HOW TO BUY AUTO INSURANCE IN MICHIGAN

I. INTRODUCTION

There are several hot-button economic issues facing Michigan citizens today. Among the hottest is the cost of automobile insurance. Our state traditionally has been in the forefront devising innovative methods of affordable, comprehensive auto insurance coverage. Witness what the Michigan legislature established in 1973 by passing the no-fault automobile law.

In 1973, Michigan was one of the early states transforming the way in which victims of automobile negligence were compensated. By adopting a three-tiered approach, the Michigan No-Fault Automobile Insurance Act requires insurance companies to pay economic expenses without delay, minimizes nuisance suits against the at-fault driver for non economic damages, and provides other access to compensation for property damage.

If you have owned a car the past ten years, you have seen automobile insurance premiums rise, even though you may not have made claims, or made minor claims against your insurance policy. The causes for this dramatic rise in premiums are numerous and complex, yet depending on whom you listen to, someone else invariably is responsible.

The insurance industry, some business associations and several respectable lawmakers blame the rise on the increased cost of repairing automobiles. They also point to increased personal injury and wrongful death lawsuits, and the rising cost of medical care, especially catastrophic claims. Attorneys for claimants counter that insurance companies run themselves inefficiently, refuse to pare administrative costs, and are not operated on a competitive basis.

The Attorneys General of several states at one time filed suits against the insurance companies for monopolistic practices they claimed illegally raised premiums to increase company profits. These suits alleged that informal "price fixing" allowed insurance premiums to go up virtually unchecked in the face of nonexistent competition. It is an American pastime to get after the insurance industry for making too much money by delaying payment on legitimate claims, exaggerating loss statistics, and "crying wolf" too many times about the "liability crisis" and "litigation explosion."

With so much finger-pointing and rhetoric, it has become difficult to tell fact from fiction, yet insurance premiums continue to soar.  No matter why premiums rise, this book will benefit you. It will help you save money on insurance premiums by offering simple, time-efficient suggestions. While this book is not a cure-all to high insurance premiums, and does not address the fundamental reasons for their never-ending increase, it will provide ideas for trimming your insurance costs while maximizing coverage against losses.

Further, this book will not make you wealthy and is not a "get rich quick" scheme. However, it may save you hundreds of dollars each year by reducing premiums. Also, it will provide a strategy you may apply when purchasing other types of insurance, such as homeowners, health, life and disability.

Have fun and good luck.

II. DEFINITIONS

A few definitions are vital for understanding how to buy auto insurance in Michigan.

Risk - The threat of loss due to an event of some sort;

Loss - Injury, damage, harm or catastrophe;

Premium - The money you pay to the insurance company in return for insurance coverage;

Insurance Policy - A contract between you and an insurance company, for which your premium pays, and which the insurance company agrees to cover a loss incurred under circumstances the policy defines.

III. WHAT IS INSURANCE?

Insurance is a guarantee. You guarantee to pay a premium over a delayed period of time, and the insurance company guarantees to cover a loss when it occurs.  In return for your premium paid over a period of time known as the insurance policy period, you are easing the potentially overwhelming burden a loss poses when an unfortunate event arises. You believe this risk of loss is greater than the premium paid.  The insurance company believes the premium is greater than the risk of loss. Both sides benefit, therefore, from this calculated bargain.

In fact, your premium dollar is commingled with billions of others in insurance company investments. The return on these investments plus the unsure chance that a loss will occur make American insurance companies some of the most powerful and wealthy corporations in the world – which is good and bad.  Wealthy and powerful insurance companies permit us to rest easily, recognizing we will be protected if serious casualties hit.  Also, much economic development, such as high-rise buildings and high-tech startups, is likely because of the huge sums of money these powerful companies have at their disposal.  On the other hand, if charges of monopolistic practices are true, then insurance companies are capable of not only profiting, but also profiteering.  With vast amounts of available money, these companies influence laws in ways you and I cannot begin to invent.

In any case, if you did not have auto insurance and became involved in a seriously disabling wreck, you would be in a serious financial emergency.  Insurance lightens the financial burden to the limits of the insurance contract. For instance, the Michigan no-fault accident law requires automobile insurance to pay lost wages for up to three years after a crash, and guarantees payment indefinitely of all accident-related medical bills.

A common complaint is that we pay several thousands of dollars in auto insurance premiums over the years and never "make a claim," yet our premiums still rise.  We should remember, however, our individual premiums and insurance policies are a small part of a bigger picture. That is, insurance companies estimate how to guarantee payment of all insureds’ losses based on an almost infinite number of factors, including the number and kind of people they insure, the number of claims, how and when claims are paid, the amount of premiums collected, and how premiums are invested.  While some of us never make a claim, others make multiple claims. Yet, if the insurance company is operated on sound economic principles, making sound investments with premium dollars, insurance coverage will be there if and when you need it.

That it is a binding contract makes buying an insurance policy important. Should one side break that contract, the other side has a right to sue – which is where we attorneys come in.  So, you can see how important it is before making a contract with a powerful multibillion dollar industry, that you understand what is involved, and connect beforehand with insurance agents, companies and attorneys you trust.

IV. WHAT TYPES OF AUTO INSURANCE COMPANIES EXIST IN MICHIGAN?

There are two types of auto insurance companies in Michigan: Stock companies and cooperative companies. This is more a matter of knowledge than practical significance, because in every case each insurance company’s profitability depends on the same, sound economic principles. And, no matter what kind of insurance company you go with, you have little direct input setting premium rates or paying claims. Professional money managers and boards of directors control these based upon a variety of factors including the insured's age, accident and driving record, place of residence, and vehicle year, make and model among other things.

