Michigan Auto Insurance: Understanding The Listing Process

Michigan's auto insurance law requires drivers to carry no-fault insurance, which provides personal liability and property damage coverage. This basic no-fault policy has three mandatory components: Personal Injury Protection (PIP), Property Protection (PPI), and Residual Bodily Injury and Property Damage Liability (BI/PD). PIP covers medical expenses, wage loss, and replacement services for up to three years after an accident. PPI provides coverage for damage to other people's property in Michigan, up to $1 million. BI/PD covers defence costs and damages for accidents resulting in serious injuries or death, with minimum coverage limits of $20,000 per person and $40,000 per accident. These insurance requirements are essential for legal driving in Michigan, and non-compliance can result in fines and jail time.

Personal Injury Protection (PIP)

PIP benefits cover a range of expenses, including medical expenses, attendant care, medical mileage, and replacement services. Medical expenses covered by PIP include doctor visits, hospitalizations, surgeries, procedures, medications, rehabilitation, and vehicle or home modifications that may be necessary due to injuries sustained in the accident. Attendant care refers to nursing services that help victims with activities of daily living, such as bathing, dressing, and medication administration. Medical mileage reimburses victims for transportation costs incurred while seeking medical treatment. Replacement services cover the cost of hiring someone to perform household tasks that the victim can no longer do due to their injuries, such as housekeeping, laundry, and grocery shopping.

In Michigan, PIP is required for all drivers, and there are severe penalties for driving without this type of insurance. As of July 2, 2020, Michigan no longer mandates unlimited PIP coverage, and drivers can choose from different coverage levels, including $50,000, $250,000, $500,000, or unlimited coverage. The cost of PIP in Michigan depends on factors such as the level of medical coverage chosen, the driver's age, driving history, and income.

Property Protection (PPI)

Property Protection Insurance (PPI) is one of the mandatory types of auto insurance that Michigan state law requires 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 for up to $1 million if you cause damage to properly parked vehicles or fixed properties such as buildings, fences, trees, or lampposts in the state of Michigan. This type of coverage 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 covers the cost of damage to tangible property resulting from a car accident, regardless of who was at fault. For damaged or destroyed property, coverage will pay for the "lesser of reasonable repair costs or replacement costs less depreciation." Coverage for the "loss of use" of a damaged vehicle (that was parked and unoccupied at the time that it was struck and damaged by another driver) has been interpreted to include the "value" or cost of a rental car.

PPI does not cover car accident-related damage to vehicles, their contents, or trailers if they are "parked in a manner" that causes "unreasonable risk of the damage which occurred." It also does not cover "property damage to utility transmission lines, wires, or cables arising from the failure of a municipality, utility company, or cable television company." Additionally, PPI will not cover property damage outside of Michigan.

Residual Bodily Injury and Property Damage Liability (BI/PD)

The BI/PD portion of your auto insurance policy will cover your legal defence costs and any damages you are deemed liable for, up to the limits of your policy. This means that if you are found legally responsible for injuries or property damage in an accident, your insurance will cover the costs, up to the specified limits.

Prior to July 2, 2020, the minimum coverage limits for BI/PD in Michigan were as follows:

• Up to $20,000 for a person who is hurt or killed in an accident.
• Up to $40,000 for each accident if multiple people are hurt or killed.
• Up to $10,000 for property damage in another state.

However, under the new auto insurance law in Michigan, the default BI/PD coverage limits have increased to:

• Up to $250,000 for a person who is hurt or killed in an accident.
• Up to $500,000 for each accident if several people are hurt or killed.
• Up to $10,000 for property damage in another state.

It's important to carefully consider your coverage limits as this choice will have financial implications. If you are responsible for injuries to another person, you may be liable for damages beyond your coverage limit, which could result in significant financial consequences.

Additionally, drivers in Michigan have the option to purchase other BI/PD coverage limits. The lowest coverage limits available are:

• $50,000 for a person who is hurt or killed in an accident.
• $100,000 for each accident if multiple people are hurt or killed.
• $10,000 for property damage in another state.

To make an informed decision, it is recommended to consult with a licensed insurance agent or financial advisor to discuss the various options available and choose the coverage limits that best suit your needs.

Collision and Comprehensive Insurance

In Michigan, drivers are required by law to carry No-Fault insurance, which covers personal liability and property damage. This basic insurance does not include collision and comprehensive insurance, which are optional.

If your car is an older model, you may decide against collision and comprehensive coverage. However, if your car is financed, the loan company may require you to purchase this coverage.

Broad form collision insurance coverage waives the deductible if the driver of the insured vehicle was "not substantially at fault" in causing the accident. In contrast, under standard collision insurance coverage, the deductible must be paid regardless of fault. Limited collision coverage is further divided into two types: with and without a deductible. If the driver is found to be "substantially at fault," limited collision coverage with a deductible will require the deductible to be paid before the insurance company begins paying for repairs. If the driver is found to be "not substantially at fault," limited collision coverage without a deductible will pay for repairs with no deductible required.

Uninsured and Underinsured Motorists Coverage

Uninsured and underinsured motorist coverage is optional in Michigan but highly recommended. It is estimated that 21% of Michigan drivers do not have the no-fault insurance required by law, and in some cities, like Detroit, over half of all drivers are uninsured. This means that if you are in a car accident, there is a significant chance that the other driver will not be insured and you will be unable to receive full compensation for your injuries. Uninsured motorist coverage is relatively inexpensive and can provide vital protection in the event of an accident with an uninsured driver.

Uninsured motorist coverage comes into effect when you are injured by an at-fault driver who does not have insurance or cannot be identified (in the case of a hit-and-run). In this case, you would typically file a claim with your own insurance company, which would "step into the shoes" of the uninsured driver and pay you compensation for your injuries and damages. This coverage also applies if you were a passenger in someone else's car and they had uninsured motorist coverage.

Underinsured motorist coverage, also known as UIM coverage, is similar but applies when the other driver does have insurance, but their coverage is insufficient to fully compensate you for your injuries and damages. In this case, your insurance company would pay you the difference between the other driver's policy limits and the amount of UIM coverage you have purchased.

Both types of coverage are extremely important for protecting yourself and your family financially in the event of a car accident. While there are no minimum coverage amounts mandated in Michigan, it is generally recommended that drivers purchase as much uninsured and underinsured motorist coverage as they can afford, with recommended coverage limits of at least $500,000 per person and $1,000,000 per accident.

Frequently asked questions