Auto Insurance In Michigan: What's The Law?

Auto insurance is required in Michigan, and the state has historically been one of the more expensive states in which to buy insurance. This is because Michigan requires far more coverage than other states. To be a legal driver in Michigan, you must adhere to the state's guidelines or face steep penalties. Michigan is a no-fault state, meaning that when an accident happens, your own insurance foots the bill, regardless of who is at fault. The minimum insurance requirements in Michigan are $50,000 for bodily injury per person, $100,000 for bodily injury per accident, and $10,000 for property damage per accident.

Minimum insurance requirements

Michigan is a no-fault state, which means that drivers must file claims with their own insurer after an accident, regardless of who was at fault. Michigan law requires all drivers to carry a minimum amount of car insurance coverage. Failure to do so can lead to fines, a license suspension, and other penalties.

The minimum insurance requirements in Michigan are as follows:

• Bodily injury liability: $50,000 per person and $100,000 per incident. These coverages help pay for medical bills and lost wages if a driver injures another person in an accident. The default coverage limits are $250,000 per person and $500,000 per incident, which offer more protection but also cost more.
• Property damage liability: $10,000 per accident. This coverage pays for damage to another person's vehicle or property.
• Personal injury protection (PIP): This coverage pays for medical expenses, lost wages, and replacement services if a driver is injured in an accident. There are several options for PIP coverage, including a default option with no maximum limit.
• Property protection insurance (PPI): This coverage pays for damage to other people's property, such as buildings, fences, and parked cars, up to $1 million.
• Residual bodily injury and property damage liability (BI/PD): This coverage pays for defence costs and damages if a driver is found liable for an accident in which someone was seriously injured or killed. The minimum limits for this coverage are $20,000 per person, $40,000 per accident, and $10,000 for property damage in another state.

It's important to note that these are the minimum insurance requirements in Michigan. Drivers may choose to purchase additional coverage to protect themselves financially in the event of an accident.

No-fault insurance

In 2019, Michigan became a no-fault insurance state. This means that if you are involved in a car accident, no-fault insurance will reimburse you for hospital or medical expenses, lost wages from an inability to work, and funeral costs, regardless of who is responsible for the accident. No-fault insurance does not, however, cover any damage to your car.

Michigan's No-Fault Insurance law was designed to help people who have been injured in a car accident. It is a unique system that ensures car accident victims get the help they need promptly and without regard to fault.

Under the No-Fault Insurance law, if you are injured in a car accident, you will turn to your own auto insurance company for the benefits you will need to recover and begin rebuilding your life. Those benefits will pay for your accident-related medical bills and your lost wages if your injuries disable you from returning to work. Getting the help you need does not depend on and require you to sue the driver who caused your accident.

The way Michigan No-Fault insurance works is that if you are injured in a car accident, an auto insurance company pays your medical bills and lost wages regardless of whether you were at fault. Either your own insurer or the legally responsible company will pay once you file an application for benefits.

In Michigan, there are six options for PIP coverage that the policyholder can choose from, including a default option with no maximum limit. The most significant decision that Michigan drivers will make is selecting a level of PIP coverage.

No-Limit PIP Option

This option is available to anyone purchasing No-Fault Insurance and is the closest to what was offered under the Old Law. This option covers all reasonable expenses incurred for the care, recovery, and rehabilitation of the injured person. Under this Option, the new law mandates premium reductions to be "an average of 10% or greater per vehicle".

$500,000 PIP Option

This option is also available to anyone purchasing No-Fault Insurance. This option only covers up to $500,000 incurred for the injured person's care, recovery, and rehabilitation. Under this option, the new law mandates premium reductions to be "an average of 20% or greater per vehicle".

$250,000 PIP Option

This option is available to anyone purchasing No-Fault Insurance. This option only covers up to $250,000 incurred for the injured person's care, recovery, and rehabilitation. Under this option, the new law mandates premium reductions to be "an average of 35% or greater per vehicle".

$50,000 PIP Medicaid Option (Limited Availability)

This option is only available to persons covered under Medicaid whose spouse and household relatives are also either on Medicaid, have other health insurance, or have other PIP coverage through a different policy. Under this option, the new law mandates premium reductions to be "an average of 45% or greater per vehicle".

