April 23, 2013, Introduced by Senators SMITH and HUNE and referred to the Committee on Insurance.
A bill to amend 1956 PA 218, entitled
"The insurance code of 1956,"
by amending sections 102, 3101, 3104, 3113, 3114, 3115, 3135, 3301,
and 3310 (MCL 500.102, 500.3101, 500.3104, 500.3113, 500.3114,
500.3115, 500.3135, 500.3301, and 500.3310), section 102 as amended
by 2000 PA 252, section 3101 as amended by 2008 PA 241, section
3104 as amended by 2002 PA 662, section 3113 as amended by 1986 PA
93, section 3114 as amended by 2002 PA 38, section 3135 as amended
by 2012 PA 158, and section 3310 as amended by 2001 PA 228, and by
adding chapter 32A.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 102. As used in this act:
(a)
(1) "Commissioner" as used in this act means
the
commissioner
of the office of financial and insurance
services.director.
(b) (2)
"Department" as used
in this act means the office
department
of insurance and financial and
insurance services.
(c) "Director" means the director of the department.
Sec.
3101. (1) The Subject to
chapter 32A, 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. Security shall only be required by
this subsection is only required to be in effect during the period
the
motor vehicle is driven or moved upon on a highway.
Notwithstanding any other provision in this act, an insurer that
has issued an automobile insurance policy on a motor vehicle that
is
not driven or moved upon on
a highway may allow the insured
owner or registrant of the motor vehicle to delete a portion of the
coverages under the policy and maintain the comprehensive coverage
portion of the policy in effect.
(2) As used in this chapter:
(a) "Automobile insurance" means that term as defined in
section 2102.
(b) "Highway" means that term as defined in section 20 of the
Michigan vehicle code, 1949 PA 300, MCL 257.20.
(c)
"Motorcycle" means a vehicle having that has a
saddle or
seat for the use of the rider, is designed to travel on not more
than
3 wheels in contact with the ground, which and is
equipped
with a motor that exceeds 50 cubic centimeters piston displacement.
The
For purposes of this
subdivision, the wheels on any
attachment
to
the vehicle shall not be considered as are not wheels in contact
with the ground. Motorcycle does not include a moped, as defined in
section
32b of the Michigan vehicle code, 1949 PA 300, MCL 257.32b.
Motorcycle
does not include or an ORV.
(d)
"Motorcycle accident" means a loss involving that involves
the ownership, operation, maintenance, or use of a motorcycle as a
motorcycle,
but does not involving involve the ownership,
operation, maintenance, or use of a motor vehicle as a motor
vehicle.
(e) "Motor vehicle" means a vehicle, including a trailer, that
is
operated or designed for operation upon
on a public highway by
power
other than muscular power which and
that has more than 2
wheels.
Motor vehicle does not include a any of the following:
(i) A motorcycle. or
a
(ii) A moped, as defined in section 32b of the Michigan vehicle
code,
1949 PA 300, MCL 257.32b. Motor vehicle does not include a
(iii) A farm
tractor or other implement of husbandry which that
is not subject to the registration requirements of the Michigan
vehicle
code pursuant to under section 216 of the Michigan vehicle
code,
1949 PA 300, MCL 257.216. Motor vehicle does not include an
(iv) An ORV.
(f)
"Motor vehicle accident" means a loss involving that
involves the ownership, operation, maintenance, or use of a motor
vehicle as a motor vehicle, regardless of whether the accident also
involves the ownership, operation, maintenance, or use of a
motorcycle as a motorcycle.
(g) "ORV" means a motor-driven recreation vehicle designed for
off-road use and capable of cross-country travel without benefit of
road or trail, on or immediately over land, snow, ice, marsh,
swampland, or other natural terrain. ORV includes, but is not
limited to, a multitrack or multiwheel drive vehicle, a motorcycle
or related 2-wheel, 3-wheel, or 4-wheel vehicle, an amphibious
machine, a ground effect air cushion vehicle, an ATV as defined in
section 81101 of the natural resources and environmental protection
act, 1994 PA 451, MCL 324.81101, or other means of transportation
deriving
that derives motive power from a source other than muscle
or wind. ORV does not include a vehicle described in this
subdivision
that is registered for use upon on
a public highway and
has
the security described in this section, 3101 or section 3103,
or chapter 32A in effect.
(h) "Owner" means any of the following:
(i) A person who is renting or has the use of a motor vehicle,
or
having the use thereof, under a
lease or otherwise, for a period
that is greater than 30 days.
(ii) A person who holds the legal title to a vehicle, other
than a person engaged in the business of leasing motor vehicles who
is
the lessor of a motor vehicle pursuant to under a lease
providing
that provides for the use of the motor vehicle by the
lessee for a period that is greater than 30 days.
(iii) A person who has the immediate right of possession of a
motor vehicle under an installment sale contract.
(i) "Registrant" does not include a person engaged in the
business of leasing motor vehicles who is the lessor of a motor
vehicle
pursuant to under a lease providing that provides for the
use of the motor vehicle by the lessee for a period that is greater
than 30 days.