A stock company is like other American corporations. The owners are the stockholders or shareholders. Examples of such stock insurance companies are Allstate, Allmerica/Citizens Insurance Company of America and GMAC Insurance Company (formerly MIC).

There are two types of cooperative auto insurance companies in Michigan: Mutual and reciprocal insurance exchanges. Mutual companies allow policy holders to own shares of the insurance company proportional to the amount of insurance owned. State Farm Mutual Automobile Insurance Company, Michigan Millers Mutual and Amica Mutual are well known mutual companies doing business in Michigan.

Reciprocal exchanges are nonprofit insurance companies composed of people who have formed a group focused on a particular interest to minimize premiums while maximizing coverage. Farmers Insurance Exchange is one of these doing business in Michigan.

V. WHO SELLS AUTO INSURANCE?

Auto insurance is sold in Michigan generally in three different ways; through:

1. Agents;
2. Brokers; and
3. Direct sales.

There are two types of agents: First, is the independent agent who sells the insurance of several insurance companies. Secondly, is the exclusive agent who sells for one company's insurance. Which type you should see is not always an easy choice, because there are advantages and disadvantages to each.

An exclusive agent may be better, because he presumably knows one or two companies for whom he sells insurance better than would an independent agent who may sell insurance for several companies. Also, his specialization may result in lower premiums. On the other hand, comparison is more difficult because you need to see more agents to premium shop.

Alternately, the independent agent offers the consumer choice among several companies. By giving you one stop comparative shopping, you may save time and premium dollars, and find the exact policy to cover your needs. Such comparisons are not always easy with the exclusive agent.

No matter the type of agent, earns his keep on a commission basis computed as a percentage of your premiums.

When you shop for an agent, consider these modest suggestions:

1. Talk to at least three agents. Why three? There is nothing magic about the number three, except that three agents will give you a really good idea of challenges you are facing.
2. Since an agent is a state-licensed professional, call the Michigan Department of Licensing and Regulation or the Insurance Commissioner's Office, and make sure the agent's license is in good standing. The addresses and phone numbers for each of these state departments are in Appendix A.
3. Prior to seeing an agent, sit down and draw up your needs. If an agent tries to change your mind with high pressure tactics, walk out of his office.
4. Meet the agent, don't just speak with him over the phone. When meeting him, ask yourself: Is he clean and neat? Is he too pushy? Does he come across as too sincere? Does he make you feel comfortable or uncomfortable? Does he condescend or respect you? Does he answer your questions to your satisfaction, or does he make you feel that you ask too many questions and take up his time? Is his support staff friendly and courteous? Is the agent open and frank about prices and coverage? Will he give you information about the insurance company's financial solvency? Will he tell you his commission total?
5. Don’t wait until the last minute to shop for a better insurance premium; plan ahead.

These are but a few things to keep in mind and there is no doubt many more. One good source of referrals to the right insurance agency is your family attorney. Usually, the attorney is in regular contact with insurance agents and companies, and correctly will advise you.

The next source of auto insurance sales in Michigan is through the broker. A broker is hired by and works for you, while the agent works for one or more insurance companies. So, one advantage of the broker is that he will do the insurance shopping for you, and will find the right coverage for the right price.

Similar to agents, though, a broker is paid through commissions. The actual commission often is specified in your premium, so you may identify exactly the broker’s amount. One advantage of the broker is that he may be more willing to fight for you, so you may end up with better coverage for the premium.

When picking a broker, follow the same guidelines as for an agent.

The final method is direct sale from the company to you – no middle man involved. However, if you buy through the direct sales approach, you must thoroughly know the product, and you better investigate the company's financial status. AAA of Michigan sells directly to consumers through company representatives who are employees, rather than agents or brokers.

The disadvantage of buying through direct sales is your lack of choice among more than one company. This would prevent comparative shopping, possible lower premiums and better coverage.

With this basic information, we’ll explore the Michigan auto insurance setup.

VI.  MICHIGAN’S NO FAULT AUTOMOBILE CRASH LAWS

A. INTRODUCTION

In 1973 Michigan's legislature passed the No Fault Automobile Insurance Act, completely changing how automobile and truck death and personal injury cases would be handled. Then in 1996, the Michigan legislature revised the methods of compensating those victimized in motor vehicle crashes. For those hurt or killed, the law provides benefits irrespective of fault; however, the law substantially altered and tightened the right to file a lawsuit against those who drive negligently.

For every automobile accident occurring in Michigan or involving a Michigan resident out-of-state, there are three potential claims:

1. Personal Protection Insurance claim or lawsuit for PIP/first party/no fault benefits covering economic losses;
2. A negligence claim or lawsuit against the party at fault for non economic losses; and,
3. A claim to recover for collision damage to your vehicle.

Today’s law has its advantages and disadvantages over previous compensation systems. One advantage is that your auto insurance company must quickly pay economic losses or it may be penalized. Under the pre-1973 system of compensation, you had to to sue the negligent party to recover out-of-pocket damages. This usually took several years, and you remained financially strapped during that time.

A disadvantage today is your ability to sue a negligent driver for conscious pain and suffering, mental and emotional distress, lost enjoyment of life, and damage to your motor vehicle is impaired. Additionally, an automobile lawsuit may take several years to resolve, so you may not see rightful compensation during this time.

The no fault automobile law arguably makes it easier for non-attorneys to collect certain benefits. However, as you will see, the method of obtaining compensation and the strict time limits for bringing suit are complicated, and usually require an attorney's assistance.

