Michigan No Fault – Automobile Forum Property Damage Liability Ins and Outs

Michigan is a no-fault state for vehicle property damage caused in an automobile accident. There are limited exceptions to Michigan’s No-Fault Law. This article will discuss the various aspects of Michigan auto losses and how they are properly handled within the arbitration process.  

There are very limited instances in which an insurance company may pursue arbitration against an at-fault carrier in the state of Michigan for damages paid under its first-party coverage.  Michigan PPI (Property Protection Insurance) is a required coverage under Michigan No-Fault Law. Michigan PPI will pay for damages caused by an insured’s vehicle to fixed property, such as buildings and fences. Michigan PPI also provides coverage for damage caused by its insured to another vehicle, but this only applies if the other vehicle was properly parked. AF Rules allow a company to file for damages paid under its first-party automobile coverage. The only out-of-pocket expense allowed in arbitration is reimbursement of an insured’s deductible. Thus, in a parked vehicle situation, the filing company could file for payments made under the policy, as well as the insured’s incurred deductible amount. An award would depend upon the arbitrator’s determination that the vehicle was properly parked at the time of impact. This is because PPI is part of the no-fault coverage and does not pertain to the Michigan comparative negligence law.  

Most vehicle losses in Michigan are subject to the Michigan Mini-Tort Statute, since this statute applies to all vehicle losses in which the vehicle was improperly parked. Michigan Mini-Tort allows a party in a loss to pursue up to $3,000 in damages not covered by insurance. A party must be 50% or less liable to collect these out-of-pocket expenses under the Mini-Tort from an at-fault carrier. Under Michigan Mini-Tort, the pursuable amount of $3,000 is restricted to out-of-pocket expenses. Therefore, the $3,000 that may be collected under Michigan Mini Tort is not an expense that can be pursued in arbitration according to AF Rules. If damages are improperly sought for a Michigan auto loss, the Responding company should raise a jurisdictional exclusion that the subrogation action is prohibited under AF Rules. This would allow the arbitrator to review the information and rule on jurisdiction when hearing the case.

In closing, the above is specific to filings by insurance companies. Filings by self-insureds will be decided on a case-by-case basis based on the arguments and evidence submitted by the parties.

This article is for general informational purposes only and is not intended to constitute legal advice. Readers should contact their internal legal department for further advisement.