Legally Reviewed and Edited by: Terry Cochran

Published on: March 22, 2024

How your fault vs. no-fault car insurance claim is handled will depend on the state and its laws regarding liability in car accidents. Your car insurance policy covers your medical expenses in no-fault states like Michigan. The other driver’s bodily injury liability insurance pays your hospital bills in at-fault states.

Knowing what actions to take after an accident and where to file for compensation starts with understanding the difference between fault vs. no-fault car insurance claims. An experienced car accident lawyer from Cochran, Kroll, & Associates, P.C. can help you navigate the claims process and explain your rights and benefits under your auto insurance policy.

No-Fault Car Insurance vs. At-Fault Insurance

The fault vs. no-fault car insurance claim process varies depending on your home state. When you’re involved in a car accident in an at-fault state, you must file a claim against the insurance of the driver determined to be at fault for the accident. This claim can include compensation for injuries, property damage, and other losses.

In a no-fault state, regardless of who is at fault in the accident, each driver typically files a claim with their insurance company for their medical expenses. This system reduces the need for litigation over the causes of the accident and speeds up medical expense payments. However, there are limitations on when a driver can sue for additional damages such as pain and suffering or other non-economic losses. These rules vary by state.

At-Fault States

In an at-fault state, the driver who caused the car accident compensates the other driver or drivers for their losses, either through an insurance claim or by paying out of pocket. For instance, if a driver is found at fault for an accident, their property damage and bodily injury policies will pay for the other driver’s car damages and medical expenses.

However, car insurance coverage will only pay up to policy limits. If medical bills and property damage expenses exceed the coverage limits, the at-fault driver is liable for the remaining damages.

No-Fault States

No-fault states require drivers involved in an accident to file a claim with their insurance company, regardless of who caused the collision. Several states passed legislation in the 1970s introducing no-fault auto insurance to simplify assigning fault when an accident occurs.

These laws affect a car accident victim’s ability to sue for damages or injuries. Drivers can only sue in no-fault states if they meet specific injury or monetary thresholds. In a no-fault state like Michigan, car accident victims must have sustained a severe impairment of a body function to bring a personal injury lawsuit for pain and suffering against a negligent driver.

What is No-Fault Car Insurance?

No-fault car insurance, or personal injury protection (PIP), pays for medical expenses, lost wages, and other economic losses after an accident. PIP coverage differs from other types of insurance in that it covers damages, regardless of who caused the accident.

For instance, if your car is hit from behind and you sustain injuries, PIP can help cover your medical expenses. In Michigan, PIP insurance is required for all drivers at a minimum of $50,000.

In addition to PIP insurance, liability insurance is also required in no-fault states. While PIP insurance pays for a driver’s medical expenses after a crash, it does not cover property damage for car repairs or non-economic damages such as pain and suffering.

Drivers in Michigan must carry liability insurance of $50,000, $100,000, and $10,000 to cover injury or death to one person, multiple people, and property damage, respectively. This includes all economic and non-economic damages you may suffer in a crash.

In a no-fault state, liability insurance only applies if the victim’s damages exceed PIP coverages.

What Happens if You’re Involved in a Car Accident in a No-Fault State?

You can file a claim with your auto insurance company after the accident in a no-fault state. Once you’ve reported the accident, a claims adjuster will investigate the crash and determine how much the insurance company will cover for your damages.

Who Pays For Car Damage in a No-Fault State Michigan

Your PIP coverage pays medical expenses you may incur due to the accident up to your policy’s limit. If you have collision coverage, your insurance will cover the cost of repairing or replacing your vehicle up to the policy limits.

PIP insurance can help cover the following if you or your passengers are hurt in an automobile accident:

• Medical expenses
• Allowable expenses for products, services, and accommodations necessary for your care, recovery, or rehabilitation
• Wage loss benefits if you’re unable to work
• Household replacement services
• Damage to other people’s property
• Funeral and burial expenses

You can receive up to $20 daily for household replacement services in Michigan. Up to 56 hours per week of in-home attendant care from a family member, friend, or business associate are allowed. Work loss benefits are available for up to three years after the accident date.

If a loved one has passed away in an accident, you can receive funeral and burial expenses between $1,750 to $5,000 over the amount outlined in their auto insurance policy.

Is No-Fault Car Insurance Optional?

All drivers in Michigan must have no-fault PIP insurance in Michigan. The state offers six PIP coverage levels, ranging from a minimum of $50,000 to unlimited coverage.

The only exception to required PIP insurance is for drivers enrolled in Medicare Parts A and B whose household members also have another health or auto insurance policy covering medical expenses due to car accidents. Those who meet these criteria can opt out of PIP coverage but must have the documentation to prove their enrollment.

Can I File a Car Accident Lawsuit Against a Negligent Driver in a No-Fault State?

No-fault car insurance states like Michigan allow injured drivers and passengers to file third-party insurance claims and car accident lawsuits against the at-fault driver. However, to file a lawsuit, your injuries from the accident must meet a serious injury threshold or monetary amount.

The Serious Injury Threshold

The serious injury threshold is a legal statute that defines what type of injuries allow crash victims to file a third-party tort claim to receive additional compensation above their PIP insurance.

In Michigan, severe injuries include traumatic brain injuries, amputations, spinal cord injuries, and compound fractures. Specific criteria your injury must meet before suing another driver include:

• The injury can be seen or felt by someone other than you, such as a doctor
• Your injury impairs a vital body function
• The injury affects your ability to live your life as you did before the accident

There is no set period for how long the injury must last, and each case is evaluated individually by comparing the car crash victim’s life before and after the accident.

