Contrary to what is being reported by many news media outlets, Michigan no-fault insurance does not pay “unlimited” benefits to car crash victims.
In recent months, it has been inaccurately stated that “unlimited” medical benefits are one reason why Michigan has high auto insurance rates. That simply is not true, and here’s why.
First, the No-Fault Act – specifically MCL 500.3107(1)(a) – does not use the word “unlimited” when referring to personal protection insurance (PIP) benefits after a motor vehicle collision. Rather, §3107(1)(a) says: “(1) Except as provided in subsection (2), personal protection insurance benefits are payable for the following: (a) Allowable expenses consisting of all reasonable charges incurred for reasonably necessary products, services, and accommodations for an injured person’s care, recovery, or rehabilitation.” (Emphasis added.)
As you can see, the No-Fault Act uses the words “reasonable” and “reasonably necessary” when referring to PIP benefits. The terms “reasonable” and “reasonably necessary” are purposely in the No-Fault Act to keep a check on what insurance companies pay and what medical providers claim. Therefore, it’s incorrect to say that no-fault benefits are unlimited when there are, indeed, limitations on what insurers pay and on what medical providers can charge.
Another reason why no-fault benefits are not unlimited? Because insurance companies do not pay 100% of PIP claims 100% of the time. In fact, no-fault insurers often use the language inn §3107(a)(1) to deny or stop paying benefits that should otherwise be paid. For example, no-fault insurers will frequently allege that a car crash victim’s medical treatment is unnecessary. The insurer will then request the injured person to undergo an independent medical exam (IME). Because an IME is conducted by a doctor who is chosen by the insurance company, chances are the doctor will determine that the medical treatment is unnecessary or, if it is necessary, then perhaps not at the level that’s needed for the victim’s full recovery. Relying on this IME doctor’s opinion, the insurer will sometimes deny or stop paying PIP benefits.
In sum, it is incorrect to say that no-fault benefits are unlimited. The word “unlimited” implies that insurance companies pay all claims for no-fault benefits all the time, no matter what – and that simply is not what happens.