Michigan’s No-Fault law was enacted in 1973 for the purpose of “righting the wrongs of the old tort liability system and … protecting the Michigan consumer …” “No-Fault Insurance After Three Years,” Thomas C. Jones, Michigan Insurance Commissioner, October 6,1976, Opening Letter)
Those “wrongs” of the tort liability system included: It was “incomplete, inequitable, inefficient and slow”; it did “a poor job of providing for seriously injured auto accident victims”; it had an “inequitable payment structure” because a “high percentage of persons injured in automobile accidents received no reparations under the tort system”; it “systematically undercompensated the most seriously injured” victims; and “lengthy delays existed under the tort system in compensating those injured in automobile accidents — often in cases where the need for prompt compensation was strongest.” (Sources: “No-Fault Insurance After Three Years,” Thomas C. Jones, Michigan Insurance Commissioner, October 6,1976, Opening Letter, Introduction, Page 12; “No-Fault Insurance In Michigan: Consumer Attitudes And Performance,” Thomas C. Jones, Michigan Insurance Commissioner, April 10, 1978, Pages iv, 3; Shavers v. Attorney General, 402 Mich. 554, 621-622 (Michigan Supreme Court 1978)
To correct the situation, true to its name, Michigan’s No Fault Law guaranteed on a no-fault basis that auto accident victims would receive reasonably necessary and reasonably priced lifetime No Fault medical benefits as well as No Fault wage loss, replacement services and survivor benefits.
The point of No Fault was to “assure that persons injured in auto accidents are compensated … quickly and equitably … for medical costs and lost income …” (Insurance Institute of Michigan: “No-Fault: An overview of Michigan’s unique auto insurance law,” brochure (no longer accessible on the IIM’s web site))
As the Insurance Institute of Michigan has attested, No Fault did what it set out to accomplish:
“The no-fault concept has worked well. Accident victims are promptly compensated for their losses. They receive unlimited medical benefits and substantial wage loss benefits on a no-fault basis. Severely injured people no longer have to bear devastating financial burdens while waiting for lawsuits to be settled.” (Insurance Institute of Michigan, “No-Fault: An overview of Michigan’s unique auto insurance law,” brochure (no longer accessible on the IIM’s web site))
“Under Michigan’s no-fault system severely injured people receive immediate benefits instead of the previous system of having to wait for lawsuits with at-fault parties to be settled.” (Insurance Institute of Michigan web site, Consumers, “Auto Insurance Facts”)
Nevertheless, Michigan’s auto insurance industry has never fully accepted No Fault and the protections and benefits it guarantees to seriously injured auto accident victims.
Twice the industry has asked Michigan voters to do away with No Fault’s guarantee of necessary and reasonably priced lifetime No Fault medical benefits – once in 1992 and once in 1994 – and on both occasions the public overwhelmingly voted to preserve No Fault as it was.
The auto insurance industry has also sought to advance its cause in the Michigan Legislature with House Bill 4612, introduced on April 23, 2013, by Rep. Pete Lund, R-36th District, being its latest effort.
Although HB 4612 may be the industry’s most ambitious effort to “reform” or dismantle No Fault, it is also its most audacious, outrageous and unacceptable attempt.
For the reasons set forth in this “Auto Insurance Consumers’ Guide To Michigan No Fault Reform & House Bill 4612,” no action should be taken on HB 4612.
HB 4612 should be rejected. And, Michigan No Fault should be preserved exactly as it is.