B. PERSONAL INJURY PROTECTION(PIP)/ FIRST PARTY/NO FAULT BENEFITS

1. What are they?

If you sustain accidental bodily injury in a motor vehicle accident, you may recover the following PIP/first party/no fault benefits from your auto insurance company:

1. Medical expenses for life, including medical mileage;
2. Wage losses for up to three years;
3. Replacement services expenses for up to three years; and
4. In death cases, survivor benefits for up to three years, and a one-time death benefit.

These losses are actual, tangible, economic losses as opposed to non economic losses (such as conscious pain and suffering that we will discuss later) which you would claim against the at fault negligent driver.

a. Medical Expenses. By law, you are entitled to recover "all reasonable charges incurred for reasonably necessary products, services and accommodations for an injured person's care, recovery or rehabilitation." Your automobile insurance company must pay these benefits for life, in an unlimited amount so long as they are "reasonable and necessary."

Medical expenses include bills for doctor and hospital services, medicine, orthopedic devices and other medically necessary equipment (e.g., computers for those with traumatic brain injury; or fully equipped vans for transportation of paraplegics and quadriplegics). Medical expenses also include private duty nursing services, unskilled nursing services (sometimes including those which family members perform), modifications to vehicles and residences, medically necessary foods, apartment rent, and several types of rehabilitation, including vocational rehabilitation.

In short, medical expenses include virtually anything reasonable and necessary to your health damaged by an auto crash. Reasonably necessary services include more than health care services, such as casting broken bones, surgery, physical therapy or head injury therapy. The law also includes on occasion the costs associated with a guardian and conservator appointed as the result of incapacity arising from injuries in an automobile accident.

You are also entitled to receive "medical mileage"; however, the maximum amount available per mile (e.g., up to $.26/mile) varies with each insurance company. It includes miles driven to and from the doctor, hospitals, therapy, pharmacy, etc. for care and treatment of an accident related injuries.

b. Wage Losses. You may recover wage losses from your automobile insurance carrier for up to three years from the date of the accident. You will receive 85% of your gross wage (the other 15% is considered money you would owe in taxes), unless your tax rate is lower. In that case, you would be eligible for a greater share of your gross wage than 85%.

In addition to the normal understanding of wages for purposes of computing the loss, salary increases, overtime, step increases, shift premiums and COLA may also be included in the computation. If you use sick and vacation time negotiated in a collective bargaining agreement through your union, then the PIP carrier may have to reimburse these to you as lost wages, because the negotiated benefits of your employment are lost to you.

c. Replacement Service Expenses vs Attendant Care. You may recover for up to the first three years after an accident as much as $20.00 per day for expenses "reasonably incurred in obtaining ordinary and necessary services in lieu of those that, if he had not been injured, an injured person would have performed . . . " For example, if you can no longer perform household duties, due to your accident, such as mowing the lawn, laundry, housecleaning, etc., replacement service benefits are available.

Anyone, including a family member, may provide services and be compensated, so long as this person did not provide them before the accident. Also, your promise to pay the person rendering replacement services is enough. Actual payment is not essential to making a claim.

If you do not use the maximum amount available each day, you lose the difference, because replacement services benefits may not be stockpiled.

A related benefit is known as "attendant care" services. These are not limited by the $20.00 per day maximum, are more like skilled or unskilled nursing services that are limited only by what is "reasonable and necessary." (See "Medical Expenses" above).

d. Survivor and Death Benefits. By law, if an insured is killed in a motor vehicle crash, his or her dependents may recover survivor benefits "which consist of a loss, after the date on which the deceased died, of contributions of tangible things of economic value, not including services that dependents of the deceased at the time of his death would have received for support during their dependency from the deceased if he had not suffered the accidental bodily injury causing death . . . "

Survivor benefits are lost financial support for dependents, including the deceased’s social security, pension, worker compensation benefits, medical insurance premiums and other benefits of employment.

These benefits are subject to the same monthly limitation as wage loss benefits, described above. Also, the law reduces these benefits by the amount the deceased would have paid in taxes, but not what he would have consumed had he lived. The $20.00 per day replacement services provision is part of survivor benefits. Therefore, financial support and service expenses combined may not exceed the monthly limitation in effect on the accident date. As with wage loss benefits, dependents may not receive survivors loss benefits for more than three years.

Additionally, in the event of death, you may claim a minimum of $1,750.00 for use in paying funeral and burial expenses. You may purchase additional coverage in $500.00 increments at insurance renewal time.

2. What Are Coordinated v Uncoordinated PIP Benefits?

PIP benefits come in two forms: Coordinated (a.k.a., excess) and Uncoordinated (a.k.a., full). If you purchased a coordinated benefits policy before your accident, your no fault carrier is secondarily liable while another insurance carrier is primarily liable for PIP benefits. For example, if you have traditional health insurance available through your employer, your no fault carrier is liable for accident-related medical bills your employer-provided health care insurance has not paid. An exception to this involves ERISA health coverage through a "qualified" plan. If you have this through your employer, most likely your PIP coverage is primary and ERISA is secondary. Another exception is Medicare and Medicaid, which is secondary to your PIP coverage, which is primary.

The same is true if you have disability coverage through your employer. That would be primary, and the wage loss coverage of your automobile insurance would be secondarily liable, if you have coordinated PIP wage loss coverage.

A few words of caution: if your primary carrier is a HMO/PPO/PPOM or other form of managed health care, first you must seek health care within your health care network. If you elect to treat outside your network, then you must first seek the proper referral or preauthorization according to your health insurance plan's requirements. Failure to follow your health insurance policy's requirements regarding the circumstances under which you must seek a referral or preauthorization for treatment may release your PIP carrier from the obligation of paying health care bills not pre-approved or not subject to the proper referral procedures. In other words, the financial burden would fall on you to pay those bills. Please make sure you follow all referral and preauthorization procedures outlined in your health insurance contract.

