No-fault car insurance in Michigan: Here’s how it works

May 07--Detroit drivers face the highest average insurance rates for cars and other vehicles in the country. Motorists in Detroit can often be quoted more than $3,000 a year to insure a single automobile.

A Detroit Free Press investigation finds that runaway medical bills, disability benefits payouts and lawsuits under Michigan's one-of-a-kind, no-fault insurance system play a key role in driving up costs for drivers.

What is no-fault car insurance?

No-fault auto insurance will pay for all of a car crash victim's necessary medical bills for as long as that person's injury or disability persists, potentially for life.

Unlike many private health insurance plans, no-fault car insurance also pays for in-home nursing care -- known as "attendant care" -- to help a person with tasks such as dressing, showering and preparing meals. This care can be provided by a relative, friend or agency. No-fault pays lost wages for up to three years, and $20 a day for someone to do the injured person's household chores. There is also money to pay for funeral expenses and the cost to modify a vehicle or home to be accessible to people with disabilities.

How long do I have to file a no-fault insurance claim?

People generally have up to a year from the date of the accident to file a no-fault insurance claim.

What if I have health insurance? What happens to my no-fault benefits?

Motorists with private health insurance who are not on Medicaid or Medicare can opt to coordinate their coverages and have their health insurer be the primary payer for car crash injuries, in exchange for a discount on their auto insurance premiums.

Under this scenario, no-fault auto insurance stays in the background but kicks in for certain crash-related expenses or benefits that aren't provided by private health insurance, such as long-term physical therapy or replacement for lost wages.

Those with coordinated coverage must follow the cost-containing guidelines of their primary health insurance policy, such as staying within a network of providers. That requirement can preclude them from visiting certain doctors, MRI centers and stand-alone clinics that aren't affiliated with major hospital systems or insurance billing networks and that specialize in treating patients who pay with no-fault insurance. These providers may bill for their services at higher-than-typical rates.

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