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Can Unlicensed Drivers Receive No-Fault Benefits?

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A recent Court of Appeals decision addressed one issue important to all Michigan motorists: terms for disqualification from no-fault benefits. More specifically, in this case, the Court answered the important question “can unlicensed drivers receive no-fault benefits?Grand Rapids car crash lawyer, Tom Sinas, recently reviewed the concept of no-fault PIP benefit disqualification and the case that brought recently brought this issue to the forefront on Fox 17 “Know the Law.”

Common Causes of No-Fault PIP Disqualification

In certain circumstances, a person otherwise entitled to receive auto no-fault benefits can be disqualified. Under specific provisions of Michigan’s auto insurance law, a person becomes disqualified from no-fault PIP benefits for a number of reasons. Most commonly, disqualification happens when a person is an “uninsured owner.” This means if you’re the owner of a car and you did not insure the car and it’s involved in a crash you would be disqualified from no-fault benefits even if you were injured in the car crash. Michigan auto insurance is a requirement for owning a vehicle in the state. Therefore, failing to obtain the requisite insurance on the car disqualifies uninsured owners from obtaining no-fault PIP benefits.

A second cause for disqualification, and the issue the Court of Appeals recently decided on, relates to what is known as the “unlawful taking” of a vehicle. What does “unlawful taking” mean? It means that if someone is willingly using a vehicle that was taken unlawfully and the person knew or should have known that the vehicle was taken unlawfully, that person is disqualified from receiving no-fault benefits.

Unlicensed Driver Disqualified from No-Fault Benefits Under “Uninsured Owner” Provision

While most of us aren’t going out and unlawfully taking vehicles, the recent Court decision related to this specific disqualification provision may come as a surprise. This specific recent case dealt with a rental car. In this instance, the person who rented the vehicle let someone else drive the car. However, this other person didn’t have a driver’s license. The car rental agreement banned unlicensed drivers from operating the rental car. The unlicensed driver proceeded to drive the car, got into a crash, sustained injuries, and the Court of Appeals held that the unlicensed driver committed the “unlawful taking” of the rental car. Therefore, the unlicensed driver was disqualified from receiving auto no-fault benefits.

Outcomes of No-Fault Disqualification

It’s important to remember that, in Michigan, no-fault PIP benefits compensate for a number of separate damages, including:

  1. Medical expenses
  2. Wage loss 
  3. Replacement services
  4. Survivor’s loss

Injured drivers disqualified from no-fault benefits can find themselves in a truly unfortunate situation. Not only do they have their injuries to tend to, but they may also accrue thousands and thousands of dollars in medical bills, may not be able to return to work due to their injuries, and will be forced to face this new reality without an insurance system to help them foot the bills along the way.