On the other hand, you may purchase an uncoordinated/full benefits policy. Here, your automobile insurance carrier generally is liable for PIP benefits even though they have been paid under another insurance policy. For example, if your health insurance pays accident related medical bills totaling $10,000, the no fault carrier must pay you the same amount. Therefore, the advantage of an uncoordinated PIP policy is that you are legally entitled to "double-dip." The advantage of a coordinated policy is premium savings each year.

Your no fault carrier may offer at a reduced premium rate a PIP deductible of $300. Such a deductible will be specified in the policy of insurance, or on an endorsement or declaration sheet.

After an auto accident, it is important for your attorney to discover which form you have – it could make a major dollar difference to you.

3. How Do Governmental Benefits Figure In?

The no fault statute permits your auto insurance carrier to deduct from monthly wage loss or survivors' benefits any amount you or your dependents receive in governmental benefits. This means that if you receive workers compensation benefits for the vehicle accident for which you claim PIP benefits, the no fault carrier will lessen monthly no fault benefits by that amount. Or, if a deceased’s survivors receive government social security benefits, your PIP carrier can deduct those from no fault survivors' benefits; however, it may not deduct social security old age benefits.

Critically, Medicare benefits are not a governmental benefit that can be setoff.

4. Whose Insurance Policy Pays PIP Benefits?

This can be tricky. At accident time, if you are covered by a no fault automobile insurance policy, because you are an insured motorist or reside with an insured relative, that policy will pay benefits irrespective of whether you are the car's driver, passenger or a non-occupant.

If you are occupying an employer-furnished vehicle, then that insurance must pay.

If you do not have your own auto insurance policy or live in a household without no fault protection, but sustain injury while an occupant of a motor vehicle, then you must obtain coverage from the owner or operator of the vehicle occupied. If you do not have a policy yet sustain injury while a non occupant (i.e., pedestrian or bicyclist), then you must obtain no fault coverage from the "vehicle involved" in the accident.

5. What About PIP Benefits and Motorcycle Accidents?

A motorcycle owner or registrant must purchase liability insurance for property damage, bodily injury, or death suffered by another due to the "ownership, maintenance, or use of that motorcycle."

Also, the motorcycle owner or registrant may purchase first party medical benefits in increments of $5,000.00, payable if the owner or registrant is involved in a motorcycle accident. No wage loss coverage may be purchased the same way.

A motorcyclist is not entitled to PIP benefits for accidental bodily injury if:

1. The person was using an unlawfully taken motorcycle, without belief of entitlement to it;
2. The person was the owner or registrant of the motorcycle but no mandated insurance was purchased; or
3. The person was not a registrant of this state, or was an occupant of a motor vehicle or motorcycle not registered in this state and was not insured.

If the motorcyclist is entitled to PIP benefits because he sustained injuries in an accident with a motor vehicle, he may collect benefits from only the insurer of the owner or registrant of the motor vehicle, the motor vehicle's operator, or insurer of a motorcyclist who purchased medical benefits’ coverage.

6. When and How May You Claim Benefits?

The no fault law sets-up uncompromising and perplexing time limits within which you must claim and obtain benefits. There are two related one year statutes of limitations. First, unless you have furnished the PIP carrier a written notice within one year of the accident, or the insurance company has paid some benefit to you, you must file suit within one year of the accident to recover benefits.

If you have given written notice or your insurance company has made payment within one year of the accident, then you must sue for each unpaid expense within one year of the most recent allowable expense incurred. If you file suit timely, you may recover those expenses which you incurred not more than one year before the date the complaint was filed.

This becomes sticky because different insurance companies treat the law differently __ some are strict and others are not. And different courts interpret the law differently.   Therefore, with this complicated formula, you usually need an attorney’s assistance.

The written notice mentioned above must follow a specific form for easy insurance company processing. It must give the name and address of the claimant and indicate, in ordinary language, the name of the person injured and the time, place and nature of his injury. The no fault PIP Application (the long yellow or white form) satisfies the notice requirements.

7. What Does A PIP Lawsuit Involve?

When your auto insurance company refuses to pay benefits or pays them inadequately, incompletely or late, you may have no choice but to file suit. This lawsuit involves a breach of the contract by your insurance company, and it is unwise to undertake this without a lawyer on your side. Such a suit involves a Complaint, which starts things going, followed by the insurance company’s Answer which denies responsibility. Then each side trades written questions known as Interrogatories that the other side must answer. This is followed by your deposition and the deposition of your doctors, independent medical evaluators and other witnesses. If the case still is unresolved, it may go to mediation and trial. The whole process may take a year or more.

If your suit proves successful, benefits may be payable at 12% per annum interest. In addition, if the Court determines that your insurance company acted unfairly when dealing with you, your attorney is entitled to a reasonable fee for his services.

C. THIRD PARTY/NEGLIGENCE CLAIMS FOR NONECONOMIC INJURIES

1. Whom May You Sue and For What May You Sue?

The next claim the law authorizes you to make is against the at_fault, negligent driver for non-economic injuries. These damages include conscious pain and suffering, lost enjoyment of life, mental and emotional distress, and lost love and companionship, for example.

In addition, if your accident related economic losses exceed those your PIP insurance paid, you may sue the negligent driver for them as well. For example, if your monthly lost wages exceed the limitation mentioned in Section II, 2, above, you may sue to collect the excess. You may sue also for excess funeral and burial expenses, and medical bills.

