Michigan's No-Fault Auto Insurance: What You Need To Know

Michigan is one of about a dozen US states that follow a no-fault car insurance system. This means that if you're injured in a car accident, your own insurance coverage will pay for your medical treatment and other out-of-pocket losses, regardless of who caused the crash. Michigan's No-Fault Insurance law was designed to ensure that car accident victims receive prompt assistance without regard to fault. This system also limits lawsuits so that benefits can be paid quickly.

Personal Injury Protection

Michigan is a No-Fault state for auto accidents. This means that if you are injured in a car accident, your own auto insurance company will pay for your medical bills and lost wages, regardless of who was at fault for the accident. This is where Personal Injury Protection (PIP) comes in.

PIP insurance in Michigan is part of a person's auto No-Fault insurance coverage. It pays for a person's auto accident-related medical expenses and lost wages after they have been injured in a car accident. PIP benefits are paid by the injured person's own auto insurance company, regardless of who was at fault for the accident. This allows people to obtain medical care and treatment, and begin collecting lost wages, without having to delay until they can prove someone else was to blame and successfully sue.

The benefits provided by PIP coverage include:

• All costs of medical care made necessary by the accident
• Wages lost due to the injury (up to 85% of income you would have earned if you hadn't been injured, for up to three years)
• Up to $20 per day in "replacement services" – for someone to take care of household chores that you're unable to perform because of the accident
• Benefits for funeral and burial expenses
• Benefits for dependents in the event of a person's death

There are several levels of PIP medical coverage available to Michigan drivers. These levels represent the most a driver's auto insurance company will pay per person, per accident, for an injured person's expenses under PIP medical coverage. The levels of coverage include:

• Unlimited medical coverage
• $50,000 cap on medical expenses for drivers who are on Medicaid
• $250,000 cap on medical expenses
• $500,000 cap on medical expenses

Drivers who are on Medicare can opt out of PIP medical coverage entirely.

Property Protection Insurance

Michigan is a "no-fault" state for auto insurance, which means that if a person is injured in a car accident, their own insurance coverage will pay for their medical treatment and other out-of-pocket losses, regardless of who caused the crash.

One of the mandatory coverages that all drivers must carry as per Michigan's No-Fault auto insurance law is Property Protection Insurance (PPI). This insurance covers the cost of damage to tangible property resulting from a car accident.

PPI covers accidental damage to another person's tangible property resulting from a car accident. This includes "physical injury to or destruction of the property and loss of use of the property so injured or destroyed". For damaged or destroyed property, PPI will pay for the "lesser of reasonable repair costs or replacement costs less depreciation". Coverage for the "loss of use" of a damaged vehicle has been interpreted to include the "value" or cost of a rental car.

PPI will cover car accident-related damage to property such as safely parked cars, fences, or trees. It is important to note that PPI will not cover car accident-related damage to vehicles if they are "parked in a manner" that causes "unreasonable risk of the damage which occurred". Similarly, PPI will not cover "property damage to utility transmission lines, wires, or cables arising from the failure of a municipality, utility company, or cable television company".

The payout on a PPI claim will not exceed $1 million. If the driver of the vehicle involved was at fault for causing the property damage, the property owner may be able to sue the driver for "tort liability" for damages in "excess" of the $1 million limit up to $4 million when "liability insurance required by federal statute or regulation is in effect".

A property owner cannot sue on this type of claim "later than 1 year after the accident". If a property owner is forced to file a lawsuit for insurance benefits, they must name the auto insurance company for the involved vehicle's owner and/or driver as the defendant because the actual responsible party with this type of claim is the owner's or driver's auto insurer.

Residual Liability

In Michigan, if you are found legally at fault for a car accident, your no-fault policy will provide "residual liability" protection. This will cover your defence costs and any damages you are found liable for as a result of the accident, up to the limits of the policy.

The minimum coverage amounts provided by residual liability protection in Michigan are as follows:

• $20,000 per person hurt or killed in an accident
• $40,000 per accident in which more than one person is hurt or killed
• $10,000 per accident for property damage for an accident that occurs in another state

It is important to note that these are the minimum coverage amounts and you can pay for higher limits if desired.

