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When Michigan PIP Coverage Runs Out, Who Pays the Rest
Michigan drivers have been choosing how much personal injury protection coverage to carry since policies issued or renewed after July 1, 2020. The choice was presented as a premium decision. It is also a decision about who pays for catastrophic care, and the answer when a chosen limit is exhausted is not the one most drivers assume.
A driver whose coverage runs out is not simply left with the balance. MCL 500.3135(3)(c) preserves tort liability against the at-fault driver for allowable expenses, work loss, and survivor’s loss, including all future allowable expenses and work loss, in excess of the applicable limit. The excess becomes a claim against the person who caused the crash.
The Coverage Levels the Statute Actually Sets
MCL 500.3107c(1) sets four coverage levels, and a driver selects one when a policy is issued or renewed. They are a limit of $50,000 per individual per loss occurrence, $250,000, $500,000, or no limit at all.
The $50,000 level is not open to everyone. It is available only where the applicant or named insured is enrolled in Medicaid, and where their spouse and any resident relative has qualified health coverage, is enrolled in Medicaid, or carries their own no-fault PIP.
Whichever level is selected applies to the named insured, their spouse, and any relative of either domiciled in the same household, along with anyone else with a right to claim benefits under the policy. Where benefits are payable under two or more policies, subsection (6) caps them at an aggregate equal to the highest available limit under any one of those policies rather than adding them together.
Insurers carrying one of the capped tiers must also offer a rider providing attendant care above the applicable limit. That rider is the provision most relevant to a catastrophic injury, and whether it was offered and declined is worth establishing from the file rather than from memory.
Two further options sit outside that section, which is why the choice is often described as six options rather than four. A complete election not to maintain PIP is made under MCL 500.3107d, and a coordination exclusion runs through MCL 500.3109a(2). The distinction matters because the consequences of exhausting a tier and the consequences of electing out are not the same, as the next section shows. Our Michigan No-Fault Insurance Guide sets out how each option interacts with health insurance.
What the At-Fault Driver Still Owes
The excess claim under MCL 500.3135(3)(c) is the provision most worth understanding before a limit is chosen. Where a driver carries a $250,000 tier and a brain injury exhausts it, the allowable expenses and work loss above that figure remain recoverable from the at-fault driver, and the statute says so for future expenses as well as incurred ones.
The claim is broader still where a driver elected out under MCL 500.3107d, or where a MCL 500.3109a(2) exclusion applies. In those cases the statute allows recovery of allowable expenses without limit, rather than only the amount above a tier.
One offset applies. The party liable for damages is entitled to a reduction equal to the taxes that would have been payable on the income the injured person would have earned had they not been injured, so a work loss recovery is calculated on an after-tax basis.
Whether a tier was exhausted is a question the declarations page answers in about a minute, and we are glad to read one for you. We talk these questions through with you. Call us at (800) 525-6386.
The Opt-Out Carries a 30-Day Cliff
An election not to maintain PIP under MCL 500.3107d(1) is available to a qualified person whose spouse and resident relatives have qualified health coverage or their own no-fault PIP. The insurer must be given a document from the health coverage provider naming everyone covered.
Subsection (3)(e) is the part that catches people, and the form is required to disclose it in a conspicuous manner. Where the qualified health coverage ceases during the policy term, the person has 30 days after the termination takes effect to obtain PIP coverage. Missing that window excludes them from all personal protection benefits for the period the coverage was not maintained.
A job change, a plan termination, or a spouse’s coverage lapsing can start that clock without anyone connecting it to auto insurance. The exclusion is not a penalty a court weighs. It follows from the statute.
What Happens When No Valid Selection Was Made
The statute anticipates that the paperwork will sometimes be missing or defective, and the consequences favor the insured. MCL 500.3107c(2) requires the form to state the benefits and risks of each option conspicuously, to let the applicant mark that they read and understood the options, to allow the selection to be marked, and to be signed.
Where no effective selection was made but a premium or installment was paid, subsection (3) creates a rebuttable presumption that the amount paid accurately reflects the coverage level applicable to the policy. The presumption can be argued with, and the premium records are what it turns on.
Where no effective selection was made and that presumption does not apply, subsection (4) provides that subsection (1)(d) governs the policy. Subsection (1)(d) is the unlimited option. A defective or absent selection can therefore leave a policy with no PIP cap at all, which is the reverse of what an adjuster describing a capped tier will usually assume.
Coverage decisions made at renewal, often by phone and often to reduce a premium, are rarely remembered accurately years later. The declarations page and the signed selection form are the record, and obtaining both early is the difference between arguing about a limit and establishing one. At Neumann Law Group, we handle Michigan personal injury claims arising from motor vehicle collisions for drivers throughout the state.
Finding Out What a Policy Actually Covers
An exhausted PIP limit is the point where a no-fault claim becomes a claim against a person rather than an insurer, and the two are proved differently. At Neumann Law Group, we represent injured drivers and passengers from Traverse City, Grand Rapids, and Detroit. If you would like us to look at your situation, call (800) 525-6386 or contact us through our website.