(3) Security required by subsection (1) may be provided under
a
policy issued by an insurer duly authorized to transact business
in
this state which that affords insurance for the payment of
benefits described in subsection (1). A policy of insurance
represented or sold as providing the security required by
subsection (1) is considered to provide insurance for the payment
of the benefits.
(4) Security required by subsection (1) may be provided by any
other method approved by the secretary of state as affording
security equivalent to that afforded by a policy of insurance, if
proof of the security is filed and continuously maintained with the
secretary of state throughout the period the motor vehicle is
driven
or moved upon on a highway. The person filing who files the
security has all the obligations and rights of an insurer under
this
chapter. When If the context permits, "insurer", as
used in
this
chapter, includes any person filing who files the security as
provided
in this section.subsection.
This subsection does not apply
to a policy under chapter 32A.
Sec.
3104. (1) An The
catastrophic claims association is
created
as an unincorporated, nonprofit
association. to be known as
the
catastrophic claims association, hereinafter referred to as the
association,
is created. Each insurer engaged in
writing insurance
coverages that provide the security required by section 3101(1)
within this state, as a condition of its authority to transact
insurance in this state, shall be a member of the association and
shall
be is bound by the plan of operation of the association.
Each
insurer engaged in writing insurance coverages that provide the
security required by section 3103(1) within this state, as a
condition of its authority to transact insurance in this state,
shall be considered a member of the association, but only for
purposes of premiums under subsection (7)(d). Except as expressly
provided in this section, the association is not subject to any
laws of this state with respect to insurers, but in all other
respects the association is subject to the laws of this state to
the extent that the association would be if it were an insurer
organized and subsisting under chapter 50.
(2) The association shall provide and each member shall accept
indemnification for 100% of the amount of ultimate loss sustained
under personal protection insurance coverages under this chapter in
excess of the following amounts in each loss occurrence:
(a) For a motor vehicle accident policy issued or renewed
before July 1, 2002, $250,000.00.
(b) For a motor vehicle accident policy issued or renewed
during the period July 1, 2002 to June 30, 2003, $300,000.00.
(c) For a motor vehicle accident policy issued or renewed
during the period July 1, 2003 to June 30, 2004, $325,000.00.
(d) For a motor vehicle accident policy issued or renewed
during the period July 1, 2004 to June 30, 2005, $350,000.00.
(e) For a motor vehicle accident policy issued or renewed
during the period July 1, 2005 to June 30, 2006, $375,000.00.
(f) For a motor vehicle accident policy issued or renewed
during the period July 1, 2006 to June 30, 2007, $400,000.00.
(g) For a motor vehicle accident policy issued or renewed
during the period July 1, 2007 to June 30, 2008, $420,000.00.
(h) For a motor vehicle accident policy issued or renewed
during the period July 1, 2008 to June 30, 2009, $440,000.00.
(i) For a motor vehicle accident policy issued or renewed
during the period July 1, 2009 to June 30, 2010, $460,000.00.
(j) For a motor vehicle accident policy issued or renewed
during the period July 1, 2010 to June 30, 2011, $480,000.00.
(k) For a motor vehicle accident policy issued or renewed
during the period July 1, 2011 to June 30, 2013, $500,000.00.
Beginning July 1, 2013, this $500,000.00 amount shall be increased
biennially on July 1 of each odd-numbered year, for policies issued
or renewed before July 1 of the following odd-numbered year, by the
lesser of 6% or the consumer price index, and rounded to the
nearest $5,000.00. This biennial adjustment shall be calculated by
the association by January 1 of the year of its July 1 effective
date.
(3) An insurer may withdraw from the association only upon
ceasing to write insurance that provides the security required by
section 3101(1) in this state.
(4) An insurer whose membership in the association has been
terminated by withdrawal shall continue to be bound by the plan of
operation, and upon withdrawal, all unpaid premiums that have been
charged to the withdrawing member are payable as of the effective
date of the withdrawal.
(5) An unsatisfied net liability to the association of an
insolvent member shall be assumed by and apportioned among the
remaining members of the association as provided in the plan of
operation. The association has all rights allowed by law on behalf
of the remaining members against the estate or funds of the
insolvent
member for sums money due the association.
(6) If a member has been merged or consolidated into another
insurer or another insurer has reinsured a member's entire business
that provides the security required by section 3101(1) in this
state, the member and successors in interest of the member remain
liable for the member's obligations.
(7) The association shall do all of the following on behalf of
the members of the association:
(a) Assume 100% of all liability as provided in subsection
(2).
(b) Establish procedures by which members shall promptly
report to the association each claim that, on the basis of the
injuries or damages sustained, may reasonably be anticipated to
involve the association if the member is ultimately held legally
liable for the injuries or damages. Solely for the purpose of
reporting claims, the member shall in all instances consider itself
legally liable for the injuries or damages. The member shall also
advise the association of subsequent developments likely to
materially affect the interest of the association in the claim.
(c) Maintain relevant loss and expense data relative to all
liabilities of the association and require each member to furnish
statistics, in connection with liabilities of the association, at
the times and in the form and detail as may be required by the plan
of operation.
