Auto Insurance Exceptions In Michigan

Michigan's auto insurance law requires vehicle owners to carry No-Fault auto insurance, which covers personal injuries, property damage, and liability for bodily injury. This means that motorists are required to carry no-fault insurance to help cover injuries and damages without the need to determine fault in an accident. The monthly premium for state minimum coverage in Michigan is around $77.

Michigan's new auto insurance law, which came into effect on July 1, 2020, introduced a tiered system for Personal Injury Protection (PIP) coverage, allowing individuals to opt out or purchase as little as $50,000 worth of PIP coverage for medical expenses under certain circumstances. The new law also mandates insurance companies to reduce PIP statewide average medical premiums.

The most significant decision that Michigan drivers will make is selecting a level of PIP coverage. The options include $500,000, $250,000, $50,000, and No-Limit. It is important to note that the new law does not prohibit an increase in insurance policy premiums, and insurance companies can also apply for an exemption.

Michigan auto insurance law changes

On May 30, 2019, Governor Whitmer signed a historic bipartisan no-fault auto insurance reform bill to provide insurance coverage options, reduce rates for Michigan drivers, maintain the highest benefits in the country, and strengthen consumer protections. The changes apply to policies issued or renewed after July 1, 2020.

Michigan had the highest auto insurance benefits, but also the highest costs. Mandatory unlimited Personal Injury Protection (PIP) medical benefits proved too expensive for many Michigan families. Some drivers who could not afford the costly unlimited coverage were driving uninsured.

The new law implemented the following cost reduction measures:

• Personal Injury Protection (PIP) Choice: Drivers can now choose a coverage level that suits their needs and budget.
• Rate Reduction: Each insurance company is required to reduce PIP statewide average medical premiums.
• Fee Schedule: A required cost control measure between auto insurance companies and healthcare providers to make PIP medical coverage more affordable.

The new law established the following consumer protections:

• Elimination of Some Non-Driving Factors: The new law prohibits auto insurance companies from using sex, marital status, home ownership, credit score, educational level, occupation, and zip codes when setting auto insurance rates.
• Fraud Investigation Unit: The newly established unit investigates criminal and fraudulent activity related to the insurance and financial markets.
• Michigan Catastrophic Claims Association (MCCA) Transparency: The MCCA is now required to provide an annual report to the Legislature, post an annual consumer statement on their website, and is subject to an audit by the Michigan Department of Insurance and Financial Services (DIFS) every three years.
• Prior Approval: Auto insurance rates and policies must now be filed with and approved by DIFS before being offered to consumers.
• Fines and Penalties: The new law allows for increased fines for insurance companies, agencies, and licensed agents for certain violations of the law.

The three basic coverages in a Michigan auto insurance policy that must be purchased and carried on every vehicle are:

• Personal Injury Protection (PIP)
• Property Protection (PPI)
• Residual Bodily Injury and Property Damage Liability (BI/PD)

No-fault auto insurance

Under the no-fault insurance system, if you are injured in a car accident, your auto insurance company will pay for your medical bills and lost wages, regardless of who was at fault for the accident. This is a significant change from the previous system, where seriously injured victims were often denied compensation or under-compensated, and faced lengthy delays that resulted in devastating financial burdens.

The Michigan No-Fault Insurance law was designed to help people injured in car accidents. It offers essential protection, known as PIP insurance, which stands for "personal injury protection" insurance. This coverage includes payment of accident-related medical care and reimbursement of lost wages if injuries disable the victim from returning to work.

In 2019, the Michigan Legislature made historic changes to the auto insurance law, providing insurance coverage options, lowering rates for Michigan drivers, maintaining the highest benefits in the country, and strengthening consumer protections. These changes gave drivers more choices and control over their coverage levels and premiums.

The biggest change was the introduction of a tiered system for PIP coverage, giving individuals the option to opt out or purchase coverage ranging from $50,000 to $500,000, or select the no-limit option. This change addressed the issue of high costs associated with the previous mandatory unlimited Personal Injury Protection (PIP) medical benefits, which proved too expensive for many Michigan families.

The new law also established several consumer protections, including the elimination of some non-driving factors in setting insurance rates, the creation of a Fraud Investigation Unit, and increased transparency and oversight of the Michigan Catastrophic Claims Association (MCCA).

In summary, Michigan's no-fault auto insurance law provides comprehensive protection for drivers involved in accidents, ensuring prompt access to medical care and financial support, regardless of fault. The recent changes to the law give drivers more flexibility and control over their insurance coverage while maintaining strong consumer protections.

Personal Injury Protection (PIP)

PIP benefits will pay for your medical bills and lost wages after you’ve been injured in a car accident. They are guaranteed by the Michigan No-Fault law and are paid by your auto insurance company, regardless of whether you were at fault. This means you don't have to sue the at-fault driver.

