Understanding Michigan's No-Fault Insurance: What You Need to Know

Michigan has one of the most unique auto insurance systems in the United States. Understanding how Michigan's no-fault insurance works — and how professional investigations factor into claims — is essential for anyone involved in an auto accident case in the state.

What Is Michigan's No-Fault Insurance System?

Michigan's no-fault auto insurance law, originally enacted in 1973 and significantly reformed in 2019, requires every vehicle owner to carry no-fault insurance coverage. Under this system:

Each driver's own insurance company pays for their medical expenses and lost wages, regardless of who caused the accident

Personal Injury Protection (PIP) benefits cover medical expenses, wage loss, replacement services, and mileage for medical treatment

Drivers are generally restricted from suing the at-fault driver unless specific injury thresholds are met

This system was designed to provide quick, guaranteed benefits to accident victims while reducing litigation. However, it has also created unique challenges — and opportunities — for investigations.

The 2019 Reform: What Changed

In June 2019, Michigan enacted significant reforms to the no-fault system that changed the landscape:

PIP Coverage Options

Before the reform, Michigan required unlimited lifetime PIP medical benefits — the most generous in the nation. The 2019 reform now allows drivers to choose from several coverage levels:

Unlimited coverage — The traditional full coverage

$500,000 coverage — Covers up to $500,000 in medical expenses

$250,000 coverage — Available to those with qualifying health insurance

$50,000 coverage — Available to Medicaid recipients

Opt-out — Available to those with Medicare

Fee Schedule Implementation

The reform also imposed a fee schedule that caps the amount medical providers can charge for treating no-fault patients. This has led to reduced reimbursement rates and, in some cases, disputes about the reasonableness of medical charges.

Impact on Investigations

These reforms have made investigations more important than ever. With limited coverage amounts, insurance companies need to ensure benefits are being used appropriately. And with ongoing disputes about medical billing and treatment, investigations help verify the legitimacy and necessity of claims.

How Investigations Factor Into No-Fault Claims

Personal Injury Protection (PIP) Investigations

PIP claims are the most common type of no-fault investigation in Michigan. Investigators are called upon to:

Verify the claimant's injuries are consistent with the accident

Conduct surveillance to determine if claimed disabilities match actual activity levels

Investigate treatment providers for patterns of over-billing or unnecessary treatment

Document claimant activities that may contradict reported limitations

Research prior claims history to identify potential patterns of fraud

Mini-Tort Investigations

Michigan's no-fault system includes a mini-tort provision that allows limited recovery from the at-fault driver for vehicle damage up to $3,000. Investigations may be needed to:

Determine fault in disputed accidents

Document pre-existing vehicle damage

Verify the extent of claimed damage

Third-Party Liability Claims

While no-fault insurance handles basic economic damages, injured parties can pursue third-party claims against the at-fault driver if they meet Michigan's serious injury threshold. This threshold requires proof of:

Death

Serious impairment of body function

Permanent serious disfigurement

Investigations are critical in third-party claims because the burden of proof for meeting the threshold is high. A PI can gather evidence to support or challenge whether the threshold has been met.

The Role of Surveillance in No-Fault Cases

Surveillance is the single most impactful investigation tool in Michigan no-fault cases. Here's why:

Verifying Claimed Disabilities

When a claimant reports that they cannot work, perform household tasks, or engage in normal activities due to their injuries, surveillance can reveal whether these claims are accurate. Common findings include:

Claimants performing physical activities inconsistent with reported injuries

Engaging in recreational activities while claiming inability to work

Traveling and attending events while reporting homebound status

Documenting Recovery Timelines

Surveillance conducted over time can document a claimant's recovery trajectory. This information helps insurance adjusters and attorneys assess whether ongoing treatment and benefits are still warranted.

Supporting IME Findings

Independent Medical Examinations (IMEs) are frequently used in Michigan no-fault cases. Surveillance evidence that supports or contradicts IME findings provides powerful corroboration that strengthens the insurer's or claimant's position.

Insurance Fraud in Michigan's No-Fault System

Michigan's generous no-fault benefits have unfortunately attracted significant fraud. Common schemes include:

Staged accidents — Intentional collisions designed to generate false claims

Paper mills — Clinics that bill for treatments never provided

Runner schemes — Individuals who recruit accident victims for fraudulent treatment providers

Phantom passengers — People who weren't in the vehicle but file PIP claims

The Michigan Automobile Insurance Fraud Coalition estimates that insurance fraud costs Michigan drivers over $1 billion annually, contributing to the state's historically high insurance premiums.

Professional investigations help combat this fraud through surveillance, background research, and detailed evidence gathering that exposes fraudulent claims.

What Attorneys Need to Know

If you're a Michigan attorney handling no-fault cases, here's how a private investigator can support your practice:

For Plaintiff Attorneys

Document your client's limitations to support their claim for benefits

Investigate the accident scene to establish fault for third-party claims

Locate witnesses who can testify about the accident and your client's condition

Research the at-fault driver's history for evidence of negligence

For Defense Attorneys

Conduct surveillance to verify or challenge the claimant's reported injuries

Investigate treatment providers for fraud indicators

Research the claimant's background for prior claims or credibility issues

Document activity levels that contradict claimed disabilities

Working With Priority Investigation on No-Fault Cases

At Priority Investigation, we have extensive experience with Michigan no-fault insurance cases. Since 2009, we have worked with insurers, attorneys, and self-insured entities throughout Michigan on:

PIP claim investigations

Third-party liability investigations

Surveillance operations

Provider fraud investigations

IME coordination support

Our investigators understand the nuances of Michigan's no-fault system and produce evidence that meets the standards required for Michigan insurance proceedings and courts.