Michigan No-Fault Insurance

Currently, 12 states have some form of no-fault car insurance laws, but none has "pure no-fault." The state of Michigan has always been the closest to true no-fault, but a bill that just passed one house of the state legislature may change that. House Bill 4301 expands Michiganders’ rights to sue the at-fault party in certain circumstances.

No-Fault = Higher Car Insurance Rates?

Michigan has the purest form of no-fault car insurance in any of the 50 states, and it also has the second highest car insurance rates of any state in the country. Only New Jersey has higher rates, but recent deregulation moves by the current and former governor have brought rates down in the state. If the trend continues, Michigan could soon be #1.

But advocates of no-fault say that Michigan’s high rates have nothing to do with its no-fault status, and that expanding the ability to sue the at-fault party would lead to an increase in rates. They say that Michigan’s high rates are due to the state’s peculiar character. On one hand, half of the state’s population is densely concentrated in and around the city of Detroit, and on the other hand, Michigan has the second most deer accidents of any state in the country, outdone only by Pennsylvania.

No-fault reformists counter that the inability to sue the at-fault party in more accidents makes everyone’s rates higher, since all Michiganders thereby subsidize the bad drivers who cause damages. The no-fault defenders counter that the reformists’ goal of merely tweaking the no-fault law would only lead to higher payouts to injured parties, thereby causing everyone’s rates to go up.

When Can You Sue in Michigan?

There are only three situations in which you can sue or be sued under Michigan’s strict no-fault insurance laws: (1) Death; (2) Disability; and (3) Loss of bodily function. But a 2004 court decision further restricted the right to sue by limiting it to injured parties to whom, in the words of Michigan Supreme Court Judge Fischer, "the effect of impairment on the course of a person’s entire life must be considered."

Reformists say that this was an act of "judicial activism" and that they merely seek to return Michigan’s no-fault law to its standing prior to the court decision. The bill to do so passed the Michigan State House along party lines, with the newly elected Democratic House nearly unanimously supporting it, while the minority Republicans opposed it. Since Michigan has a bicameral parliament, the bill will need to pass the State Senate before it is passed on to Democratic Governor Jennifer Granholm for signing. Since the Democratic majority in the Senate is slimmer than in the House, it is not clear whether the bill will be passed or not.

No-Fault Does Not Mean No-Choice

Regardless of what happens in the State Senate, Michiganders can still save on their car insurance by comparison shopping at carinsurancerates.com. Regardless of the impact of the HB 4301, savvy shoppers will always save. Clearly, there are pros and cons to HB 4301, but if you are a Michigander with strong feelings one way or another, contact your state senator.