More than ever, parents of adult children are helping them pay the bills and make ends meet. Parents often carry their children’s health insurance until they are 26 (the legal limit), and many pay their children’s phone bills even longer. But is it a good idea for parents to foot the bill for an adult driver’s Michigan no-fault auto insurance? Can you insure someone else’s car for them? Or will doing so increase the chances of an insurance claim denial?
Michigan Has Mandatory Personal Injury Insurance
Paying for insurance is part of nearly every Michigan driver’s life. That is because Michigan law requires that the “owner or registrant” of a motor vehicle maintain no-fault insurance on that vehicle as long as he or she intends to drive it on state roads. The state’s mandatory no-fault insurance includes personal injury protection (PIP) coverage, liability insurance, and residual coverage, all of which are generally sold as one “no-fault” policy.
The consequences for breaking this law are far worse than a simple traffic ticket for driving without insurance. If you are driving an uninsured vehicle that you own at the time of an auto accident, you run the risk of having to pay for all your own medical bills, lost wages, and replacement service costs. That’s because a driver of an uninsured vehicle is not entitled to PIP insurance. Unlike passengers, pedestrians, and other road users, drivers are required to follow the law and maintain insurance policies, or they will be excluded from receiving benefits.
And those policies are not cheap. While Michigan recently passed a law modifying the No-Fault Act and promising reduced insurance premiums, those new policies won’t be available until next year. Until then, many well-meaning parents may find themselves wondering whether you can insure someone else’s car for them.
National Guard Servicemember Asks Father for Help Insuring His Vehicle
That’s what happened in a recent Michigan Supreme Court case, Dye v Esurance Prop & Cas Ins Co. Matthew Dye was a member of the National Guard. In anticipation of spending time in Afghanistan, he had granted his father power of attorney so that he could do business with the Michigan Secretary of State on his behalf. In July 2013, Matthew bought a new car, a BMW. He asked his father to register the vehicle for him and get a state-mandated no-fault insurance policy to cover it. His father registered the car in Matthew’s name with the secretary of state, but in insuring the vehicle online through Esurance, he accidentally named himself as the only named insured.
Two months later, Matthew was in a serious auto accident, resulting in a traumatic brain injury. But when he applied for benefits through Esurance and his wife’s policy with GEICO, they both said no. The insurance claim denial was based, at least in part, on the fact that someone else had insured his car, not him.
Can You Insure Someone Else’s Car for Them?
Until recently, Michigan courts have said that at least one owner or registrant of a vehicle needed to pay for an insurance policy on the vehicle involved in an accident. However, in Dye, the Michigan Supreme Court says that’s not what the law requires. The court said drivers are required to “maintain” coverage and not allow it to lapse. But the law didn’t specify how they did that. The court also said that as long as the vehicle has the required insurance, it doesn’t matter who makes the claim as the driver in a motor vehicle accident.
The Dye decision allows for parents and family members to help out servicemembers, students, and others who may have trouble obtaining or paying for no-fault insurance on their own. By making it clear that you can insure someone else’s vehicle for them, the court has done a service to all those who need help managing their day-to-day affairs.
The Macomb Law Group, is a personal injury law firm in Clinton Township, MI. Our attorneys can help you receive the benefits you need from auto insurance companies. If you or a loved one have been seriously injured, contact Macomb Law Group and get our team working for you.