Introduction To No-Fault Reform
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 . . . .” (Source: “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 various No-Fault “reform” bills, proposing to dismantle No-Fault by eliminating or limiting or severely restricting the vital protections and benefits that the law provides to Michigan car accident victims.
In this “Auto Insurance Consumer’s Guide to Michigan No-Fault Reform,” we will discuss No-Fault reform proposals that have previously been proposed (and could likely be reintroduced again in the future), highlighting the points that drivers, victims and consumers should be aware of when evaluating the lawmakers’ efforts to change No-Fault.