When people think of Michigan's No-Fault Insurance Act ('Act'), their mind is likely drawn to thoughts of a roadside automobile accident. But what if an automobile damages subdivision common areas or condominium common elements? Under State law, drivers are required to carry insurance for injury to or destruction of other's property resulting from an accident caused by their vehicle. This insurance is intended to benefit third-party property owners (such as a condominium or subdivision association) by imposing liability for property damage on the insurers of vehicle owners or drivers.
The Act requires all auto policies to carry Property Protection Insurance ('PPI') coverage. This means the driver's automobile insurance company is responsible for the cost of repairing damage to 'tangible property' resulting from the insured's ownership, maintenance or use of a motor vehicle 'without regard to fault.' MCL 500.3121. Such coverage would include, for example, damage to a wall, fence, or landscaping. There is strict liability for any accidental damage, and thus, it is not necessary to demonstrate fault on behalf of the driver. PPI benefits consist of the lesser of reasonable repair costs or replacement costs less depreciation and, if applicable, the value of loss of use.
MCL 500.3125 mandates that any claim for PPI benefits be pursued with the insurance company directly, not the owner or driver of the vehicle. PPI benefits should first and primarily be sought from the no-fault insurer of the vehicle's owner. If coverage is denied, you can next look to the insurer of the operator of the vehicle involved in the accident. Either way, the right to recovery is exclusively through the insurer. Be aware that there is a limited exception in the Act for insurance policies which specifically exclude a particular driver from coverage. This means that if an insured specifically excludes someone from coverage and that person happens to be driving a vehicle that damages your property, the insurance company would have a reasonable basis to deny that claim.
MCL 500.3145 requires that any action be commenced within one year of the accident. Thus it is important to pursue the appropriate party (the insurer, not the insured driver) for benefits from the outset after an accident. The Act does not allow for the statue of limitations to be tolled even if written notice has been provided to the insurer (in fact, no specific notice is required to be given to the insurer at all regarding the claim). If a claim were pursued or an action filed against the incorrect party (i.e. the driver), it would not preserve your right to later commence an action against the insurer after expiration of the statute of limitations.
If you become aware of damage to common property caused by a vehicle, it is important to contact the police as soon as possible and file a report. While the underlying facts of how the accident came about may be irrelevant, the association will still need to be able to demonstrate that a particular driver caused the damage for which they seek reimbursement. Having the police investigate the damage and file a written report can be crucial to demonstrating this nexus, in addition to identifying the driver and most importantly, the driver’s insurance company. Be sure to also obtain the name and contact information for any eyewitnesses. These witnesses could be helpful in not only identifying the driver, but especially helpful when it comes to establishing the extent and scope of damages. For example, if the driver's car goes through a fence, it could be critical to establish that the driver not only drove through the fence, but that the driver also hit a tree or a particular area of a building's facade. Of course, extensive photographs of the damage would be very helpful.
While the provisions in the Act may be well-established under Michigan law, it does not stop an insurance company from making an effort to fight against payment of a claim. As previously stated, a police report and witnesses are imperative if the insurance company chooses to dispute your claim. Even if it is undisputed that a particular driver caused some damage, the insurance company may argue that (1) the repairs the Association seeks reimbursement for exceed the damage caused by the driver (i.e. some or all of the repairs are an upgrade) or (2) particular aspects of the repairs are unrelated to the accident. Ask your contractor to not only itemize all work that is performed, but to provide their opinion as to why each item performed is directly related to the damage caused by the vehicle. For example, if a brick wall is hit, but it is impossible to repair the damaged portion without removing an additional section of the wall, this is arguably a direct result of the accident. However, it may be infeasible to obtain an entirely new wall. If only half of the wall needs to be replaced because of the accident, but the association needs to replace the entire wall in order for the brick color to match, the insurer would likely only be responsible for replacing the portion that was damaged in the accident. The replacement of the remaining portions of the wall would not be directly related to the accident and the insurer will likely have the right to deny.
In the event of vehicle damage to common property, the association should resist filing a claim with the association’s insurer. Instead, no-fault insurance required under Michigan law should be the avenue through which an association may recover repair expenses.