Michigan No-Fault Reform Bills & Assigned Claims Plan Legal Update

Recent action taken by the Director of the Department of Insurance and Financial Services (DIFS) Anita Fox has sought to provide some level of clarity as to the effect dates of certain provisions enacted in Public Acts 21 and 22, otherwise known as the No-Fault Reform bills. On September 20, 2019, DIFS released Order 19-048-M, a link will be provided below, which clarified when the new Order of Priorities would go into effect. This Order reminds insurance carriers writing policies in the State of Michigan that any insurance form issued in the state must be first approved by DIFS pursuant to MCL 500.2236(1). Accordingly, since no insurer is known to have submitted new policy language for approval to DIFS since June 11, 2019 when the new statute was enacted, every current policy in effect must provide coverage under the rules established in the pre-June 11, 2019 statute, including the Order of Priority found in MCL 500.3114 and MCL 500.3115. Additionally, the Order specifically prevents an insurer from relying on any contractual “conformity to law clause” as a means to avoid responsibility for a claim.

The second Opinion, 19-049-M, a link will be provided below, released by DIFS came out on September 24, 2019. It pertains to the Michigan Automobile Insurance Placement Facility (MAIPF) and the Michigan Assigned Claims Plan (MACP). Public Acts 21 and 22 imposed a $250,000 cap on allowable expenses available through the MACP. The statute was silent on a specific date for this cap to be effective. Accordingly, there was reason to believe that this limit would have immediate effect for any accidents occurring after June 11, 2019. This Order makes it clear that the limit does not go into effect until July 2, 2020. The reasoning used in the Opinion was that since the newly created MCL 500.3172(7) regarding the Assigned Claims Plan does not go into effect until July 2, 2020, the entire subdivision should not be effective until then, including the cap. Secondly, the at-fault driver would be relying on pre-July 1, 2020 residual bodily injury limits which did not contemplate the risk of liability for allowable expenses in excess of the cap.