6.1 Michigan No-Fault Auto Insurance: PIP Benefits, Priority, MCCA & MACP

Michigan No-Fault Auto Insurance: PIP Benefits, Priority, MCCA & MACP

Quick Answer: Michigan's No-Fault Automobile Insurance Act (MCL 500.3101 et seq.) requires the owner or registrant of every motor vehicle (having more than two wheels) required to be registered in Michigan—or operated in Michigan by a nonresident for an aggregate of more than 30 days in any calendar year—to maintain three mandatory coverages: (1) Personal Protection Insurance (PIP), (2) Property Protection Insurance (PPI), and (3) Residual Liability Insurance (BI/PD). Post-2020 reform sets the default Residual Bodily Injury limit at $250,000 per person / $500,000 per accident, with a written choice floor of $50,000 / $100,000 (plus $10,000 out-of-state PD), and allows five PIP medical benefit levels ranging from Unlimited down to a Medicare Parts A & B Opt-Out.

Automobile insurance accounts for 15% to 17% of the Michigan Claims Adjuster examination. Because Michigan operates the nation's most distinctive statutory No-Fault system—substantially modernized by Public Acts 21 and 22 of 2019 (fully effective July 2, 2020)—adjusters must know the exact statutory thresholds, medical choice rules, wage loss caps, and priority hierarchies codified in Chapter 31 of the Michigan Insurance Code (MCL 500.3101–500.3179) and the Michigan Vehicle Code Financial Responsibility Act (MCL 257.501–257.532).

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Compulsory No-Fault Security & Motor Vehicle Definition (MCL 500.3101–.3102)

Under MCL 500.3101(1), the owner or registrant of a motor vehicle required to be registered in Michigan shall maintain security for payment of benefits under Personal Protection Insurance (PIP), Property Protection Insurance (PPI), and Residual Liability Insurance. Security is only required to be in effect during the period the motor vehicle is driven or moved on a highway.

What Is (and Is Not) a "Motor Vehicle" Under MCL 500.3101?

For purposes of the Michigan No-Fault Act, a "motor vehicle" is defined as a vehicle, including a trailer, that is operated or designed for operation on a public highway by power other than muscular power and that has more than 2 wheels (MCL 500.3101(3)(i)). A motor vehicle expressly does NOT include:

• A motorcycle or moped (two-wheeled vehicles are excluded from the definition of a motor vehicle, although motorcycle owners must carry third-party motorcycle liability insurance under MCL 500.3103);
• A farm tractor or other implement of husbandry that is not constructively designed for highway transport;
• An off-road vehicle (ORV), golf cart, power-driven mobility device, commercial quadricycle, or electric bicycle.

Nonresident 30-Day Rule & Penalties for Operating Uninsured (MCL 500.3102)

• Nonresident Security Requirement (MCL 500.3102(1)): A nonresident owner or registrant of a motor vehicle or motorcycle not registered in Michigan shall not operate or permit the vehicle to be operated in Michigan for an aggregate of more than 30 days in any calendar year unless they continuously maintain Michigan No-Fault security.
• Criminal Misdemeanor Penalty (MCL 500.3102(2)): An owner or registrant who operates (or permits the operation of) an uninsured motor vehicle or motorcycle on a public highway in Michigan—or any other person who operates it knowing that compulsory security is not in effect—is guilty of a misdemeanor punishable by a fine of $200 to $500, imprisonment for not more than 1 year, or both. In addition, an uninsured owner is completely barred from receiving PIP benefits (MCL 500.3113(b)), completely barred from suing for pain and suffering or Mini-Tort damages (MCL 500.3135), and personally liable to reimburse the Michigan Assigned Claims Plan (MCL 500.3177) for any benefits paid out because of the uninsured vehicle.

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Residual Bodily Injury & Property Damage Liability Limits (MCL 500.3009 & MCL 257.520)

The third mandatory pillar of a Michigan No-Fault policy is Residual Liability Insurance, which protects the insured against third-party tort claims that survive Michigan's No-Fault tort threshold (such as serious bodily injury claims, excess economic loss claims, out-of-state accidents, and up to $3,000 in Michigan Mini-Tort claims if Mini-Tort liability coverage is endorsed).

Why Is Residual Property Damage Only $10,000?

Inside the State of Michigan, accidental damage to stationary tangible property and legally parked cars is covered up to $1,000,000 by mandatory Property Protection Insurance (PPI), while damage to moving cars is governed by each driver's own Collision coverage and the $3,000 Mini-Tort. Consequently, Residual Property Damage Liability ($10,000 minimum under MCL 500.3009(1)) primarily pays for property damage caused by the insured while driving outside the State of Michigan.