(d) In a manner provided for in the plan of operation,
calculate and charge to members of the association a total premium
sufficient to cover the expected losses and expenses of the
association that the association will likely incur during the
period for which the premium is applicable. The premium shall
include an amount to cover incurred but not reported losses for the
period and may be adjusted for any excess or deficient premiums
from previous periods. Excesses or deficiencies from previous
periods may be fully adjusted in a single period or may be adjusted
over several periods in a manner provided for in the plan of
operation. Each member shall be charged an amount equal to that
member's total written car years of insurance providing the
security required by section 3101(1) or 3103(1), or both, written
in this state during the period to which the premium applies,
multiplied by the average premium per car. The average premium per
car shall be the total premium calculated divided by the total
written car years of insurance providing the security required by
section 3101(1) or 3103(1) written in this state of all members
during the period to which the premium applies. A member shall be
charged a premium for a historic vehicle that is insured with the
member of 20% of the premium charged for a car insured with the
member. A member shall not be charged a premium for a car insured
with the member under a policy issued under chapter 32A. As used in
this subdivision:
(i) "Car" includes a motorcycle but does not include a historic
vehicle.
(ii) "Historic vehicle" means a vehicle that is a registered
historic vehicle under section 803a or 803p of the Michigan vehicle
code, 1949 PA 300, MCL 257.803a and 257.803p.
(e) Require and accept the payment of premiums from members of
the association as provided for in the plan of operation. The
association shall do either of the following:
(i) Require payment of the premium in full within 45 days after
the premium charge.
(ii) Require payment of the premiums to be made periodically to
cover the actual cash obligations of the association.
(f)
Receive and distribute all sums money
required by the
operation of the association.
(g) Establish procedures for reviewing claims procedures and
practices of members of the association. If the claims procedures
or practices of a member are considered inadequate to properly
service the liabilities of the association, the association may
undertake or may contract with another person, including another
member, to adjust or assist in the adjustment of claims for the
member on claims that create a potential liability to the
association and may charge the cost of the adjustment to the
member.
(8) In addition to other powers granted to it by this section,
the association may do all of the following:
(a) Sue and be sued in the name of the association. A judgment
against the association shall not create any direct liability
against the individual members of the association. The association
may provide for the indemnification of its members, members of the
board of directors of the association, and officers, employees, and
other persons lawfully acting on behalf of the association.
(b) Reinsure all or any portion of its potential liability
with reinsurers licensed to transact insurance in this state or
approved
by the commissioner.director.
(c) Provide for appropriate housing, equipment, and personnel
as may be necessary to assure the efficient operation of the
association.
(d) Pursuant to the plan of operation, adopt reasonable rules
for the administration of the association, enforce those rules, and
delegate authority, as the board considers necessary to assure the
proper administration and operation of the association consistent
with the plan of operation.
(e) Contract for goods and services, including independent
claims management, actuarial, investment, and legal services, from
others within or without this state to assure the efficient
operation of the association.
(f) Hear and determine complaints of a company or other
interested party concerning the operation of the association.
(g) Perform other acts not specifically enumerated in this
section that are necessary or proper to accomplish the purposes of
the association and that are not inconsistent with this section or
the plan of operation.
(9)
A board of directors is created , hereinafter referred to
as
the board, which shall be responsible for the operation of and
shall operate the association consistent with the plan of operation
and this section.
(10) The plan of operation shall provide for all of the
following:
(a) The establishment of necessary facilities.
(b) The management and operation of the association.
(c) Procedures to be utilized in charging premiums, including
adjustments from excess or deficient premiums from prior periods.
(d) Procedures governing the actual payment of premiums to the
association.
(e) Reimbursement of each member of the board by the
association for actual and necessary expenses incurred on
association business.
(f) The investment policy of the association.
(g) Any other matters required by or necessary to effectively
implement this section.
(11) Each board shall include members that would contribute a
total of not less than 40% of the total premium calculated pursuant
to subsection (7)(d). Each director shall be entitled to 1 vote.
The initial term of office of a director shall be 2 years.
(12) As part of the plan of operation, the board shall adopt
rules providing for the composition and term of successor boards to
the initial board, consistent with the membership composition
requirements in subsections (11) and (13). Terms of the directors
shall be staggered so that the terms of all the directors do not
expire at the same time and so that a director does not serve a
term of more than 4 years.
(13)
The board shall consist of 5 directors
, and the
commissioner
director, who shall be an ex officio member of the
board without vote.
(14)
Each director shall be appointed by the commissioner
director and shall serve until that member's successor is selected
and qualified. The chairperson of the board shall be elected by the
board.
A vacancy on the board shall be filled by the commissioner
director consistent with the plan of operation.
(15)
After the board is appointed, the The board shall meet as
often
as the chairperson, the commissioner, director, or the plan
of
operation shall require, requires,
or at the request of any 3
members
of the board. The chairperson shall retain the right to may
vote on all issues. Four members of the board constitute a quorum.
(16) An annual report of the operations of the association in
a
form and detail as may be determined by the board shall be
furnished to each member.