Under the pre-1973 tort system of compensation, you needed to prove the other driver acted negligently causing your loss in order to receive compensation. But that has changed. Now, you must prove an additional element: one or more of three threshold injuries: a) death, b) serious impairment of a body function, or c) permanent serious disfigurement.

Consider these threshold injuries as barriers over which you must pass in order to go from injured but uncompensated to injured and compensated. The "death" threshold is obvious. However, in 1996, the Michigan legislature redefined the meaning of a "serious impairment of a body function." The new law provides:

"Serious impairment of a body function means an objectively manifested impairment of an important body function that generally affects the person’s general ability to lead his or her normal life."

An accident leaving you wheelchair-bound for life is an obvious and undisputable "objective manifestation." An automobile accident in which you sustained a small scratch on your leg, and for which you didn't seek treatment, may constitute an objective injury, but may not have affected your "general ability to lead . . . [a] normal life"; so you likely did not sustain a threshold injury and cannot sue.

If a drunk driver rear-ended you, resulting in neck and upper back muscle strain, you required six or seven months of treatment, including heavy doses of muscle relaxers, you were out of work or school for five or six months, and needed help taking a bath because you couldn't move your neck or arms, then you may have sustained a serious impairment of a body function. A judge may not let your case get to the jury, if there is no material, factual dispute on the nature and extent of your injury. However, if there is a dispute, then your case will probably be decided by a jury.

A graphic example of clearing the "permanent, serious disfigurement threshold" would be a million dollars per year fashion model who sustained gnarled glass punctures in her face so that scarring prevented her from earning a living. Clearly, this would be a permanent, serious disfigurement allowing her to sue.

Also, the amended law requires a doctor to diagnose head injuries for your case to get to a jury. So, a neurologist, neurosurgeon, psychiatrist or neuropsychiatrist, as well as your family physician, must diagnose a head injury to secure your right to a jury trial.

The 1996 amendments also adopted two new provisions which severely limit the right to sue an at-fault vehicle’s driver/owner. A jury may not issue an award of non economic damages to you if you were more than 50% at fault. This would generally prevent drunk drivers, for example, from suing. Also, you may not sue for non economic damages if you had no automobile insurance covering you.

In addition to being able to sue the at-fault driver of the other vehicle, you may sue the owner of that vehicle. Here, your attorney must show that the at-fault driver had the car with the owner’s knowledge or permission.

In the event you file a third party suit for excess economic damages, you need not prove a threshold injury.

2. When Must You Sue?

Generally, you must sue the at_fault driver for damages within three years of the accident date. There are exceptions when a minor is injured, or if the injury results in some type of legal incompetence, and a longer time for suing is permissible. However, these complicate the statute of limitations' requirements, and it is extremely important to see an attorney immediately after your accident.

3. What If A Drunk Driver Is At Fault?

a. Statistics. Statistics in Michigan disclose that about 40% of all automobile crashes involve alcohol. They show that liquor liability laws work, because in 1990 the figure was an astounding 50%. Statistics also show that almost one out of every two Americans will be involved in his lifetime in an alcohol related automobile crash. In Michigan, alcohol-related automobile crashes kill several hundred and injure several thousand people each year.

Therefore, it is important in every such crash to make sure your attorney investigates whether or not alcohol was involved. Drunk driving crashes are not only matters of civil concern, but are crimes. The victims are crime victims no less than murder victims.

b. The Michigan Dramshop Law. If the at-fault driver was drunk at the time of the crash, you may have an additional right to sue a retail liquor licensee (e.g., bar or beer and wine store) for illegal alcohol service. Under the Michigan Dram Shop Act, a retail liquor licensee may not supply alcoholic beverages to a minor or visibly intoxicated person. If illegal service causes or contributes to illegal intoxication and results in injury to an innocent person, then he may sue not only for automobile negligence, but also under the Michigan Dram Shop Act.

An important feature of the Michigan Dram Shop law is that in order to sue the retail liquor licensee, you must name and retain in the suit until the very end the at-fault minor or visibly intoxicated person.

Another important feature is that suit against the bar or beer and wine store must commence within two years of the crash date, effectively reducing the automobile negligence statute of limitations to two years from the previously mentioned three years. This 2-year statute of limitations follows a requirement that within 120 days of the date you retain an attorney, you must send written notice to the retail liquor licensee you intend to sue. Again, in the case of death or other legal incapacity, the time periods will vary. Nevertheless, the failure to follow these notice and statute of limitations provisions will probably bar you from suing the retail liquor establishment. An attorney’s immediate help is vital to protecting your rights.

c. Social Host Liability. The Michigan Dramshop law covers drunk driving personal injuries and death when there has been illegal, retail liquor service. But what about non-retail situations, such as graduation open house parties or wedding receptions, where alcohol is furnished to minors? Here, Michigan law imposes "social host liability" in certain circumstances.

In such a social setting, if a minor is served alcohol and becomes impaired, and injures or kills himself or others, the "social host" who furnished the intoxicants can be held civilly liable to compensate the victims.

The statute of limitations follows the general three year negligence limitation period, modified only by some legal incapacity as discussed above. To play it safe, seek an attorney’s assistance immediately to ensure your rights as a crime victim are protected.

e. Bankruptcy And Liquor Liability Laws. Many times, injuries from alcohol and drug related vehicle crashes are serious. So serious in fact that the case’s value far exceeds available insurance and other assets. So the perpetrator attempts to avoid liability by filing for bankruptcy protection. This will not work most of the time.