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Personal Protection Insurance (PIP): The Five Medical Choice Tiers (MCL 500.3107c–.3107d)

Under MCL 500.3107(1)(a), PIP Allowable Expenses consist of reasonable charges incurred for reasonably necessary products, services, and accommodations for an injured person's care, recovery, or rehabilitation (medical treatment, surgery, hospital stays, physical therapy, prosthetic devices, home/vehicle modifications, and rehabilitative occupational training). Before July 2, 2020, every Michigan auto policy carried mandatory Unlimited lifetime PIP medical benefits. Under MCL 500.3107c and MCL 500.3107d, applicants may now select from five PIP medical coverage levels:

Definition of "Qualified Health Coverage" (MCL 500.3107d(7)(b))

To qualify for the $50,000 Medicaid tier, the $0 Medicare Opt-Out, or the $250,000 tier with household member exclusions (MCL 500.3109a(2)), "qualified health coverage" means either:

1. Other health or accident coverage (such as an employer group health plan) to which both of the following apply:
   • The coverage does NOT exclude or limit coverage for injuries related to motor vehicle accidents; AND
   • Any annual deductible is no more than the DIFS-adjusted limit per individual—a $6,000 statutory base that DIFS set at $6,579 for July 1, 2026–June 30, 2027 (Bulletin 2026-08-INS).
2. Coverage under both Medicare Parts A and B.

30-Day Grace Period Rule for Loss of Qualified Health Coverage (MCL 500.3107d(6)): If a person who opted out of PIP medical benefits (or was excluded under MCL 500.3109a(2)) loses their qualified health coverage, the named insured must obtain PIP medical coverage within 30 days after that coverage ends. If the person is injured during that 30-day window and no other policy applies, the person may claim PIP medical benefits through the Michigan Assigned Claims Plan (MACP) up to a special $2,000,000 limit (MCL 500.3172(7)(b)). If coverage is not obtained within 30 days, the person is excluded from PIP medical benefits for the period in which coverage was not maintained.

Attendant Care 56-Hour Weekly Cap & Medicare Fee Schedule (MCL 500.3157)

• 56-Hour Weekly Cap on Family/Household Attendant Care (MCL 500.3157(10)): For in-home attendant care rendered in the injured person's home, an insurer is only required to pay benefits for up to 56 hours per week if the attendant care is provided directly, or indirectly through another person, by any of the following:
  1. An individual who is related to the injured person;
  2. An individual who is domiciled in the household of the injured person; or
  3. An individual with whom the injured person had a business or social relationship before the injury. (Note: Insurers may voluntarily contract to pay for more than 56 hours per week, and commercial nursing agencies using unrelated staff are not subject to the 56-hour familial cap.)
• PIP Medical Fee Schedule (MCL 500.3157(2)–(8)): Reimbursements to physicians, hospitals, clinics, and rehabilitation providers for treatment of motor vehicle injuries are capped at statutory percentages of the amount payable under Medicare (stepped down from 200% to 190% of Medicare for standard providers for treatment after July 1, 2023; 220% for providers with 20%–30% indigent volume and freestanding rehabilitation facilities; 250% for providers with 30% or more indigent volume; 230% for Level I or Level II trauma centers treating an emergency before the patient is stabilized; and, when Medicare provides no rate, a percentage of the provider's January 1, 2019 charge description master—52.5% for standard providers).

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PIP Work Loss, Replacement Services, Funeral & Survivors' Loss (MCL 500.3107–.3108)

Regardless of which PIP medical limit an insured selects (even under a $0 PIP medical opt-out), a Michigan No-Fault policy continues to provide statutory Work Loss, Replacement Services, Funeral/Burial, and Survivors' Loss benefits:

Coordinator of Benefits & Statutory Setoffs (MCL 500.3109 & 500.3109a)

• Mandatory Government Benefit Setoff (MCL 500.3109(1)): Benefits provided or required to be provided under the laws of any state or the federal government—such as Workers' Compensation, Social Security Disability (SSDI), or Social Security Survivor Benefits—shall be subtracted from the PIP benefits otherwise payable for the injury by the No-Fault insurer.
• Optional Coordination of Benefits (COB — MCL 500.3109a): An insured who carries private health or disability insurance may elect Coordinated PIP in exchange for a reduced auto premium. Under Coordinated PIP, the insured's health insurer is primary and the Michigan No-Fault auto insurer is excess (paying deductibles, copays, and non-covered services). Under Uncoordinated (Full) PIP, the auto insurer pays first.

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PIP Order of Priority (MCL 500.3114–.3115) & Statutory Exclusions (MCL 500.3113)

General Rule: PIP Follows the Person/Household, NOT the Vehicle (MCL 500.3114(1))

In most states, auto medical coverage follows the car. In Michigan, Personal Protection Insurance follows the injured person and their household first. Under MCL 500.3114(1), a personal protection insurance policy applies to accidental bodily injury to:

1. The person named in the policy (Named Insured);
2. The person's spouse; and
3. A relative of either domiciled in the same household.

Even if you are riding as a passenger in a friend's car or struck as a pedestrian while crossing the street, you claim PIP benefits from your own Michigan auto insurer (or your resident spouse's or resident relative's Michigan auto insurer)—NOT from the insurer of the car you were riding in or the car that hit you!