(17)
Not more than 60 days after the initial organizational
meeting
of the board, the board shall submit to the commissioner
for
approval a proposed plan of operation consistent with the
objectives
and provisions of this section, which shall provide for
the
economical, fair, and nondiscriminatory administration of the
association
and for the prompt and efficient provision of
indemnity.
If a plan is not submitted within this 60-day period,
then
the commissioner, after consultation with the board, shall
formulate
and place into effect a plan consistent with this
section.
(18)
The plan of operation, unless approved sooner in writing,
shall
be considered to meet the requirements of this section if it
is
not disapproved by written order of the commissioner within 30
days
after the date of its submission. Before disapproval of all or
any
part of the proposed plan of operation, the commissioner shall
notify
the board in what respect the plan of operation fails to
meet
the requirements and objectives of this section. If the board
fails
to submit a revised plan of operation that meets the
requirements
and objectives of this section within the 30-day
period,
the commissioner shall enter an order accordingly and shall
immediately
formulate and place into effect a plan consistent with
the
requirements and objectives of this section.
(17) (19)
The proposed plan of operation or Any
amendments to
the plan of operation of the association are subject to majority
approval
by the board, ratified and
ratification by a majority of
the membership having a vote, with voting rights being apportioned
according to the premiums charged in subsection (7)(d) and are
subject
to approval by the commissioner.director.
(18) (20)
Upon approval by the commissioner and ratification
by
the members of the plan submitted, or upon the promulgation of a
plan
by the commissioner, each An insurer authorized to write
insurance providing the security required by section 3101(1) in
this state, as provided in this section, is bound by and shall
formally
subscribe to and participate in the plan approved of
operation as a condition of maintaining its authority to transact
insurance in this state.
(19) (21)
The association is subject to all
the reporting,
loss
reserve, and investment requirements of the commissioner
director
to the same extent as would a member
are the members of
the association.
(20) (22)
Premiums charged members by the
association shall be
recognized in the rate-making procedures for insurance rates in the
same manner that expenses and premium taxes are recognized.
(21) (23)
The commissioner director or
an authorized
representative
of the commissioner director
may visit the
association at any time and examine any and all of the
association's affairs.
(22) (24)
The association does not have
liability for losses
occurring before July 1, 1978.
(23) (25)
As used in this section:
(a) "Association" means the catastrophic claims association
created in subsection (1).
(b) "Board" means the board of directors of the association
created in subsection (9).
(c) (a)
"Consumer price index"
means the percentage of change
in the consumer price index for all urban consumers in the United
States
city average for all items for the 24 months prior to before
October
1 of the year prior to before
the July 1 effective date of
the biennial adjustment under subsection (2)(k) as reported by the
United States department of labor, bureau of labor statistics, and
as
certified by the commissioner.director.
(d) (b)
"Motor vehicle accident
policy" means a policy
providing the coverages required under section 3101(1).
(e) (c)
"Ultimate loss" means the
actual loss amounts that a
member is obligated to pay and that are paid or payable by the
member, and do not include claim expenses. An ultimate loss is
incurred by the association on the date that the loss occurs.
Sec. 3113. A person is not entitled to be paid personal
protection insurance benefits for accidental bodily injury if at
the time of the accident any of the following circumstances
existed:
(a) The person was using a motor vehicle or motorcycle which
he or she had taken unlawfully, unless the person reasonably
believed that he or she was entitled to take and use the vehicle.
(b) The person was the owner or registrant of a motor vehicle
or motorcycle involved in the accident with respect to which the
security required by section 3101 or 3103 was not in effect.
(c) The person was not a resident of this state, was an
occupant of a motor vehicle or motorcycle not registered in this
state, and was not insured by an insurer which has filed a
certification in compliance with section 3163.
(d) The person was the owner or registrant of a motor vehicle
insured under a policy issued under chapter 32A.
Sec.
3114. (1) Except as provided in subsections (2), (3), and
(5), (7), and (8), a personal protection insurance policy described
in section 3101(1) applies to accidental bodily injury to the
person named in the policy, the person's spouse, and a relative of
either domiciled in the same household, if the injury arises from a
motor vehicle accident. A personal injury insurance policy
described in section 3103(2) applies to accidental bodily injury to
the person named in the policy, the person's spouse, and a relative
of either domiciled in the same household, if the injury arises
from
a motorcycle accident. When If
personal protection insurance
benefits described in section 3107(1) or personal injury benefits
described in section 3103(2) 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.
(2) A person suffering accidental bodily injury while an
operator or a passenger of a motor vehicle operated in the business
of transporting passengers shall receive the personal protection
insurance benefits to which the person is entitled from the insurer
of the motor vehicle. This subsection does not apply to a passenger
in the following, unless that passenger is not entitled to personal
protection insurance benefits under any other policy:
(a) A school bus, as defined by the department of education,
providing transportation not prohibited by law.
(b) A bus operated by a common carrier of passengers certified
by the department of transportation.
(c) A bus operating under a government sponsored
transportation program.
(d) A bus operated by or providing service to a nonprofit
organization.
(e) A taxicab insured as prescribed in section 3101 or 3102.
(f) A bus operated by a canoe or other watercraft, bicycle, or
horse livery used only to transport passengers to or from a
destination point.
