Insurance Coverage For Michigan Drivers: Whose Policy Applies?

In Michigan, car insurance generally follows the car, not the driver. However, there are exceptions to this rule, and in some cases, insurance will follow the driver. For instance, if you have your own auto insurance policy and are injured in a crash while driving someone else's car, your insurance will follow you and cover medical expenses and lost wages. Conversely, if you don't have your own insurance policy and are injured while driving someone else's vehicle, the insurance will follow the driver, and you will receive No-Fault benefits from the car owner's insurance.

No-fault insurance and liability coverage

In Michigan, car insurance usually follows the car rather than the driver. This means that if you lend your car to someone and they have an accident, your car insurance will cover any resulting damage. However, there are a few situations where car insurance follows the driver.

In Michigan, No-Fault insurance is the mandatory car insurance for anyone who drives regularly in the state. The Michigan No-Fault Insurance law was designed to help people injured in car accidents. It ensures that car accident victims get the help they need promptly and without regard to fault. If you are injured in a car accident, your auto insurance company will pay for your medical bills and lost wages, regardless of who caused the crash. This is different from the tort liability system, which preceded it and often left car accident victims without help.

Under the Michigan No-Fault Insurance law, auto insurance companies are not obligated to pay for more than 56 hours per week of in-home, family-provided attendant care. Additionally, medical providers must conform their charges for medical care to a new Medicare-based fee schedule. As of July 2, 2020, drivers are also required to carry bodily injury liability insurance of at least $250,000 for injury or death to one person in an accident and $500,000 for two or more people.

While No-Fault insurance follows the driver in Michigan, liability coverage typically follows the car. If you let someone borrow your car and they cause an accident, your bodily injury liability insurance will pay for injuries to the other driver and their passengers. Similarly, your property damage liability insurance will pay for damage to the other driver's car. If the person who borrowed your car causes damage that exceeds your coverage limits, their liability policy can act as secondary coverage. However, their coverage will only kick in after yours is exhausted.

Collision insurance

In Michigan, car insurance usually follows the car and not the driver. However, there are a few exceptions where insurance follows the driver. In the case of collision insurance, it can follow both the car and the driver.

There are three main types of collision insurance coverage in Michigan: standard, broad form, and limited. Standard collision insurance requires the payment of a deductible, regardless of whether the insured driver was at fault. On the other hand, broad form collision coverage waives the deductible if the driver was "not substantially at fault" in the accident. However, if the driver was \"more than 50%\" at fault, the deductible must be paid before the insurer's benefits are provided. Limited collision coverage is similar to standard collision, but benefits are denied if the insured driver was "substantially at fault."

It is important to note that collision insurance may not be worth the extra cost due to Michigan's "mini-tort" law. This law allows individuals involved in an accident with an insured at-fault driver to collect up to $3,000 from their insurance company to cover damages or deductibles. Therefore, even if an individual has a deductible, they can have it reimbursed by the at-fault driver's insurance company. However, mini-tort only applies to collision/property damage and does not cover injuries sustained in the accident.

Uninsured motorist coverage

In Michigan, car insurance usually follows the car and not the driver. However, there are a few exceptions where the insurance follows the driver. One such exception is uninsured motorist coverage.

UM coverage ensures that injured parties can recover compensation and damages, including pain and suffering compensation and "excess" No-Fault PIP medical benefits. Without UM coverage, it may be challenging to obtain full compensation from an uninsured at-fault driver.

In the event of an accident with an uninsured driver, a UM claim is typically filed with the insured person's own insurance company. The insurance company then "steps into the shoes" of the uninsured driver and pays for personal injury damages that the uninsured driver would have been liable for.

Additionally, UM coverage can also provide protection in the event of a crash with an underinsured driver. Underinsured motorist coverage (UIM) is also optional in Michigan but highly recommended due to the high cost of car insurance in the state. UIM coverage helps ensure that injured parties receive adequate compensation when the at-fault driver's insurance policy limits are insufficient to cover the full extent of the damages incurred.

Full-coverage insurance

In Michigan, full-coverage auto insurance is generally more expensive than minimum coverage. However, it offers more protection than the minimum liability coverage and can help prevent financial disaster in the event of a major accident. It is typically defined as a policy that provides collision and comprehensive insurance, plus at least the state's minimum required coverage. This includes $50,000 in bodily injury coverage per person (up to $100,000 per accident) and $10,000 in property damage coverage. It also includes personal injury protection and property protection insurance.

The average cost of a full-coverage car insurance policy in Michigan is $3,397 per year, while a state-minimum policy costs an average of $1,300 per year. It is worth noting that Michigan is one of the most expensive states for auto insurance in the country, and many drivers choose to only meet the minimum car insurance requirements. However, with the establishment of new insurance laws, the average cost of auto insurance in Michigan has dropped by more than 50%, making full-coverage insurance a more attractive option for many residents.

It is important to note that in Michigan, car insurance usually follows the car, not the driver. This means that if you lend your car to someone and they have an accident, your insurance will likely cover any resulting damage. However, there are situations where car insurance follows the driver. For example, if the car's insurance limits are exceeded, the driver's coverage can be used to fill in the gaps. Additionally, if you are driving someone else's car and cause a crash that results in injury or death to someone else, you will likely have liability coverage through your own auto insurance (if you have it) and the policy covering the car you are driving.

Insurance requirements and penalties

Michigan's auto insurance laws are designed to ensure that drivers have adequate financial protection in the event of an accident. These laws mandate specific types of coverage and impose penalties for non-compliance.

Michigan law requires vehicle owners to carry No-Fault auto insurance, which covers personal injuries, property damage, and liability for bodily injury. This type of insurance follows the driver in most cases, but it can also follow the vehicle, depending on the policy's contract language. The No-Fault insurance includes four coverage types: Personal Injury Protection (PIP), Property Protection Insurance (PPI), Bodily Injury, and Property Damage. PIP coverage provides unlimited lifetime medical benefits for accident-related injuries and, in the event of serious injuries to another person in an accident, the law requires a minimum bodily injury liability coverage limit of $250,000 per person and $500,000 per accident. However, drivers may opt for lower limits of $50,000 and $100,000. The minimum coverage for Property Damage is $10,000, although it is recommended to carry at least $100,000.

Driving without insurance in Michigan is a serious offence and can lead to various penalties. Fines for driving without insurance range from $200 to $500, and drivers may also be required to pay court costs and administrative fees. Additionally, driving without insurance can result in the suspension of the driver's license. These penalties are separate from any civil liabilities that may arise if an uninsured driver is involved in an accident, which can lead to substantial out-of-pocket expenses.

It is important to note that insurance requirements and penalties can be complex and may vary depending on individual circumstances. Consulting with a legal professional who is familiar with Michigan's insurance laws is advisable to ensure compliance and understand the full extent of the requirements and penalties.

Frequently asked questions