The U.S. bankruptcy laws specifically exempt from discharge debts incurred as a result of violating liquor liability laws. To follow this through, your attorney must first obtain an order or judgment in the appropriate civil court. Then, if the defendant seeks bankruptcy protections, you must hire a bankruptcy attorney to make sure the proper steps are followed in federal bankruptcy court to protect your order or judgment.

D. YOUR CAR AND NO FAULT

1. What Claim Is Available?

The third claim the Michigan No Fault Act authorizes is the right to repair or replace your car. To do this at an insurer's expense, however, you must purchase optional collision or comprehensive automobile insurance. Without this type of coverage, you will not be compensated for damage to your car by another's negligence, except under the following three conditions:

1. You sue the at-fault driver under the mini-tort law in Small Claims Court. If you can prove another person was at fault, you may obtain from his insurance company $500 or the amount of your collision or comprehensive coverage deductible, whichever is less.
2. You may sue the at-fault party if he intentionally caused harm to your vehicle.
3. You may sue a negligent driver if he was uninsured.

2. When Must You Sue For Vehicle Damage?

A suit against your automobile insurance for such property damage must be brought within the time period outlined in your automobile insurance policy. If none is mentioned, then you have 6 years from the accident date to sue your carrier. A suit against the at-fault driver’s/vehicle owner’s insurance must be brought within one year of the accident date. Also, if the at-fault party intentionally causes your crash or was uninsured, you must sue him within one year of the crash.

Failure to sue under any of the scenarios above will bar suit after these limitation provisions expire.

E. DO YOU NEED AN ATTORNEY?

If you or anyone you know has experienced death, personal injury or property damage in an automobile crash then consult an attorney immediately. Insurance companies do not always disclose all PIP benefits available. An attorney will be able to secure for you all, appropriate no-fault benefits.

Many times, the insurance company will discourage you from hiring legal counsel, then attempt to engineer a settlement of first party, third party or collision coverage benefits. While it is true that insurance company representatives omit occasionally to advise you of your full scope of rights, invariably it happens. Also, insurance companies will frequently negotiate with you to pay the least amount of money possible -- that is its job, right?

Insurance companies may stretch settlement negotiations until the statute of limitations has elapsed, then end negotiations altogether. Under these circumstances your rights are likewise cutoff.

Statistics show that upwards of 95% of auto negligence cases settle without going to trial. However, a quickly shrinking number of cases settle before you file suit, because insurance companies like to keep their money and invest it until they absolutely have to pay you. By delaying hiring an attorney, you likewise delay receiving compensation for your injuries.

It is therefore important for you to be represented by legal counsel immediately after an auto accident, if for no other reason than to guarantee your rights are championed. Don't surrender your right to compensation!

VII. WHAT TYPES OF INSURANCE COVERAGE DOES MICHIGAN PROVIDE?

The type and amount of coverage you want or need will answer the ultimate question this book asks: How much do I have to pay and what do I get for it?  (The initials in parentheses are what you’ll likely see on your auto policy.)

A. Bodily Injury/Personal Injury (BI/PI) - This is mandatory auto insurance which covers you if, through your negligence, you injure or kill someone. On the declaration sheet accompanying your insurance policy, it is expressed as a single limit (e.g., $100,000) or split limits (e.g., $100,000/$300,00). The minimum amount you must carry is $20,000/$40,000 (split limits). This means your policy will pay up to $20,000 for each person injured or killed, and up to $40,000 for each accident involving two or more people injured or killed.

Importantly, the limits of your BI/PI coverage don't prevent a court from judging you liable for more than the coverage. So, sufficient coverage is key to your financial security.  We recommend that you purchase a minimum of $100,000.00/$300,000.00.

B. Property Damage (PD) - This also is mandatory insurance coverage which pays for damage to another's property caused by your negligent driving. You must carry a minimum of $10,000 for property outside the state.

C. Property Protection Insurance (PPI) - This too is mandatory coverage paying up to $1 million for property damage you cause in an auto accident in Michigan.

Examples of such damage include power lines, poles, and fences. Also, this pays for damage you cause to properly parked motor vehicles. You are also covered up to $500 for mini-tort damage to another's car if you are 50% or more at fault.

D. Personal Protection Insurance (PIP) - This mandatory coverage is the chief feature of the no fault system in Michigan, and what differentiates Michigan from non-no fault states such as California.

PIP pays medical bills for accident-related injuries in an unlimited amount for an indefinite period of time. It also pays for mileage put on a car transporting you to and from health care of all kinds.

A standard amount is $.26 per mile. State Farm Mutual will only pay $.09 per mile. Amica Mutual Insurance Company, which underwrites auto coverage in Michigan, but is headquartered in Providence, Rhode Island, allows up to $.26 per mile(or the current IRS standard).

PIP further pays 85% or more of lost wages due to accident-caused disability. However, wages are paid for only three years at a determined rate each month. The theory behind the reduced amount is that if you were working, taxes would reduce gross income to a level roughly equal to 85%. The law will allow the insurance company to hold back less than 15%, if you can show your tax bracket is lower.

The theory behind the three-year wage loss limitation is that most auto crash-related injuries should resolve themselves within three years, and you should be back on your feet and at work.

Finally, PIP pays for replacement services, or routine tasks you can't perform, that you need to hire someone else to perform because of your injuries. The maximum you may claim is $20 per day for up to three years.

If your economic damages exceed PIP coverage, then the excess may be recovered by suing the negligent driver - unless that person is you.

D. Collision - This is optional coverage which pays for damage to your vehicle caused by you or someone else. There are three types of collision coverage: standard collision, limited collision, and broadened collision. Limited means that the insurance company will pay for collision damages when the driver of the insured vehicle is not substantially (i.e., more than 50%) the cause of the crash. You may or may not have to pay a deductible amount.  If the driver of the insured vehicle is substantially the cause of the crash, the insurance company will not pay for collision damages.

