When more than one automobile insurance policy exists in the family household, make sure you submit your no-fault claim to each auto insurer

A young man lived with his parents.  The young man was the titled owner of two motor vehicles.   One vehicle was a truck that he used exclusively for his personal farming business.  The truck was insured by Progressive under a commercial auto policy with the young man being listed as the named insured.  The other vehicle was a sedan that the young man used for personal needs.  That car, however, was insured under a policy purchased by the parents and issued by Citizens.  On the Citizens policy, the young man was listed as a driver.

The young man was driving his sedan and crashed, sustaining bodily injuries.  A claim was presented to Citizens, only, which began paying no-fault benefits.  Citizens learned about the Progressive policy and therefore, declared that Progressive was legally responsible to pay the young man's no-fault claims.  Progressive denied responsibility claiming that it did not insure the risk complained of but rather, only insured a loss that involved the farming truck.

The Michigan Court of Appeals agreed with Citizens.  The court reasoned that the plain language of the household priority provision under MCL 500.3114(1) trumped the employer provided vehicle priority provision under MCL 500.3114(3).   Sub-section one states that "When personal protection insurance benefits . . . are payable to or for the benefit of an injured person under his or her own policy and would also be payable under the policy of his or her spouse, relative, or relative's spouse, the injured person's insurer shall pay all of the benefits and is not entitled to recoupment from the other insurer."  (Emphasis in original).  Given this plain language, the court held that the Progressive policy applied, regardless of the contemplated risk it insured for the truck which was not involved.

What this means for injured persons:

Boiled down to its core, the court held that the auto policy followed the insured person.  Therefore, when more than one automobile insurance policy exists in the family household, make sure you submit your no-fault claim to each auto insurer.  Failure to do so could prove fatal to your claim under the written notice requirement under MCL 500.3145(1).  Thereafter, let the competing auto insurers sort out which company is ultimately liable to pay.

On that note, though, the no-fault law demands that the injured person (and medical service providers) be left out of any priority dispute; instead, one insurer must pay benefits and then seek recoupment from the other insurer, just like Citizens did in this case.   If, however, the disputing auto insurers refuse to take responsibility, then the injured person (and medical service providers) should immediately file a lawsuit which will allow them to recover not only the no-fault benefits owed, but also no-fault interest at 12% under MCL 500.3142(3) and  no-fault attorney fees under MCL 500.3148(1).  In this regard, the Michigan Court of Appeals stated clearly in Regents of U of M v State Farm Mut Auto Ins Co, 250 Mich App 719 (2002), at page 738:

“A claimant who is clearly entitled to no-fault benefits should not be forced to hire an attorney merely because the circumstances of his accident create problems of priority among insurers.  Because the only dispute concerned Estes’ domicile, and because there is no dispute that Estes was entitled to no-fault benefits, the trial court’s finding that defendants acted unreasonably was not clearly erroneous.  We find no error in the award of attorney fees to plaintiffs.”

What this means for medical service providers:

At intake, make sure you identify every possible auto insurer within the injured person's household.  Then, submit your claim to each auto insurer, demanding payment within 30 days as required under MCL 500.3142(2).  Failure to notify all potentially liable auto insurers written notice of your claim will prove fatal under MCL 500.3145(1).  Do not rely upon your patient to submit his/her claim and assume you were included.  Some patients refuse to cooperate, fearing that their auto insurance rates will increase if they submit a claim.  While this is a poor and ill advised position to take, the fact is is that happens frequently.  Therefore, medical providers must be proactive and submit their own claims directly.

You can read this Opinion here.

Authored by L. Page Graves.