In addition, residual liability insurance in Michigan covers your "tort liability" for the following up to the limit you selected in your policy:

• Pain and suffering compensation
• Excess medical benefits (which can include car accident-related medical bills that exceed the No-Fault PIP medical benefits coverage level or all 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

Mini-tort claims

In Michigan, a mini-tort claim is an auto accident victim's right to recover vehicle damage costs from the at-fault driver, either through their insurance company or from them personally. The maximum amount recoverable is $3,000 for car accidents occurring after July 1, 2020, an increase from the previous cap of $1,000. It is important to note that the mini-tort law covers only vehicle damage and not injuries. If you were injured, you would need to refer to your No-Fault insurance policy to understand your entitlements.

The mini-tort law is designed to compensate individuals involved in a car accident that was not their fault for out-of-pocket expenses resulting from the collision. It is premised on the idea that individuals have the freedom to purchase their own collision coverage. If an individual has existing collision coverage, the full vehicle repair costs from the accident will be paid from that policy. However, even with collision coverage, individuals can still make a mini-tort claim for incidental, out-of-pocket expenses such as a deductible, up to the maximum of $3,000.

If you have No-Fault insurance coverage and are found to be at fault for an accident, the law will limit your personal liability to $3,000 for vehicle damage. In other words, the law protects you from vehicle damage claims that exceed this amount. If you do not have automobile insurance and are found to be at fault, the mini-tort law will not shield you from personal liability, and you will be responsible for all vehicle damage caused.

The amount you can recover from a mini-tort claim depends on your percentage of fault in the car accident. For example, if the car damage amounts to $100 and the other driver is deemed 75% responsible, that driver would pay $75, and you would be responsible for the remaining $25. It is worth noting that in most car accidents, one person is usually found to be 100% at fault. These cases are typically handled in small claims court, but either party may request to move the case to a higher jurisdiction.

To file a mini-tort claim in Michigan, you will need to:

• Obtain necessary information from the at-fault driver, including their name, address, vehicle registration number, and a copy of their driver's license and proof of auto insurance.
• Get a copy of the police report, also called a "UD-10" or "Traffic Crash Report," to verify the personal and insurance information provided by the at-fault driver.
• Get an estimate of the cost to repair the damage to your car from a collision car repair body shop.
• Obtain a copy of the Declarations Page from your auto insurance policy, which lists your coverage, coverage dates, and proves you were covered at the time of the accident.
• Notify the at-fault driver's auto insurance company of your claim and provide supporting documents and evidence to collect your payment.

Uninsured Motorist Coverage

Michigan is a no-fault state for auto accidents, meaning that if you are injured in a car accident, your own auto insurance company will pay for your medical bills and lost wages, regardless of who caused the crash.

However, it is estimated that 21% of all Michigan drivers do not have the no-fault insurance that is required by law. This means that if you are in a Michigan car crash, you have a 1 in 5 chance of being unable to receive full compensation for your injuries from the driver who caused your accident.

This is where Uninsured Motorist Coverage (UM) comes in. UM coverage in Michigan provides a valuable source of legal recovery for pain and suffering compensation and "excess" No-Fault Personal Injury Protection (PIP) medical benefits and other economic losses for people who have been injured in a car accident caused by an "uninsured" driver.

In Michigan, an uninsured driver is someone who does not have auto insurance coverage as required by Michigan's No-Fault law. UM coverage pays money damages to car accident victims when the driver who caused the accident had no insurance.

If you have UM coverage and have been injured in a car accident caused by an uninsured driver, you will file a claim with your own auto insurance company. Your insurance company will then pay the compensation and money damages that would have been recovered from the at-fault, uninsured driver's auto insurance company if they had been insured.

UM coverage is not mandatory in Michigan, but it is highly recommended, especially if you live in a city like Detroit, where it is estimated that over half of all drivers are uninsured. Without UM coverage, you risk being unable to recover the pain and suffering compensation and the "excess" No-Fault PIP medical benefits that you would otherwise be entitled to.

UM coverage is also relatively inexpensive, with recommended coverage limits of $500,000 per person and $1,000,000 per accident. For the price of a movie ticket and a box of popcorn, you can easily add this vital coverage to your policy.

Frequently asked questions