(3) An employee, his or her spouse, or a relative of either
domiciled in the same household, who suffers accidental bodily
injury while an occupant of a motor vehicle owned or registered by
the employer, shall receive personal protection insurance benefits
to which the employee is entitled from the insurer of the furnished
vehicle.
(4) Except as provided in subsections (1) to (3), (7), and
(8), a person suffering accidental bodily injury arising from a
motor vehicle accident while an occupant of a motor vehicle shall
claim personal protection insurance benefits from insurers in the
following order of priority:
(a) The insurer of the owner or registrant of the vehicle
occupied.
(b) The insurer of the operator of the vehicle occupied.
(5)
A Except as provided in
subsections (7) and (8), a person
suffering accidental bodily injury arising from a motor vehicle
accident
which that shows evidence of the involvement of a motor
vehicle while an operator or passenger of a motorcycle shall claim
personal protection insurance benefits from insurers in the
following order of priority:
(a) The insurer of the owner or registrant of the motor
vehicle involved in the accident.
(b) The insurer of the operator of the motor vehicle involved
in the accident.
(c) The motor vehicle insurer of the operator of the
motorcycle involved in the accident.
(d) The motor vehicle insurer of the owner or registrant of
the motorcycle involved in the accident.
(6) If 2 or more insurers are in the same order of priority to
provide personal protection insurance benefits under subsection
(5), an insurer paying benefits due is entitled to partial
recoupment from the other insurers in the same order of priority,
together with a reasonable amount of partial recoupment of the
expense of processing the claim, in order to accomplish equitable
distribution of the loss among all of the insurers.
(7) An automobile insurance policy issued under chapter 32A
applies only to the owner or registrant of the motor vehicle
insured under the policy, not to the owner's or registrant's spouse
or a relative of either domiciled in the same household. An owner
or registrant of a motor vehicle insured under an automobile
insurance policy issued under chapter 32A is not entitled to
benefits described in this section under an automobile insurance
policy issued to any of the following:
(a) The owner's or registrant's spouse, relative, or
relative's spouse.
(b) The owner, registrant, or operator of another vehicle
occupied by the owner or registrant of the motor vehicle insured
under the policy issued under chapter 32A.
(8) Other than residual liability benefits described in
section 3009, an individual other than the owner or registrant of a
motor vehicle insured under an automobile insurance policy issued
under chapter 32A is not entitled to benefits under the policy. The
individual, if injured while an occupant of the motor vehicle or in
a motor vehicle accident that shows evidence of the involvement of
the motor vehicle, is only entitled to personal protection benefits
that are otherwise available to the individual under this chapter.
Sec.
3115. (1) Except as provided in subsection (1) of section
3114
3114(1), a person suffering accidental bodily injury while
not
an occupant of a motor vehicle shall claim personal protection
insurance benefits from insurers in the following order of
priority:
(a) Insurers of owners or registrants of motor vehicles
involved in the accident.
(b) Insurers of operators of motor vehicles involved in the
accident.
(2) When 2 or more insurers are in the same order of priority
to provide personal protection insurance benefits an insurer paying
benefits due is entitled to partial recoupment from the other
insurers in the same order of priority, together with a reasonable
amount of partial recoupment of the expense of processing the
claim, in order to accomplish equitable distribution of the loss
among such insurers.
(3) A limit upon the amount of personal protection insurance
benefits available because of accidental bodily injury to 1 person
arising from 1 motor vehicle accident shall be determined without
regard to the number of policies applicable to the accident.
(4) The limit of liability for 2 or more motor vehicles under
1 policy or for 2 or more policies shall not be added together,
combined, or stacked to determine the limit of insurance coverage
available for each injured person covered under the policy.
Sec. 3135. (1) A person remains subject to tort liability for
noneconomic loss caused by his or her ownership, maintenance, or
use of a motor vehicle only if the injured person has suffered
death, serious impairment of body function, or permanent serious
disfigurement.
(2) For a cause of action for damages pursuant to subsection
(1) filed on or after July 26, 1996, all of the following apply:
(a) The issues of whether the injured person has suffered
serious impairment of body function or permanent serious
disfigurement are questions of law for the court if the court finds
either of the following:
(i) There is no factual dispute concerning the nature and
extent of the person's injuries.
(ii) There is a factual dispute concerning the nature and
extent of the person's injuries, but the dispute is not material to
the determination whether the person has suffered a serious
impairment of body function or permanent serious disfigurement.
However, for a closed-head injury, a question of fact for the jury
is created if a licensed allopathic or osteopathic physician who
regularly diagnoses or treats closed-head injuries testifies under
oath that there may be a serious neurological injury.
(b) Damages shall be assessed on the basis of comparative
fault, except that damages shall not be assessed in favor of a
party who is more than 50% at fault.
(c) Damages shall not be assessed in favor of a party who was
operating his or her own vehicle at the time the injury occurred
and did not have in effect for that motor vehicle the security
required by section 3101 at the time the injury occurred.
(d) If the injured person was the owner or registrant of a
motor vehicle insured under a policy issued under chapter 32A, the
injured person is limited to a recovery of $20,000.00 in the
aggregate from all persons who are liable under subsection (1).
