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Warning! Mistakes You Must Not Make in Your No Fault Insurance Claim or When Buying No Fault Insurance

1. Never Lie When Applying for Insurance, or When Making a Claim for Benefits. Be 100% Accurate

Insurance Application

You must be 100% accurate and honest when filling out a no fault insurance application, or the policy will be cancelled at the worst possible time – when you or a family member is seriously injured in an accident. For example, if you have a teenage son who sometimes drives your vehicle, you must disclose that fact in the application.

If, after you buy the policy, your teenage son gets his license and is allowed to drive the car, you must call the insurance agent and report that fact.

Insurance Claim

If you or a family member has been so severely injured in a vehicle accident that he/she needs attendant care (help dressing, bathing, taking medications, going to the bathroom), no fault insurance will pay up to 56 hours per family member per week. But if the claimant or care provider lies about event $20 worth of attendant care, the insurance company will cancel all benefits for that injury for the claimant’s lifetime. For example, if a person claims he provided you 5 hours per day of attendant care for every day in the month of March 2022 – 31 days – but was actually on vacation for 3 days, that false claim will prompt the insurance company to cut off all benefits for the claimant’s lifetime, possibly millions of dollars worth of benefits. Even if the mistake was accidental, perhaps due to sloppy record keeping, the insurance company will try to cut off lifetime benefits when it catches the mistake; you would have to prove to a jury that the mistake was honest to get your benefits.

Another example: the injured person seeks attendant care for assistance in walking, but the insurance company’s secret surveillance catches the person walking down the driveway to the mailbox – the insurance company will cut off lifetime benefits. Even if the mistake was accidental, the insurance company will cut off benefits, and the injured person will have to sue – and may lose the lawsuit if the jury concludes the false claim was deliberate. Even if the injured person doesn’t lose the lawsuit, it’ll cost him/her a year or five of litigation, and an attorney fee (assuming the person will find an attorney willing to take the case).

The same thing goes with “replacement services”. Under your no fault policy, the insurer must pay up to $20 per day when the injured person hires someone to do work around the house he/she did before the injury, such as cleaning house, cutting grass, food shopping. If the injured person (or the person he/she hires to do the work), makes a false claim for even $10, the insurance company will cut off lifetime benefits the instant it learns of the false claim. The cutoff will happen even if you can prove it was not deliberate (for example, poor record keeping caused the false claim). Again,you’d have to find an attorney willing to take the case and prove the mistake was accidental, after possibly years of litigation.

How will an insurance company find out about the mistakes or lies? By surveillance; by interviewing the injured person or the person who provided the attendant care or replacement services; by taking the deposition of the injured person or the care/service provider after litigation is started for some other reason. The insurers have many ways to discover a mistake or a lie, and they will be ruthless when the find out.

Bottom line: be 100% honest and accurate when filling out an application for no fault insurance, or any form claiming benefits.

2. Motorcyclists Injured in a Vehicle Accident

A motorcyclist who is injured colliding with a motor vehicle gets no fault insurance from the insurer of the motor vehicle. Because the insurance on the motor vehicle may provide for zero or a small amount of medical coverage, if you have a serious injury you will have to rely on your own no fault or personal insurance.

If you are injured because a motor vehicle causes you to drop the bike or hit a tree, for example (but there is no motor vehicle contact), you will have to rely on the no fault insurance you have on a vehicle you own or on an insured vehicle in your household. If no motor vehicle was involved in any you, you must rely on your health insurance.

Bottom line: it is critical that you have good health insurance, and full coverage (unlimited PIP) on at least one vehicle that you own. Motorcycle accidents often result in very serious injuries with huge medical bills, so, once again, have full no fault coverage on at least 1 vehicle in your household, and keep good health insurance.

3. Buying No Fault Insurance

The new no fault law has made it more important than ever to get good coverage. First, get at least $500,000 of liability coverage – or $1,000,000 if you have a job paying good money or have a fair amount of money/assets which you don’t want a creditor to seize. The new no fault law allows people to buy skimpy insurance, and if you cause an accident, an injured person with skimpy insurance can come after you once they exhaust their own insurance. Under the old law, they couldn’t sue you for medical expenses; they can now, and you could get sued for hundreds of thousands of dollars of their medical bills. The best way to prevent the injured person from garnishing your wages or seizing your assets is to have a lot of liability coverage.

Second, get full PIP coverage or at least $500,000 coverage for PIP (personal injuryprotection). A serious vehicle accident can easily result in your hospital bills totaling more than $500,000. If you can afford it, buy full coverage for PIP – it’ll pay for lifetime coverage for any medical bill from a vehicle accident. Even Cadillac health insurance – such as union health insurance – won’t do that; very few insurance plans pay for attendant care, or lifetime PT, or lifetime nursing home care, etc etc.

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