PIP covers:

• Medical expenses: Your accident-related medical bills and expenses will be covered up to the dollar amount of the No-Fault PIP medical benefits coverage level selected in the auto insurance policy through which you are claiming personal injury protection benefits.
• Medical mileage: Personal injury protection benefits cover your transportation costs for traveling to and from medical appointments.
• Wage loss: If your accident-related injuries have disabled you from returning to work, your personal injury protection benefits will reimburse you for the wages you have lost. Wage loss benefits are available for three years from the date of the accident and are subject to a monthly maximum.
• Replacement services: Personal injury protection benefits will pay up to $20 per day during the first year after your car accident to reimburse people who help you by performing “ordinary and necessary services” that you can no longer do because of your accident-related injuries and limitations.
• Attendant care: If your car accident-related injuries require you to have attendant care, then Michigan PIP benefits will pay the cost. The services can be provided in your home by a family member or a nurse hired from a commercial agency.

As of July 2, 2020, auto insurance reform to Michigan's personal injury protection (PIP) requirements went into effect. Michigan no longer mandates unlimited PIP, and drivers now have a choice of coverage levels:

• $500,000 per person per accident
• $250,000 per person per accident
• $250,000 per person per accident with exclusions
• $50,000 per person per accident
• No PIP medical coverage

Bodily Injury Coverage

In Michigan, bodily injury liability insurance provides coverage if a driver is at fault in causing a car accident that results in someone being hurt or killed. It will pay for pain and suffering compensation, excess medical benefits, lost wages, and other economic damages that the driver owes to any injured persons, up to the policy limit.

Under Michigan's auto No-Fault insurance law, this auto insurance coverage is also referred to as "residual liability insurance".

If you are at fault for a car accident that injures or kills someone, your bodily injury insurance covers your liability for the injured person's pain and suffering, excess medical benefits, and lost wages, as well as other economic damages. The extent of your coverage depends on your liability policy limit.

Specifically, your Michigan bodily injury liability insurance – which the No-Fault law calls "residual liability insurance" – covers your "tort liability" for the following up to the limit you selected in your policy:

• Pain and suffering compensation
• Excess medical benefits (which consist of either car accident-related medical bills that exceed the No-Fault PIP medical benefits coverage level selected in the policy, or all of the accident-related medical bills incurred by a driver who has opted out of No-Fault medical coverage altogether)
• Excess lost wages
• Damages for economic loss if the victim is a non-Michigan resident

In Michigan, the law states you need bodily injury liability insurance with limits that provide coverage of $250,000 if you cause a car accident that results in someone being hurt or killed, and $500,000 if there are two or more victims.

Michigan law requires that anyone who drives regularly in Michigan must have this insurance coverage in the following amounts:

• “ [N]ot less than $250,000.00 because of bodily injury to or death of 1 person in any 1 accident.”
• “ [N]ot less than $500,000.00 because of bodily injury to or death of 2 or more persons in any 1 accident.”

Prior to July 2, 2020, the legally required minimum limits for this insurance were $20,000 and $40,000. Importantly, the law provides that a driver “may choose to purchase lower limits” of $50,000 and $100,000. In Michigan, to choose the lower bodily injury liability coverage, you must sign a specific form that has been approved by the Michigan Insurance Commissioner.

The Coverage Amount Attorneys Recommend for Michigan Drivers

Attorneys recommend that Michigan drivers carry bodily injury liability insurance with limits of $500,000 and $1,000,000. This is more than what the law requires, but the risk to drivers and their personal and family assets is greater now than it has ever been, thus necessitating even greater protection.

In Michigan, when a driver is at fault in causing a car accident and is determined to be liable for compensation or damages that exceed the limit in their bodily injury liability insurance policy, then the driver will have to pay for that excess. The auto insurance company won’t. The insurer’s obligation to pay ends when the policy limit is reached.

Property Protection Insurance (PPI)

In Michigan, Property Protection Insurance (PPI) is one of the required types of auto insurance that state law mandates drivers to carry. It is one of the three essential parts of a Michigan no-fault policy that must be purchased and carried on every vehicle. The other two are personal injury protection (PIP) and bodily injury and property damage liability (BI/PD).

PPI provides protection if you cause damage to properly parked vehicles or fixed properties such as buildings or lampposts within the state. It covers damage to other people's property, including buildings, poles, and fences, and will also pay for damage your car does to other people's properly parked vehicles. This is typically the only time a vehicle will be covered under PPI. Outside of Michigan, your property damage liability insurance covers your legal liability for property damage.

PPI coverage always has a $1 million policy limit and is paid without regard to fault in an auto accident. For instance, if you are waiting to make a left turn and another vehicle strikes you and pushes you into a telephone pole, both your insurance company and the insurance company of the wrongdoer will share equally in the cost to repair or replace the telephone pole.

The No-Fault Act requires all auto policies to carry PPI coverage. This means that if your car damages someone's property in Michigan, your insurer will pay for the damage through your PPI coverage.

Michigan's new auto insurance law, which came into effect on July 1, 2020, provides insurance coverage options, lowers rates for Michigan drivers, maintains the highest benefits in the country, and strengthens consumer protections.

Frequently asked questions