You may have heard people complain about no-fault car insurance, which is the form of vehicle insurance used in Michigan. For instance, they may have mentioned that it can be targeted by scams and that medical costs have been going up.
What you really may be wondering is why it's used at all. Essentially, it just makes it so that your own insurance company has to cover you, no matter who was ultimately at fault for the car accident. You could be sitting legally at a red light, doing nothing wrong, when a speeding and distracted driver rear-ends your car. Instead of that person's insurance company paying you, since he or she caused the crash, yours will pay.
It does seem a bit counter-intuitive, but the system was actually set up to help people. It sped up the entire process of getting paid after making a claim.
Medical care doesn't wait, after all. You have a lot of expenses after a wreck. You need a new car, or yours needs to get repaired. You're missing time at work. You have medical bills. All of this costs money.
If the insurance companies had to wait to decide who was at fault to determine which company would pay, things could get tied up for months. You have bills right now. With no fault insurance, you know that your financial situation is covered, and you're free to move forward with your life.
This doesn't mean there aren't issues with the no fault insurance system. Some believe it's a broken system. That's why it's so important to know your rights and what legal steps to take after a crash. Understanding how no fault insurance works and your other options for compensation can help you in the aftermath of a collision.
Source: Fox Business, "Why Does Everyone Hate No-fault Car Insurance?," Barbara Marquand, accessed Jan. 22, 2018