are commonly known as No-Fault benefits. (MCL 500.3101(1)).

Generally, No Fault benefits entitle an auto accident victim to have a No Fault auto insurance company pay wage loss benefits to cover the victim’s accident-related “loss of income from work.” (MCL 500.3107(1)(b))

However, under Michigan’s No Fault Law, if an auto accident victim was driving her or his own uninsured vehicle at the time of the accident, then the victim loses her or his right to collect No Fault wage loss benefits:

“A person is not entitled to be paid personal protection insurance benefits [i.e., No Fault medical benefits] for accidental bodily injury if at the time of the accident … [t]he person was the owner or registrant  of a motor vehicle … involved in the accident with respect to which the security required by section 3101 [i.e., No Fault auto insurance] … was not in effect.” (MCL 500.3113(b))

4. You must pay for all of your own vehicle damage.

If you are driving your own uninsured car or truck and it is damaged in an accident, then you will be personally and fully responsible for paying for all of the associated repair costs.

However, if you were not at-fault in causing the accident, even though you were driving without insurance, you may still be able to recover up to a maximum of $1,000 from the at-fault driver under Michigan’s Mini Tort law. (MCL 500.3135(3)(e) and (4))

But the availability of the Mini Tort recovery for uninsured drivers ceases on October 1, 2012, when uninsured drivers will be disqualified from recovering under the Mini Tort law.

Based on amendments to the statute in June 2012, which are contained in Public Act 158 of 2012, “[d]amages shall not be assessed if the damaged motor vehicle was being operated at the time of the damage without the security required by section 3101 [i.e., No Fault auto insurance].” (MCL 500.3135(4)(e))

5. You may be sued and held personally liable to  pay for another person’s pain and suffering damages.

If, while driving your own uninsured car or truck, you are at-fault in causing a Michigan auto accident that causes another person (driver, passenger or pedestrian) to suffer a “serious impairment of body function,” then you can be sued and held personally liable for the full amount of pain and suffering damages that a judge or jury determines the other person is entitled to. (MCL 500.3135(1)(b))

Under Michigan law, the owner or registrant of a car or truck must carry “residual liability insurance” for her or his vehicle, which covers and insures “against loss resulting from liability imposed by law for … bodily injury …” (MCL 500.3101(1); 500.3009(1); 500.3131(1))

Accordingly, without the “residual liability insurance” coverage required by law, an uninsured driver is personally liable for the full amount of pain and suffering damages resulting from the car or truck accident she or he caused.

6. You may be sued and held personally liable to pay for another person’s medical bills and lost wages.

If you are the owner or registrant of an uninsured car or truck that is involved in an accident where another person is injured, you can be sued and held personally liable for that person’s medical bills and lost wages. (See MCL 500.3177(1))

That is true even if the other person was 100% at-fault for causing the accident!

To illustrate the absurdity of Michigan’s law, consider the following scenario:

  • Suppose an uninsured, but otherwise innocent, driver who has stopped his car for a red light is rear-ended by drunk driver and that both the innocent driver and the drunk driver are seriously injured.

Under Michigan’s law, here is how the above scenario plays out:

  • The innocent driver, despite being seriously injured, is denied all No-Fault medical and wage loss benefits because Michigan law prohibits uninsured drivers from collecting No-Fault benefits. (See “liability for medical bills” and “no reimbursement for lost wages” above.)
  • Meanwhile, the drunk driver’s No-Fault auto insurance company can sue the innocent, albeit uninsured, driver to recover the money the drunk driver’s auto insurer has paid to the drunk driver’s in the form of No-Fault medical and wage loss benefits.