The Monetary Threshold

In no-fault states, people can file a claim or lawsuit if their economic damages exceed a certain monetary amount. Under Michigan law, you can seek up to $3,000 in damages for repairs not covered by insurance if another driver causes damage to your vehicle.

A Michigan car accident property damage claim can cover:

• Repair costs for your vehicle
• Replacement costs if the vehicle is totaled
• Damage to personal property inside the vehicle
• Rental car expenses while your vehicle is being repaired
• Diminished value of your vehicle, if applicable

How Does Negligence Work in No-Fault States?

No-fault states assess damages based on the degree of negligence of each driver involved in the accident. After an accident, the claims adjuster and attorneys involved in the case will evaluate the actions of each party to determine negligence.

Under comparative negligence laws, drivers may recover compensation, even if they are partially at fault. There are two types of comparative negligence laws: pure and modified.

Pure Comparative Fault vs. Modified Comparative Fault

Under pure comparative negligence, drivers can pursue compensation even if they are partially at fault for the accident. However, the amount of payment they can recover is reduced based on the degree of their responsibility.

For instance, if a driver is found to be 80% at fault for the accident, they can only recover compensation for the other party’s remaining 20% fault.

Modified comparative negligence is a type of negligence that considers the percentage of fault a driver has in an accident. It establishes a threshold typically set at 50% or 51% and varies from state to state. You may not recover compensation if your liability is over the percentage threshold.

Michigan uses modified comparative negligence to award damages to car accident victims. This means that in Michigan, you can’t recover damages if your degree of fault is 50% or more.

For example, you are involved in an accident with another driver. They were speeding and ran a red light, but you were looking at your phone when the crash occurred. Based on the evidence, you are found to be 51% at fault for the collision, making you unable to recover damages.

What is the Timeline to File for Damages in a No-Fault State?

In a state with no-fault laws, you only have a specific timeframe to file for damages after a motor vehicle accident. These are known as statutes of limitation, and they vary based on the legal action you take.

The laws in Michigan allow you the following periods to make your claim:

• PIP Benefits. You have one year from the accident date to file a claim for PIP benefits. Filing quickly with the help of a Michigan car accident attorney can help you get these needed benefits to pay for medical costs and 80% of missed wages from the accident.
• Third-party insurance claim. You can file a third-party claim against the at-fault driver’s insurance within three years from the date of the accident. Our auto accident attorneys at Cochran, Kroll, & Associates, P.C. can help you file as soon as possible to preserve evidence and facilitate faster compensation.
• Car accident lawsuit. For auto accidents in Michigan, you have up to three years from the date of the accident to file a lawsuit in court. This allows you to build a case seeking maximum damages in court from a judge or jury.
  If you were a minor (under 18) at the time of the accident, you have until one year after your 18th birthday to file a lawsuit. Similarly, if you were incapacitated at the time of the accident, you have one year from the date of regaining capacity to file.

Potential Reasons for No-Fault Insurance Claims Denials

Although no-fault states are designed to simplify the process of obtaining benefits, there are several reasons why your claim could be rejected. These reasons may include:

• Incomplete claim forms. Claims may be denied if the forms are incomplete or filled out incorrectly.
• Medically unnecessary expenses. Insurers can deny claims if insufficient evidence supports that the treatments or medical expenses are necessary due to injuries sustained from the car accident.
• Failure to report the accident promptly. Delays in reporting the accident to the insurer can lead to claim denials. Most companies require you to report collisions immediately, even if you haven’t filed an official claim.
• Exceeding insurance policy limits. If the costs exceed the coverage limits set by the policy, the excess expenses will not be reimbursed. You can work with your attorney to explore a third-party claim against the at-fault driver in this case.
• Discrepancies in the claim details. Discrepancies or mistakes in your claim details could raise suspicions of fraud, resulting in the denial of your claim. An attorney can assist you in submitting a thorough and accurate claim to speed up the processing of your benefits.

At Cochran, Kroll, & Associates, P.C., our attorneys will examine any denials of your claims and negotiate with your PIP insurer to ensure you receive fair compensation.

Advantages and Disadvantages of Michigan’s No-Fault Law

When submitting a car accident claim in Michigan, it’s essential to understand both the benefits and drawbacks involved. These may include:

Getting Legal Help After a Car Accident

If you have been injured in a Michigan car accident, we will investigate the crash scene and gather evidence, such as photographs of skid marks, road conditions, debris, and damage to vehicles. Our attorneys will also interview witnesses to counter the other party’s version of events and support your claim.

We will also review your insurance policy to determine coverage for claim damages. We will also negotiate with your insurance provider to ensure you receive sufficient compensation, including settlements for economic losses like future medical expenses.

Attorney partner and registered nurse Eileen Kroll uses her medical expertise to assess expenses accurately and link your injuries to the accident. If your claim is rejected or the insurer’s compensation is insufficient, we are ready to take legal steps to secure the no-fault benefits you are owed.

Get in Touch With a Michigan Car Accident Lawyer Today

Michigan operates under no-fault insurance laws, which can make filing a claim after an accident complex, particularly when understanding available benefits and determining when to file a lawsuit. A Michigan auto accident lawyer can guide you through the various compensation claims you can pursue.

At Cochran, Kroll, & Associates, P.C., our attorneys are committed to offering legal representation to help you navigate the complexities of fault vs. no-fault car insurance claims. Contact us for a free consultation.

Our contingency fee basis means we only get paid if we win your case, so there is no financial risk to you to get started. Call our law firm today at 1-866-MICH-LAW and schedule your no-obligation, free case evaluation.

Disclaimer : The information provided is general and not for legal advice. The blogs are not intended to provide legal counsel and no attorney-client relationship is created nor intended.