Monday, February 23, 2015

Michigan No Fault System


The Michigan No Fault system must be investigated.  Charges have been made that insurance companies, in essence, treat their insureds as adversaries.  It wasn't supposed to be that way.

The Michigan No Fault was passed in the early 1970s.  At that time, insurance companies employed adjusters in local areas.  Adjusters were people who went to the accident scene, met with injured people and got their medical bills, wage loss, replacement service and rehabilitation bills paid.  Adjusters knew the geography and the kinds of people making the claim.  They often helped people with their claims.  They put injured people they insured in their "good hands" or act as "good neighbors."

The No Fault system was thought to be automatic.  Hurt in a motor vehicle accident?  The No Fault insurer paid.  There was an ethical question about whether an attorney could charge a contingent - a percentage - fee for helping a person with the person's No Fault claim.

Insurance companies stopped using local adjusters and began centralizing adjusting service.  Adjusters sit in a centralized office or at home and process files.  No longer do adjusters visit people.  It is a bureaucratic paper process requiring paperwork filed precisely in accordance with company requirements.  A slip up and payments are cut off.

A recent article in the Michigan Association of Justice magazine assails State Farm for using a policy that does not work to make sure State Farm's insured drivers are paid benefits they are entitled to but, instead, to make State Farm money.  The policy, if accurately described in the article, delays payments, for example, to pressure lower settlements.

Insurance companies use a couple of agencies to provide doctors, to examine injured people, and give opinions that claim there is no physical problem.  Anecdotal evidence indicates that insurance company doctors make findings against the injured person at least 90% of the time.


It is time that adjusting practices by insurance companies be vigorously investigated.  Do they treat insureds as "good neighbors" and keep them in "good hands" or do they treat insureds as adversaries?  Until the practices of No Fault companies are exposed to sunlight by investigation, people will need to seek lawyers for advice in a system originally thought to be automatic.

Richard Clark

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