Here’s the provision of Michigan’s No Fault law that allows such an absurd outcome to occur:

“An insurer obligated to pay personal protection insurance benefits for accidental bodily injury to a person arising out of the ownership, maintenance, or use of an uninsured motor vehicle as a motor vehicle may recover such benefits paid and appropriate loss adjustment costs incurred from the owner or registrant of the uninsured motor vehicle or from his or her estate. Failure of such a person to make payment within 30 days after judgment is a ground for suspension or revocation of his or her motor vehicle registration and license …” (MCL 500.3177(1))

7. You may be sued and held personally liable to pay for another person’s vehicle damage.

If, while driving your own uninsured car or truck, you are at-fault in causing a Michigan auto accident that causes damage to another person’s vehicle, you can be sued and held personally liable for the total amount of vehicle damage.

Generally, an insured, at-fault driver has the protection of Michigan’s Mini Tort law which limits the victim’s vehicle damage recovery against her or him to a maximum of $500 (increasing to $1,000 on October 1, 2012).

In particular, the Mini Tort law provides that “tort liability arising from the ownership, maintenance or use … of [an insured] motor vehicle … is abolished except as to … [d]amages up to $1,000.00 to motor vehicles …” (MCL 500.3135(3)(e))

However, Michigan courts have interpreted the flipside of the statutory mandate to also be true:

Tort liability arising from the ownership, maintenance or use of a motor vehicle that is not insured is not abolished.

Consequently, because tort liability arising from the use of uninsured vehicle continues to exist, the Mini Tort recovery limit does not apply and an uninsured, at-fault driver can be held personally liable for the full amount of vehicle damage she or he caused.

8. You could be sentenced to jail and fines

The criminal penalties that await uninsured drivers in Michigan includes jail time up to a one year, a fine between $200 and $500 or both jail time and a fine.

The owner or registrant of an uninsured vehicle who either “operates” the uninsured vehicle or “permits it to be operated upon a public highway in this state … is guilty of a misdemeanor.” (MCL 500.3102(2))

Similarly, a person who drives an uninsured vehicle “upon a public highway in this state” knowing that the vehicle is uninsured “is guilty of a misdemeanor.” (MCL 500.3102(2))

Michigan law states that a person convicted of a misdemeanor for driving uninsured in Michigan “shall be fined not less than $200.00 nor more than $500.00, imprisoned for not more than 1 year, or both.” (MCL 500.3102(2))

9. You could have your driver license suspended or revoked.

A motorist who drives without No-Fault auto insurance in Michigan risks having her or his driver’s license suspended or revoked.

Failure to “produce evidence of insurance” when requested to do so by a police officer or by a judge could result in the judge ordering that the motorist surrender her or his driver’s license. (MCL 257.328(4))

If that happens, the judge “shall order the secretary of state to suspend the person’s license,” and, upon receiving the motorist’s driving abstract, the “secretary of state shall suspend the person’s license …” (MCL 257.328(4))

In the event that the owner or registrant of the uninsured vehicle which was involved in the accident is held personally liable for another person’s accident-related medical bills and lost wages (see “liability for another person’s medical bills and lost wages” above), then she or he may face suspension or revocation of her or his driver’s license.

Under Michigan’s No-Fault Law:

“Failure of such a person to make payment within 30 days after judgment is a ground for suspension or revocation of his or her motor vehicle registration and license …” (MCL 500.3177(1))

Similarly, under Michigan’s Financial Responsibility Law, (MCL 257.511 and 257.512), an uninsured driver’s license will be suspended for non-payment of any civil judgment arising from an accident caused by the uninsured driver.

The Michigan Secretary of State’s web site provides the following description of what it calls “a financial-responsibility judgment”:

“If someone is driving a vehicle without insurance and is at-fault in an accident, the injured party may file a suit against the uninsured motorist in court for damages. The court may award a judgment for damages to the injured party against the uninsured motorist. If the uninsured motorist cannot pay the judgment, their driver license is suspended until the judgment is paid in full.”

 - Photo courtesy of Creative Commons, by timo_w2s

Related information:

Drive without auto No0Fault insurance at your extreme peril

You need to buy uninsured motorist coverage – NOW!

 

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Blog Author Steven M. Gursten
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