(3) Notwithstanding any other provision of law, tort liability
arising from the ownership, maintenance, or use within this state
of a motor vehicle with respect to which the security required by
section 3101 was in effect is abolished except as to:
(a) Intentionally caused harm to persons or property. Even
though a person knows that harm to persons or property is
substantially certain to be caused by his or her act or omission,
the person does not cause or suffer that harm intentionally if he
or she acts or refrains from acting for the purpose of averting
injury to any person, including himself or herself, or for the
purpose of averting damage to tangible property.
(b) Damages for noneconomic loss as provided and limited in
subsections (1) and (2).
(c) Damages for allowable expenses, work loss, and survivor's
loss as defined in sections 3107 to 3110 in excess of the daily,
monthly, and 3-year limitations contained in those sections. The
party liable for damages is entitled to an exemption reducing his
or her liability by the amount of taxes that would have been
payable on account of income the injured person would have received
if he or she had not been injured. This subdivision does not apply
to an owner or registrant of a motor vehicle insured under a policy
issued under chapter 32A.
(d) Damages for economic loss by a nonresident in excess of
the personal protection insurance benefits provided under section
3163(4). Damages under this subdivision are not recoverable to the
extent that benefits covering the same loss are available from
other sources, regardless of the nature or number of benefit
sources available and regardless of the nature or form of the
benefits.
(e) Damages up to $1,000.00 to a motor vehicle, to the extent
that the damages are not covered by insurance. An action for
damages under this subdivision shall be conducted as provided in
subsection (4).
(4) All of the following apply to an action for damages under
subsection (3)(e):
(a) Damages shall be assessed on the basis of comparative
fault, except that damages shall not be assessed in favor of a
party who is more than 50% at fault.
(b) Liability is not a component of residual liability, as
prescribed in section 3131, for which maintenance of security is
required by this act.
(c) The action shall be commenced, whenever legally possible,
in the small claims division of the district court or the municipal
court. If the defendant or plaintiff removes the action to a higher
court and does not prevail, the judge may assess costs.
(d) A decision of the court is not res judicata in any
proceeding to determine any other liability arising from the same
circumstances that gave rise to the action.
(e) Damages shall not be assessed if the damaged motor vehicle
was being operated at the time of the damage without the security
required by section 3101.
(5) As used in this section, "serious impairment of body
function" means an objectively manifested impairment of an
important body function that affects the person's general ability
to lead his or her normal life.
CHAPTER 32A
LOW-COST AUTOMOBILE INSURANCE PILOT PROGRAM
Sec. 3275. As used in this chapter:
(a) "Automobile insurance" means that term as defined in
section 2102.
(b) "Facility" means the Michigan automobile insurance
placement facility created under chapter 33.
(c) "Federal poverty guidelines" means the poverty guidelines
published annually in the federal register by the United States
department of health and human services under its authority to
revise the poverty line under 42 USC 9902.
(d) "Insurance agency" means an agency as that term is defined
in section 1243.
(e) "Insurance producer" means that term as defined in section
1201.
(f) "LCAP applicant" means an individual who meets all of the
qualifications of section 3277.
(g) "Low-cost automobile insurance policy" means an automobile
insurance policy that satisfies the requirements of section 3278.
Sec. 3276. An owner or registrant of a motor vehicle required
to be registered in this state who is an LCAP applicant may comply
with section 3101 by maintaining a low-cost automobile insurance
policy.
Sec. 3277. (1) To qualify for a low-cost automobile insurance
policy, an individual must meet all of the following
qualifications:
(a) Reside in a household with a gross annual household income
that is equal to 300% of the federal poverty guidelines or less.
(b) Have been continuously licensed to drive an automobile for
a period of 3 years.
(c) Not have had in the preceding 3 years more than 1 of
either, but not both, of the following:
(i) A property-damage-only accident in which he or she was
substantially at fault.
(ii) An insurance eligibility point for a moving violation, as
described in section 2103.
(d) Not have had in the preceding 3 years a substantially at-
fault accident involving bodily injury or death.
(e) Not have had a conviction for 1 or more of the following:
(i) A violation of section 625 of the Michigan vehicle code,
1949 PA 300, MCL 257.625.
(ii) A violation described in section 601b of the Michigan
vehicle code, 1949 PA 300, MCL 257.601b.
(iii) A felony or misdemeanor conviction relating to the
operation of a motor vehicle.
(2) An insured under a low-cost automobile insurance policy
shall not purchase or maintain any automobile personal protection
insurance coverage other than under a low-cost automobile insurance
policy for any additional vehicles in the insured's household.
Sec. 3278. (1) An insurer that issues a low-cost automobile
insurance policy shall provide all of the following coverage under
the policy:
(a) Security against loss resulting from liability imposed by
law for property damage, bodily injury, or death suffered by a
person arising out of the ownership, maintenance, or use of the
motor vehicle that meets the requirements of section 3009.
(b) Security for the payment of first-party medical benefits,
payable if the owner or registrant of the automobile is involved in
a motor vehicle accident, as that term is defined in section 3101.