Standard coverage means that the insurance company will pay collision damages to your insured vehicle irrespective of who is responsible for the crash. You must pay a deductible amount for each accident, however.   Broad form or broadened coverage means the insurance company will pay collision damages to your insured vehicle irrespective of who is responsible for the crash. However, if the driver of your insured vehicle is more than 50% of the cause of the accident, you must pay a deductible for each crash. 

Since this is optional coverage, according to the law, if you don't purchase it, the insurance company will not pay for damage to your vehicle. This is an odd aspect of the Michigan No Fault Law, because it generally prevents you from suing the at-fault driver for damage to your vehicle, and you are required to carry collision coverage if you want damage to be paid for. Nevertheless, mortgage companies and banks require you, when buying a new car, to carry collision coverage. The logic is simple and agreeable: If the new vehicle should be totaled while the mortgagee has a lien, the mortgagee wants to be paid.

As stated above, with collision coverage it is not always necessary for fault to be proven to collect. Also, there are usually deductible amounts available in $50, $100, $250 or $500. The larger deductible amounts you choose, the lower the premiums. We'll go into more detail on this later.

If the other driver was substantially at fault, then you may sue for the $500 mini-tort, which his insurance company will pay, if you are successful in Small Claims Court.

E. Comprehensive - This optional coverage is for loss to your vehicle by theft, fire, rain, hail, animals, fights flying objects or any other means specified in the insurance contract.  Comprehensive is generally expendable if you want lower premiums.

F. Uninsured motorist coverage (UM) - Optional insurance you purchase for the other driver, believing that he is uninsured. The sad but true fact of life is that even though Michigan law requires every motor vehicle to be insured, and even makes it a misdemeanor to be uninsured, not everyone follows the law. Either because insurance has become so unaffordable, or people simply don't care, not all automobiles are insured, and they are usually the ones involved in serious crashes.

UM acts as a BI/PI coverage taking care of you should the other driver be uninsured and negligent. Though optional, everyone should have it as a cheap form of life insurance.  Be careful, however; some auto insurance companies offer little or no UM. If you find that to be true, go elsewhere for coverage. Also, you should buy UM limits equal to or greater than your BI/PI coverage.  We recommend you purchase a minimum of $100,000.00/$300,000.00.

G. Underinsurance coverage (UDM or UIM) - Similar to UM, above, except that it is triggered if your personal injury loss value exceeds the other insured vehicle's coverage. For example, your injury is worth $40,000, but the total applicable BI/PI insurance carried by the other vehicle is $20,000. UDM will then pay.  It too is optional coverage under the law.

There are two types of underinsurance: one is pure-type UDM. This may be defined to mean protection available to the insured to make up for damages which the at-fault party's insurance does not cover.   The other, more predominant type pays only to the extent that the loss exceeds the underinsured's limits, up to the limits of the UDM coverage.  An example of the latter type is where an injury's value is $100,000, and underinsurance limits are $100,000, but the at fault, underinsured has only $20,000 of BI/PI coverage. Here, UDM coverage will pay $80,000.

UM and UDM coverages pay for pain and suffering damages as well as excess economic losses, i.e., those not covered by PIP.  Further, most uninsured and underinsured policies require arbitration of disputes rather than court litigation. Don’t leave home without these. The premiums are generally very low. Look at it this way:  UM and UDM are cheap life insurance policies.

H. Rental car coverage - Another optional coverage which pays for a rental car, while yours is being repaired from accident damage. This is limited, but pays only a specific amount each day of each month.

I. Towing - This is optional insurance which pays to have your car towed by pre approved tow companies from the accident scene.

J. Michigan Catastrophic Claims Association (MCCA) - Mandatory coverage for all PIP benefits after insurance company payouts have reached $250,000. This is becoming an increasingly expensive part of your coverage, with no end in sight.

VIII. ARE THERE FINAL TIPS FOR BUYING AUTO INSURANCE?

Whenever purchasing a big ticket item, we investigate before we spend our money. In complex, technological societies like ours, investigation, accurate information, organization and planning have become the currency of success. Conversely, the failure to invest time in learning about the "insurance product" is inexcusable and a recipe for economic failure – especially since success is so simple. The following concluding tips will save you money when buying auto insurance.

A. READ

Learn the rules. The only way to do that is read whatever you can get your hands on about insurance. Don't rely on word of mouth for your knowledge. The following is a suggested reading list:

1. Consumer Reports magazine. Don't subscribe, but get a hold of back issues and keep an eye out for future relevant ones. The back issues can be obtained from your public library or Consumer Reports, 256 Washington St., Mt. Vernon, New York 10553.
2. AM Best's Insurance Reports. An annual magazine which evaluates the financial strength of auto and other insurance companies. A+ is the best rating. C is the lowest rating. Under no condition should you do business with a poorly rated company, no matter how cheap the insurance rates. Reason: During the policy term, the company may declare bankruptcy, which means you would go "bare" (as in naked, as in no insurance coverage). This type of exposure is no thrill.
   
   Other similar services are through Dun & Bradstreet, and Standard & Poors. Addresses and phone numbers for each service are in Appendix B.
   
   
3. Contact the Michigan Insurance Bureau for information to answer your questions. Appendix A.
   
   
4. The insurance policy. Compare it with other insurance policies.

B. CONTRAST AND COMPARE

Go to several insurance professionals. Obtain sample policies and premium quotes. Then sit down, read the policies, and compare them, all the while asking yourself: "What does this mean? Is this really what I want? How am I going to be better off with this one as compared to that one? How am I going to be worse off?"