Opt-Out (Limited Availability)

This option is only available if you and your spouse and household relatives meet certain criteria, including being "qualified persons" under either Medicare Parts A and B or other qualifying health insurance policies. If you select this option, you will also have very strict notification requirements if you or any of your household relatives ever lose qualified health coverage.

Bodily Injury Coverage

Under both the Old and New No-Fault Systems, all motorists must purchase a minimum amount of bodily injury coverage. This coverage is the amount an insurance company will cover the driver and owner of a motor vehicle who is negligent and injures another person.

Failure to show proof of insurance

In Michigan, drivers are required to carry proof of insurance in their vehicles at all times. This can be shown in the form of a physical or electronic "certificate of insurance". Failure to show proof of insurance when asked by a law enforcement officer can result in several penalties.

Firstly, a driver may have their license suspended and face substantial fines. Under Michigan law, failure to provide proof of insurance is considered a civil infraction, with a fine of up to $50. If a driver is found to be driving without insurance, this is considered a misdemeanor, with fines ranging from $200 to $500 and potential jail time of up to one year. Additionally, the court may order the driver to surrender their license, leading to a suspended license.

Secondly, failure to provide proof of insurance can impact the driver's insurance premium. Insurance companies may increase rates or deny renewal if they believe the driver has been operating a vehicle without valid insurance. This is due to the abstract of the court record, which does not distinguish between driving without proof of insurance and driving without insurance.

Thirdly, failure to provide proof of insurance can restrict the driver's ability to transfer, renew, or replace their license plate. It can also impact their ability to register their vehicle.

Finally, it is important to note that driving without insurance in Michigan can result in financial consequences in the event of an accident. Without insurance, a driver may be personally responsible for all vehicle repairs, medical costs, and legal expenses arising from the accident.

To avoid these penalties, it is important for Michigan drivers to ensure they have valid insurance and carry proof of insurance with them at all times when operating a motor vehicle.

Additional auto insurance coverage

Michigan is a no-fault state, which means that drivers must carry no-fault insurance. While there are mandatory types of car insurance coverage, there are also several additional auto insurance coverage options in Michigan.

Collision Insurance

Collision insurance pays to repair your vehicle after a covered at-fault accident with another vehicle or a stationary object. It also covers rollover accidents and pothole damage. A collision deductible applies in a claim situation.

Comprehensive Insurance

Comprehensive insurance pays to repair your vehicle after non-accident incidents, like floods and falling objects. This coverage also pays for vehicle theft, vandalism, fire, and cracked windshields. Comprehensive insurance also has a claim deductible.

Uninsured/Underinsured Motorist Insurance

Uninsured and underinsured motorist coverage pays for injuries and vehicle damage if you get into an accident with a driver who does not have insurance or does not have enough insurance to cover the losses.

Residual Bodily Injury Liability

If you are involved in an accident that causes serious injury to someone else and has a lasting impact after the initial healing, residual bodily injury liability (RBI) offers protection to cover medical expenses that result from the accident.

Penalties for driving without insurance

Driving without insurance in Michigan is considered a misdemeanor. The penalties for doing so are some of the harshest in the nation. If convicted, you may have to pay a fine of up to $500 and face up to one year in jail. Your driver's license will be suspended, and you will be unable to renew your plates until your vehicle is insured. You may also be required to purchase an SR-22 certificate of financial responsibility to get your license reinstated.

If you are caught driving without insurance in Michigan, you will also be disqualified from receiving No-Fault benefits. This means that if you are injured in a car accident, you will not be able to sue the at-fault driver for pain and suffering compensation, even if you are completely innocent. You will have to pay for your own medical expenses and lost wages, and you will not be reimbursed for vehicle damage.

In addition, if you cause an accident while driving without insurance, you will be held financially liable for the other driver's medical costs, lost wages, and vehicle damage. You may also be required to pay for their pain and suffering and other compensation.

The consequences of driving without insurance in Michigan can be severe, and it is important to ensure that you have the required minimum insurance coverage to avoid these penalties.

Frequently asked questions