All of the following apply to benefits under this subdivision:
(i) The benefits are payable only for medical expenses incurred
because of injury to the owner or registrant.
(ii) The benefits are payable only if there is no other health
and accident coverage available to the owner or registrant for the
medical expenses incurred.
(iii) The limit for benefits is $50,000.00.
(iv) The benefits are payable only for medically appropriate
treatment by individuals licensed or authorized to render the
treatment under article 15 of the public health code, 1978 PA 368,
MCL 333.16101 to 333.18838.
(2) An insurer issuing a low-cost automobile insurance policy
shall not provide coverage in the policy for the payment of
benefits described in chapter 31 unless the benefits are required
under this section.
Sec. 3280. (1) The facility shall provide for all of the
following:
(a) The equitable distribution of LCAP applicants to
designated participating members in accordance with the plan of
operation as amended under section 3310(3).
(b) The issuance of low-cost automobile insurance policies to
LCAP applicants as provided in the amended plan of operation.
(c) The appointment of a number of participating members to
act on behalf of the facility for the distribution of risks or for
the servicing of individuals insured under low-cost automobile
policies, as provided in the amended plan of operation and
consistent with this section. The facility shall do all of the
following:
(i) Appoint those members having the 5 highest participation
ratios, as defined in section 3303(e)(i), to act on behalf of the
facility.
(ii) Appoint up to 5 additional members to act on behalf of the
facility from among other members who volunteer to so act and who
meet reasonable servicing standards established in the amended plan
of operation.
(iii) Appoint additional members to act on behalf of the
facility as necessary to do all of the following:
(A) Assure convenient access to the low-cost automobile
policies for all LCAP applicants in this state.
(B) Assure a reasonable quality of service for individuals
insured under low-cost automobile insurance policies.
(C) Assure a reasonable representation of the various
insurance marketing systems.
(D) Assure reasonable claims handling.
(E) Assure a reasonable range of choice of insurers for
individuals insured under low-cost automobile insurance policies.
(d) Standards and monitoring procedures to assure that
participating members acting on behalf of the facility with respect
to low-cost automobile insurance policies do all of the following:
(i) Provide service to individuals insured that is equivalent
to the service provided to persons insured by the insurer
voluntarily.
(ii) Handle claims in an efficient and reasonable manner.
(iii) Provide internal review procedures for individuals insured
identical to those established under chapter 21 for persons insured
voluntarily.
(e) The establishment of procedures and guidelines for the
issuance of binders by insurance producers on receipt of the
application for coverage.
(2) Sections 3330, 3340(1) to (3), 3355, 3360, and 3380 apply
to the offering of low-cost automobile insurance policies through
the facility.
(3) A low-cost automobile insurance policy shall be issued for
an initial term of 6 months, renewable for subsequent 6-month
terms.
Sec. 3281. The other chapters of this act apply to this
chapter unless the application of a provision in another chapter
would be inconsistent with this chapter.
Sec. 3282. (1) An insurance producer that offers automobile
insurance under chapter 33 shall offer low-cost automobile
insurance policies to LCAP applicants.
(2) An insurance producer that offers a low-cost automobile
insurance policy shall provide to an LCAP applicant a notice
relating to coverage under the policy. The insurance producer shall
provide the notice in a separate document at the time of
application and include the following statement in 14-point
boldfaced type or font:
WARNING
Insurance coverage under the policy you are buying provides
only limited medical coverage up to a maximum of $50,000.00. The
medical insurance covers only you as the owner of the vehicle.
This insurance does not provide benefits that are provided
under a policy of no-fault insurance in this state, including, but
not limited to, any of the following:
Wage-loss benefits.
Survivor's benefits.
Funeral expenses.
Replacement services.
Personal protection benefits for passengers in the vehicle,
pedestrians, or any other individual.
(3) In applying for a low-cost automobile insurance policy, an
LCAP applicant shall certify, to the best of the applicant's
knowledge and belief, whether representations made in the
application and in documents submitted to demonstrate eligibility
for the low-cost automobile insurance policy are true and correct
and whether they contain any material misrepresentations or
omissions of fact.
(4) A certification of the applicant under subsection (3) that
the representations in the application are true and correct is
proof that the applicant meets the qualifications.
(5) An insurance producer or agency or an authorized
representative or employee of an insurance producer or agency
involved in the sale of automobile insurance under this chapter is
not liable to any person for damages arising from the reduction or
inadequacy of automobile insurance benefits and does not have any
other liability for damages caused by, arising out of, or related
to any actual or alleged act, error, or omission concerning the
choice of automobile insurance benefits under this chapter.
Sec. 3283. An insurer may offer an insured under a low-cost
automobile insurance policy a premium installment option under
which the insured may pay a specified portion or portions of the
premium for the low-cost automobile insurance policy on a periodic
basis. A premium for a low-cost automobile insurance policy shall
not be financed in any other manner.
Sec. 3284. (1) An insurer that issues a low-cost automobile
insurance policy under the pilot program may offer the insured any
other additional type of automobile insurance coverage such as
uninsured motorists coverage or collision coverage that is not
available under the low-cost automobile insurance policy.