The Four Major Priority Exceptions to Memorize

1. Employer-Furnished Vehicle Exception (MCL 500.3114(3)): An employee, their spouse, or a relative of either domiciled in the same household who suffers accidental bodily injury while an occupant of a motor vehicle owned or registered by the employer shall receive PIP benefits from the insurer of the furnished employer vehicle (this overrides the employee's personal household policy!).
2. Commercial Passenger Vehicle Exception (MCL 500.3114(2)): A person suffering accidental bodily injury while an operator or passenger of a motor vehicle operated in the business of transporting passengers must claim PIP from the insurer of that passenger vehicle—EXCEPT passengers riding in a school bus, certified bus, charter bus, taxicab, or government/nonprofit transit bus who have their own or a household No-Fault policy (those passengers claim from their own household policy first).
3. Occupants & Non-Occupants With No Household Policy (MCL 500.3114(4) & MCL 500.3115): Under the 2019 No-Fault reform, if an injured passenger (occupant of a motor vehicle) OR an injured pedestrian / bicyclist (non-occupant of a motor vehicle) does not have a No-Fault policy of their own, through a spouse, or through a resident relative, they do not claim against the vehicle owner's insurer. Instead, they must claim PIP benefits through the Michigan Assigned Claims Plan (MACP), where PIP medical benefits are capped at $250,000 (MCL 500.3172(7)(a)).
4. Motorcyclists Involved in a Motor Vehicle Accident (MCL 500.3114(5)): Because a motorcycle is not a "motor vehicle," a motorcyclist injured in a crash that involves a motor vehicle claims No-Fault PIP benefits in a unique 5-step statutory priority order that starts with the motor vehicle involved:
   • 1st Priority: The insurer of the owner or registrant of the motor vehicle involved in the accident;
   • 2nd Priority: The insurer of the operator of the motor vehicle involved in the accident;
   • 3rd Priority: The motor vehicle insurer of the operator of the motorcycle involved in the accident;
   • 4th Priority: The motor vehicle insurer of the owner or registrant of the motorcycle involved in the accident;
   • 5th Priority: The Michigan Assigned Claims Plan (MACP) (capped at $250,000 PIP medical).

Persons Statutorily Disqualified from PIP Benefits (MCL 500.3113)

Under MCL 500.3113, a person is not entitled to be paid Personal Protection Insurance benefits for accidental bodily injury if at the time of the accident any of the following applied:

• Unlawfully Taken Vehicle (Joyriding/Theft — MCL 500.3113(a)): The person was willingly operating or using a motor vehicle or motorcycle that was taken unlawfully, and the person knew or should have known that the motor vehicle or motorcycle was taken unlawfully.
• Uninsured Owner/Registrant of an Involved Vehicle (MCL 500.3113(b)): The person was the owner or registrant of a motor vehicle or motorcycle involved in the accident with respect to which the compulsory security required by MCL 500.3101 or 500.3103 was not in effect. (Note: Under MCL 500.3101(3)(l), "owner" includes not only the titleholder, but also any person renting a motor vehicle or having the use of a motor vehicle under a lease or otherwise for a period that is greater than 30 days!)
• Uninsured Out-of-State Nonresident (MCL 500.3113(c)): The person was not a resident of Michigan, was an occupant of a motor vehicle or motorcycle not registered in Michigan, and the motor vehicle or motorcycle was not insured by an insurer that has filed a certification under MCL 500.3163.
• Named Excluded Operator or Opt-Out Exclusion (MCL 500.3113(d)–(e)): The person was operating a motor vehicle or motorcycle as to which they were named as an excluded operator under MCL 500.3009(2), or was excluded from PIP medical benefits under an opt-out election.

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MCCA (MCL 500.3104) & MAIPF / MACP (MCL 500.3301–.3390)

• Michigan Catastrophic Claims Association (MCCA — MCL 500.3104): The MCCA is an unincorporated, nonprofit statutory association created in 1978. Every insurer authorized to write municipal or private passenger/commercial motor vehicle liability insurance in Michigan is required to be a member of the MCCA as a condition of doing business in the state. The MCCA operates as a reinsurer: it indemnifies member insurers for 100% of ultimate loss sustained under Unlimited PIP medical policies in excess of the statutory retention threshold—which is $675,000 per occurrence for policies effective July 1, 2025 through June 30, 2027. The primary insurer adjusts the claim directly with the injured claimant, pays all medical bills, and receives reimbursement from the MCCA once cumulative allowable expense payments surpass $675,000.
• Michigan Automobile Insurance Placement Facility (MAIPF — MCL 500.3301–.3390): The MAIPF is Michigan's residual market facility that guarantees automobile insurance availability to any "qualified applicant" (an owner or registrant of an automobile registered in Michigan, or a holder of a valid driver's license, who cannot obtain coverage through ordinary methods—excluding, for example, a person whose license is suspended or revoked, or whose auto policy was cancelled for nonpayment within the preceding 2 years unless the premium installment is paid in full; MCL 500.3301, .3303). Every Michigan auto insurer must participate in the MAIPF. The MAIPF also administers the Michigan Assigned Claims Plan (MACP — MCL 500.3171–.3177), which serves as the PIP payer of last resort (generally capped at $250,000 in PIP medical benefits) when no applicable No-Fault policy exists or when priority is in dispute between two or more insurers.