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What’s the most unfair, dangerous loophole in Michigan’s auto No-Fault insurance law?

February 7, 2012 by Steven M. Gursten

More than 1 million innocent drivers now at risk of financial ruin if they’re involved in an auto accident

Here’s a Ripley’s Believe it or Not: under Michigan No-Fault insurance law, a completely innocent driver may actually be required to pay the medical bills and lost wages of the “at fault” driver who causes an auto accident!

That’s right. You can be completely innocent, be injured in a motor vehicle accident, and then also be required under the Michigan No-Fault law to pay for the medical bills and wage loss of the driver who causes the auto accident.

And, to prove reality is stranger than fiction, if the innocent driver-victim does not pay within 30 days, the Michigan Secretary of State may suspend or revoke his or her driver’s license.

Not only does this dangerous loophole in Michigan’s No-Fault law defy common sense and all notions of fairness by allowing innocent auto accident victims to be penalized, but the law weighs heaviest on those who largely belong to an already financially beleaguered group: Michigan’s approximately 1,520,000 “uninsured motorists.”

In many cases, Michigan’s “uninsured motorists” are people who are financially struggling. And it is no surprise that in some cities, such as Detroit, approximately 50 percent of drivers are driving without any auto insurance at all, simply because the majority just cannot afford the cost. See here the real reason why your auto insurance is so high. Virgil Smith, are you listening?

Defying common sense

Consider the following all-too-common scenario that I see so often as a Michigan No-Fault insurance lawyer:

o Suppose a driver who has stopped his car for a red light is rear-ended by a drunk driver. Both the innocent driver and the drunk driver are seriously injured.

Suppose also that the innocent driver happens to be uninsured. Here is how the above scenario plays out:

o The innocent driver who was rear-ended by a drunk driver is denied all No-Fault benefits to cover medical expenses and lost wages, because Michigan’s law prohibits uninsured drivers from collecting No-Fault benefits.

o Here’s where, in my opinion, it becomes a question of fairness and justice: The innocent driver is also barred from suing the drunk driver who rear-ended him for his injuries, no matter how catastrophic these injuries are. The drunk gets off without ever taking any responsibility for his negligence, even if the innocent driver who the drunk rear-ended is paralyzed or killed.

o Adding major insult to injury, the drunk driver’s No-Fault auto insurance company now sues the innocent driver to recover the money the auto insurer has paid for the drunk driver’s medical bills, lost wages and other No-Fault benefits (even though the drunk caused the accident, and was, well, drunk!).

Ah, I hear what you’re thinking – you don’t believe me? Here’s the Michigan law that allows such an bizarre outcome to occur (MCL 500.3177(1):

“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))

Related Information:

You need to buy uninsured motorist coverage – NOW!

Your 3 potential cases after an auto accident

Free book: Guide to Michigan No-Fault law

Michigan Auto Law is the largest law firm exclusively handling car accident, truck accident and motorcycle accident cases throughout the entire state. We have offices in Farmington Hills, Detroit, Ann Arbor, Grand Rapids and Sterling Heights. Call (248) 353-7575 to speak with one of our Michigan insurance lawyers.


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3 Replies to “What’s the most unfair, dangerous loophole in Michigan’s auto No-Fault insurance law?”

  1. Steve:

    I know you are a Personal Injury specialist but do you know if it is also part of the code where an insurer can subrogate for damages to the insureds car where the at-fault party was uninsured?


  2. this is one of few laws that makes sence to me!
    I should not have to pay for injury/damage to something/someone that should not be on the road to begin with! It does sound better when you put a drunk driver behind the the wheel, but still the law is not there to protect the drunk, its there to protect the insured

  3. Different Jason,
    The drunk is not illustrative, it is from an actual case. You can bet that the person I am helping does not share your opinion. I understand your position and as you read in my blog, we are in agreement on the critical importance of insurance. However, in a state where an estimated 1 million drivers are uninsured, including approximately half of Detroit drivers, I feel your views are a bit too harsh in how things play out in reality everyday. We’ll have to agree to disagree on this one because I see things too often from the other side.

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