(2) An insurer shall not condition the sale of a low-cost
automobile insurance policy on the purchase of any other product or
service.
Sec. 3285. (1) A person who lawfully renders treatment to an
injured individual for an accidental bodily injury covered by a
low-cost automobile insurance policy may charge a reasonable amount
for the products, services, and accommodations rendered. The charge
shall not exceed the amount the person customarily receives for
like products, services, and accommodations in cases that do not
involve automobile insurance, the program for medical assistance
for the medically indigent under the social welfare act, 1939 PA
280, MCL 400.1 to 400.119b, or the federal medicare program
established under title XVIII of the social security act, 42 USC
1395 to 1395kkk-1.
(2) Any information needed by an insurer to determine the
appropriate reimbursement under this section shall be provided by
the person providing the treatment or rehabilitative or
occupational training.
(3) If an insurer needs information to determine the
appropriate reimbursement under this section and the information is
unavailable or not provided or the information provided is not
sufficient to determine the appropriate reimbursement, the insurer
shall pay the amount that would be paid under R 418.10101 to R
418.101503 of the Michigan administrative code or schedules of
maximum fees for worker's disability compensation developed under
those rules.
(4) Whether a charge is reasonable or whether a product,
service, or accommodation is medically appropriate and medically
necessary is a question of law to be decided by the court.
Sec. 3287. By April 1, 2014 and by April 1 of each subsequent
year, the automobile insurers who are participating in the low-cost
automobile insurance program shall submit the loss and expense data
from low-cost automobile insurance policies and a proposed rate for
the low-cost automobile insurance policy to the director.
Sec. 3288. By August 1, 2016 and by August 1 of each
subsequent year, the director shall report to the legislature on
sales of low-cost automobile insurance policies and the results of
those sales.
Sec. 3289. The director may issue an order or promulgate rules
under the administrative procedures act of 1969, 1969 PA 306, MCL
24.201 to 24.328, to implement this chapter.
Sec. 3290. This chapter does not apply after July 31, 2019.
Sec. 3301. (1) Every insurer authorized to write automobile
insurance in this state shall participate in an organization for
the purpose of doing all of the following:
(a) Providing the guarantee that automobile insurance coverage
will be available to any person who is unable to procure that
insurance through ordinary methods.
(b) Preserving to the public the benefits of price competition
by encouraging maximum use of the normal private insurance system.
(c) Assuring that low-cost automobile insurance policies are
offered and issued in this state under chapter 32A.
(2) The organization created under this chapter shall be
called the "Michigan automobile insurance placement facility".
Sec. 3310. (1) The board of governors of the facility shall
consist of 11 governors. Seven of the governors shall be elected as
provided in the plan of operation. Four governors shall be
appointed
by the commissioner, director,
of which 2 shall represent
insurance agents subject to section 1209(1) and 2 shall represent
the
general public. Each governor appointed by the commissioner
pursuant
to director under this subsection shall serve an annual
term. The 7 elected members of the board of governors of the
facility shall be elected to serve annual terms commencing within
45 days after the annual determination of participation ratios.
Vacancies shall be filled as provided for in the plan of operation.
(2) Amendments to the plan of operation for the facility are
subject to majority approval by the board of governors and
ratification by a majority of the membership. The membership vote
shall be determined by participation ratio as defined in section
3303(e)(iii). The
facility committee shall adopt a plan of operation
by
majority vote of the committee and approved
and ratified
amendments
shall submit it be submitted to the commissioner
director
for his or her approval. If the commissioner
director
finds
that the amendments to the plan meets meet the requirements
of this chapter and chapter 32A, as applicable, he or she shall
approve
it. them. If the commissioner director finds
that the
amendments
to the plan fails fail to
meet the requirements of this
chapter or chapter 32A, as applicable, he or she shall state in
what
respects the plan is amendments
are deficient and shall afford
the
facility committee board
of governors 10 days within which to
correct
the deficiency. If the commissioner director and the
facility
committee board of governors fail to agree that the
provisions
of corrected amendments to the plan so submitted meet
the requirements of this chapter or chapter 32A, as applicable,
either party to the controversy may submit the issue to the circuit
court
for Ingham county for a determination. If the commissioner
director fails to render a written decision on the amendments to
the
plan of operation within 30 days after
receipt of the plan,
amendments,
the plan amendments shall be considered approved.
(3)
Amendments to the plan of operation shall be subject to
majority
approval by the board of governors and ratified by
majority
of the membership vote. The membership vote shall be
determined
as defined in section 3303(e)(iii).
Amendments to the plan
of
operation shall be subject to the approval of the commissioner,
as
provided in subsection (2).
(3) By September 1, 2013, the board of governors shall approve
amendments to the plan of operation to assure that low-cost
automobile insurance policies under chapter 32A are offered to
residents of this state. The amendments shall be submitted to the
members for ratification and to the director for approval, as
required by subsection (2), so that the amendments will be in place
and low-cost automobile insurance policies offered in this state by
January 1, 2014.
(4) Every insurer authorized to write automobile insurance in
this state shall adhere to the plan of operation.