One question that constantly trips up many insurance lawyers is: How does PIP – also known as Michigan No Fault – apply to a minor child injured in a car accident when the parents are divorced?
The issue comes up frequently. When parents are divorced, the question of priority (where No Fault insurance benefits will come from) is unfortunately not so cut and dry, and this leads to many lawyers making a mistake and filing with the wrong insurance company. If the problem is not discovered in time, the consequences can be devastating for the injured child.
Therefore, the first thing any No Fault lawyer must do is make the correct determination regarding which divorced parent’s car insurance policy the child should claim their Michigan No-Fault (PIP) benefits.
Under the order of priorities in the Michigan No-Fault Act, if a person does not have a car insurance policy, they get their benefits through a resident-relative, meaning someone they’re related to by blood or marriage that has No Fault insurance through a car insurance policy already. As a practical matter, this “resident relative” is most often a parent.
Here’s where it starts to get complicated. How do you make the proper No Fault priority determination when there’s “joint physical custody?”
Cases have held that although a person can have more than one residence, they can have only one legal “domicile.” See Grange Insurance Co. v. Lawrence 494 Mich 475 (2013). Domicile is difficult to determine when the child lives with both parents and there’s joint custody after a divorce.
What frequently happens is that two auto insurers (unless both parents have the same insurer) each point the finger and claim the other insurer is responsible for paying No Fault PIP benefits. Often, neither pays No Fault benefits, and sometimes the injured child has difficulty receiving medical care because both insurance companies refuse to pay. Litigation results, but this can lead to delays in the child of the divorced couple receiving medical care and benefits.
The attorney representing the child should immediately file an application with the Michigan Assigned Claims Plan (MACP) which can cut through this finger-pointing and assign a third insurer to pay No Fault PIP benefits. The insurer will then seek reimbursement from one or both of the other insurers, depending on which has the highest priority to pay.
Often, because of the delays and finger-pointing, the attorney hired by the family to represent the injured child can also seek penalty interest and attorney fees from the priority No Fault insurer.
TIP for No Fault lawyers: One suggestion to avoid all of this is to have the divorce decree specify which of the two addresses is the “domicile for claiming and receiving Michigan No-Fault (PIP) benefits in the case of any potential in the case of any auto accidents.”
From litigating my share of car accident cases with No Fault disputes for minor children, I find that the domicile address be the address for school (i.e. which school district the child attends), also be in the divorce decree, assuming the divorced parents live in two different school districts.
The address could also be decided based on which parent has better uninsured and underinsured motorist coverage to protect the child in the event a very serious car accident occurs in the future.
Either suggestion will make it easier to make a future No Fault PIP claim for an injured child to receive No Fault benefits as quickly as possible. The issue will be resolved immediately if a judge has previously signed a decree/order clarifying the issue of legal domicile.