May 28, 2022

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Should I cancel No Fault insurance if I move out of Michigan? | Michigan Auto Law

Michigan auto No Fault insurance is expensive. If you’re planning on moving out of Michigan and becoming a resident of another state, you’re probably looking forward to insuring your car in your new state and cancelling your auto No Fault insurance in Michigan.

However, you should refrain from cancelling your No-Fault coverage until you have wrapped up all of your Michigan-related affairs to the point that you will no longer be driving regularly in Michigan.

Otherwise you might end up like car accident victim Gordie Russ. He was in between moving out of Michigan to Phoenix, Arizona, at the time of his car crash, but he was frequently still driving in Michigan for work and to see his girlfriend.

In Russ v. Michigan Assigned Claims Facility, the Michigan Court of Appeals ruled Russ “was not entitled” to receive No Fault PIP benefits for his accident-related injuries because:

Even though Russ had registered his car in Michigan and had an Arizona GEICO auto insurance policy, he “failed to maintain PIP insurance required by the no-fault act” and the “GEICO policy did not cover PIP benefits.”

No valid No Fault policy means big trouble if you’re hurt in a car accident

Crucial to the court’s decision was Russ’s use of his vehicle in Michigan:

“[H]e drove or moved it on Michigan streets or highways. Russ bought his vehicle in August 2013. As of the date of the accident, Russ worked three jobs in Michigan and stayed at one of two homes in Michigan. Additionally, he drove his vehicle to a home in Michigan just before the accident.”

That meant Russ had to register his car, which he had done.

But it also meant Russ should have gotten a valid No-Fault policy on the vehicle — which he hadn’t done. Under Michigan’s No Fault Law, the “owner or registrant of a motor vehicle required to be registered in this state shall maintain security for payment of benefits under personal protection insurance, property protection insurance, and residual liability insurance …,” i.e., No-Fault PIP benefits. (MCL 500.3101(1))

People who complain about Michigan’s auto insurance costs have no idea how important it is for people who are seriously injured to be able to rely on No-Fault benefits to cover and pay for necessary medical treatment and attendant care — compared to pure tort states, where a crash victim is completely dependent on the bodily injury insurance policy limits of the wrongdoer.

Know the insurance, regulation rules before moving out of Michigan

These insurance and registration rules are tricky and, to make matters worse, too few people know about them.

Unfortunately, as can be seen in the Russ case, failure to comply with the rules — especially the No Fault auto insurance requirement — can transform a driver into an “uninsured” driver and, thus, subject him or her to very severe, costly and harmful consequences, such as being disqualified from collecting No-Fault benefits to cover medical injury costs , and even to sue the driver who caused the crash for injuries and pain and suffering compensation. It can also lead to criminal charges and license suspension.

Drivers moving out of Michigan should still maintain No Fault auto insurance for as long as they are still driving or moving a car on Michigan highways and streets.

Make sure you’ve got all of your Michigan-related affairs wrapped up and put away before you cancel your No Fault car insurance.