Michigan Court of Appeals Mandates Strict Compliance for PIP Opt-Outs, Reinstating Unlimited Coverage

The Michigan Court of Appeals has clarified critical aspects of the state's no-fault auto insurance system, holding that an ineffective election to opt out of Personal Injury Protection (PIP) medical coverage results in a policy providing unlimited benefits. This ruling reverses a trial court's swift legal judgment, underscoring the necessity of strict compliance with statutory requirements.

Personal Injury Protection (PIP) medical coverage pays for medical expenses following an automobile accident, regardless of who caused the crash. Under Michigan law (MCL 500.3107d), policyholders can opt out of this coverage if they meet specific criteria. However, the Court of Appeals stated that all criteria outlined in MCL 500.3107d must be met for an opt-out to be effective. If not all criteria are met, the policy provides unlimited PIP medical benefits.

The court further detailed five specific criteria for a valid PIP medical coverage opt-out under MCL 500.3107d. First, the automobile insurance policy must have been issued or renewed after July 1, 2020. Second, the named insured must qualify as a “qualified person,” meaning they possess health coverage under both Medicare Parts A and B. Third, the named insured's spouse and all resident relatives must hold qualified health coverage or be covered under another auto policy that includes PIP medical coverage. Fourth, the election to opt out must be made on an approved form. Fifth, the policyholder must provide the insurer with evidence of qualified health coverage for all persons required to have it.

This decision carries significant implications for Michigan's no-fault insurance landscape. It places a clear obligation on insurers to meticulously verify that all five statutory requirements are satisfied when processing a PIP medical opt-out request. For policyholders, the ruling highlights the importance of understanding and fulfilling every condition to ensure their coverage choices are legally sound. Future cases may further define "qualified health coverage" and the specifics of providing evidence.