Michigan PIP

Ineffective election of reduced 1^st Party PIP benefits results in Unlimited PIP No-Fault benefits

In a recent Michigan Court of Appeals case, the court ruled that an insured who did not make an effective election to opt out of personal protection insurance (PIP) medical coverage when purchasing automobile insurance was entitled to unlimited PIP medical benefits.

The court held that the plain and unambiguous language in MCL 500.3107d provides that all the criteria outlined in MCL 500.3107d must be met to effectively opt out of PIP medical coverage.

Because not all the criteria were met in that case, the insured did not make an effective election to opt out. The insurance policy was held to provide unlimited PIP medical benefits. It is extremely important to understand what 1^st Party medical Benefits (PIP) you are buying before you or a loved one is in an automobile accident.  You can call us anytime to verify what you purchased and what the insurance company is obligated to pay.

The requirements to opt out of PIP medical coverage under MCL 500.3107d are: (1) the automobile insurance policy must have been issued or renewed after July 1, 2020; (2) the applicant or named insured must be a ‘qualified person,’ meaning they have health coverage under parts A and B of Medicare; (3) the applicant’s or named insured’s spouse and resident relatives must have ‘qualified health coverage’ or be covered under another auto policy with PIP medical coverage; (4) the applicant or named insured must elect to not maintain PIP and medical coverage, and that election must be made on an approved form; and (5) the applicant or named insured must provide the insurer evidence of qualified health coverage for all persons.

An ineffective opt-out applies not only to the named insured but also to their spouse, resident relatives, and any other person who may have a right to claim PIP benefits under the policy.

If an applicant or named insured fails to make an effective election, MCL 500.3107d(7)(4) plainly states that the policy is considered to provide unlimited PIP medical coverage. It is evident from the plain and unambiguous statutory language that the Legislature intended the unlimited PIP medical coverage to apply to the whole policy and not select individuals. If the Legislature intended to limit the application of unlimited PIP medical coverage, it could have used language reflecting that intent.