In May 2019, the Michigan legislature passed – and the Governor signed – Public Acts 21 and 22 of 2019. These Acts were the first comprehensive Michigan No-Fault Auto Insurance coverage changes of any substance in 40 years.
The Acts have several staggered “triggers” that will have taken effect or many that will take effect in the future. But, the bulk of this reform package takes effect on July 2, 2020.
The Team at Mason-McBride has recently become aware of a provision within Section 500.3163 of the Act that states:
An insurer authorized to transact automobile liability insurance and personal and property protection insurance in this state is not required to provide private protection insurance or property protection insurance benefits under this chapter for accidental bodily injury or property damage occurring in this state arising from the ownership, operation, maintenance, or use of a motor vehicle as a motor vehicle by an out-of-state resident who is insured under the insurer’s automobile liability insurance policies unless the out-of-state resident is the owner of a motor vehicle that is registered and insured in this state.
What you need to know, in summary:
The elimination of this coverage is at the option of the insurance company.
What Do Public Acts 21 and 22 mean for Michigan?
The best way to explain what this means is by this example:
Let’s say your daughter lives out of state and does not own an automobile, so she doesn’t have an individual auto insurance policy. While she’s visiting your home, you give her permission to operate your vehicle to travel around town. Unfortunately, while using the car, she accidentally hits a building, causing $200,000 in property damage to the building.
If your insurance company (the carrier) decides to eliminate this coverage from their policy form as allowed by Section 500.3163 of the Act, you wouldn’t have any coverage under the policy. So, you and your daughter be held personally liable for the property damage. Your insurance policy wouldn’t cover the cost of the damages. So, you would be paying that $200,000 bill out of your pocket.
But the scenario doesn’t just apply to personal situations. It can apply to business situations, too. For example, let’s say, in similar circumstances, an out-of-state employee or business colleague uses a Michigan-based business’ company vehicle and causes property damage to a building. The person driving the car and the company that owns the car would be held personally responsible for paying for the damages.
So now you have a better idea of this liability issue. It’s concerning.
We see inconsistency among Michigan insurance companies regarding how they will treat and address this specific provision. Some carriers have stated they will completely exclude the condition, and some will not. Others will exclude the provision but offer the policy owner the option to endorse the coverage for an additional premium.
Ultimately, this issue requires a Michigan Legislative fix. Unfortunately, there is no indication of that type of solution on the near horizon.
So that’s why if you believe this exposure exists for your particular personal or business situation, we encourage you to discuss it with your Risk Advisor at Mason-McBride right now. Then, we’ll explore further with you and find different coverage options for your consideration regarding Michigan No-Fault Auto Insurance.
Additionally, visit our Michigan No-Fault Auto Insurance Changes 2020 page for everything you need to know to be well-informed.
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