Michigan Court of Appeals: Defective PIP Opt-Out Triggers Unlimited Exposure Under MCL 500.3107d
The Michigan Court of Appeals, in Northland Radiology v Allstate (March 25, 2026) (published, Case No. 374214), addressed the effect of a defective opt-out election under MCL 500.3107d on PIP coverage.
In this case, the named insured elected to opt out of PIP medical coverage, but a resident relative did not have the required qualifying coverage, despite representations to the contrary, rendering the election defective.
The Court applied a strict statutory interpretation, holding that if any statutory condition is not satisfied, the opt-out is ineffective and the policy is treated as providing unlimited PIP medical coverage.
In doing so, the decision adopts a strict reading of the statutory requirements governing opt-out elections and materially expands the exposure contemplated at policy formation. While this approach provides clarity in the application of the statute, it results in a divergence between the risk assessed at underwriting and the exposure imposed at the time of loss, producing outcomes not contemplated at the time of policy issuance.
The decision leaves open the availability of fraud and rescission-based defenses, which will likely become central in subsequent litigation, with counterarguments focusing on the application of the innocent third-party doctrine.
This decision is likely to reshape both underwriting practices and post-loss litigation strategy in PIP claims involving opt-out elections.
The Michigan Court of Appeals, in Northland Radiology v Allstate (March 25, 2026) (published, Case No. 374214), addressed the effect of a defective opt-out election under MCL 500.3107d on PIP coverage.
In this case, the named insured elected to opt out of PIP medical coverage, but a resident relative did not have the required qualifying coverage, despite representations to the contrary, rendering the election defective.
The Court applied a strict statutory interpretation, holding that if any statutory condition is not satisfied, the opt-out is ineffective and the policy is treated as providing unlimited PIP medical coverage.
In doing so, the decision adopts a strict reading of the statutory requirements governing opt-out elections and materially expands the exposure contemplated at policy formation. While this approach provides clarity in the application of the statute, it results in a divergence between the risk assessed at underwriting and the exposure imposed at the time of loss, producing outcomes not contemplated at the time of policy issuance.
The decision leaves open the availability of fraud and rescission-based defenses, which will likely become central in subsequent litigation, with counterarguments focusing on the application of the innocent third-party doctrine.
This decision is likely to reshape both underwriting practices and post-loss litigation strategy in PIP claims involving opt-out elections.
| northland-radiology-v-allstate-michigan-court-of-appeals-pip-opt-out-unlimited-benefits-mcl-500-3107d-2026.pdf.pdf |