Inevitably, you will have questions you won't be able to answer, so go back to insurance and legal professionals and ask them. Make sure they explain their answers in clear, common sense language. Don't let them cloud their answers in technical jargon.

Take notes, not only of what you read, but also of your conversations with the professionals. Make sure your notes are an accurate reflection of what you've read and heard. Be friendly, but unrelenting in your pursuit for clarity.

C. LIST THE PREMIUMS FOR EACH POLICY

The premium to be paid is a, but not the, major consideration. Once you know the coverage available, you must engage in the most difficult part of this whole process - deciding.  Deciding will be a balancing process. Please keep in mind that there is no absolutely right decision, but a bunch of relatively correct ones. Some policies will be better than others for you, but not perfect.

If you believe even for one second that you'll find the perfect policy at the perfect price, you will lose, and become frustrated. The point is to get the best coverage possible for the best price possible - then rest easy.

D. KEEP YOUR DRIVING RECORD CLEAN

Parking tickets won't affect your rates; moving violations and certain criminal convictions will. Don't speed! Don't drink and drive!   Drive reasonably, prudently, properly, and, above all, lawfully! I cannot emphasize enough how important it is that you keep your driving record clean, because it may cause your premiums to increase, or provide the insurance company a reason for denying or revoking coverage, if you exceed a certain number of eligibility points (EPs).

All insurance companies doing business in Michigan have set up a system of EPs for traffic violations. A common misunderstanding is that these points are the same as those on the official driving record kept by the Michigan Secretary of State's office. This is not true.  Insurance eligibility points are put together by the individual insurance company, who may refuse to insure you for seven points or more within the past three years.  For example, driving more than 15 miles per hour over the speed limit is four EPs. Driving 11 to 15 miles per hour is three EPs. Driving up to 10 miles per hour over the speed limit is two EPs. Driving 15 miles per hour or less over the speed limit on freeways which used to have a maximum speed of 70 miles per hour is two EPs.

Other moving violations involve two EPs. The first accident in which you are more than 50% at fault is three EPs, and all subsequent accidents in which you are more than 50% at fault are four EPs each.

E. WEAR YOUR SEATBELT

You will receive a discount if you ear a seatbelt. This could be worth several dollars per year to you, as we will show later.

F. RAISE YOUR DEDUCTIBLES

Ask for a $300 deductible or more in your PIP medical coverage. This will save you money. Increase deductibles on comprehensive and collision coverage, and keep in mind the $400 mini tort when doing so.

G. MAINTAIN PROPER LIMITS

There is no hard and fast rule-of-thumb in knowing what your limits should be, but it is fair to say that as your income increases, your BI/PI, UM and UDM coverage should follow.

H. REDUCE OR ELIMINATE COMPREHENSIVE AND COLLISION COVERAGE

On older cars, where the costs of simple repairs outweigh the vehicle's blue book value, there is no reason to have comprehensive and collision coverage. However, keep in mind that if a negligent driver wrecks your vehicle, generally you can't sue him for its replacement.

I. BUY VEHICLES WITH TRADITIONALLY FAVORABLE PREMIUM RATES

It stands to reason that a Corvette would cost more to insure than a Buick LeSabre (and probably a whole lot more exciting to drive – which probably says something about why the premiums are so high).  Four door models usually carry lower premiums than two door models, because the former is safer. More expensive cars cost more to insure than less expensive cars. The lesson: Don't buy a road warrior.

J. KEEP YOUR VEHICLE AS LONG AS POSSIBLE

Don't be so quick to trade in your old car. As you approach 100,000 miles, the premium decreases dramatically, because the blue book value decreases.

K. BUY ONLY WHAT YOU NEED

If you don't need comprehensive or collision coverage, then don't buy it. If you don't need rental, don't buy it. If you don't need to belong to a club, don't join.

L. DISCOUNTS, DISCOUNTS, DISCOUNTS

That's right. Ask the insurance salesperson about discounts. The following are examples of the available discounts:

1. Multi-car and multi-policy discounts. A multi-car discount is available when you insure more than one family car with the same company. A multi-policy discount is available when you insure car and home, for example, with the same company.
2. Seatbelt discounts
3. AARP membership and other age related discounts
4. Driving record related discounts
5. Profession-related discounts
6. Student-a t-school discounts
7. Auto theft prevention device discounts
8. Air bag discounts
9. Four door sedan discounts
10. Mature driver discounts (i.e., age 65 or more and drive less than 3,000 miles per year.
11. Anti-lock braking system discounts
12. And on and on.

M. COORDINATE INSURANCE POLICIES

If you coordinate your PIP health coverage with other health and hospitalization insurance, you will save a few more dollars each year.  The same is true of coordinating your PIP wage loss coverage with any disability insurance you have at work.

APPENDIX A

MICHIGAN DEPARTMENT OF LICENSING AND REGULATION
611 W. Ottawa St., North Tower
P.O. Box 30018
Lansing, MI 48909
(517) 335-4978

Insurance Commissioner
Insurance Bureau
P.O. Box 30220
Lansing, MI 48909
(517) 373-8220

APPENDIX B

DUN & BRADSTREET
5793 Widewater Parkway
DeWitt, New York 13214
Telephone: (315) 446-915

STANDARD & POOR'S
25 Broadway
New York, New York 10004
Telephone: (212) 208-8000

A.M. BEST COMPANY
15 Maiden Lane
Manhattan, New York 10058
Telephone: (212) 233-3323

*. . .AND $AVE BIG BUCK$