Michigan's Auto Insurance: Minimum Coverage Requirements Explained

Michigan has minimum liability limits of $50,000 per person and $100,000 per accident for bodily injury, along with $10,000 for property damage liability per accident. These are the minimum insurance requirements for Michigan drivers, and they are designed to provide financial security and protection in the event of an accident.

Personal injury protection (PIP)

As of July 2, 2020, Michigan no longer mandates unlimited PIP, and drivers can choose their desired level of coverage. The options are:

• Up to $500,000 in coverage per person per accident
• Up to $250,000 in coverage per person per accident
• Up to $50,000 in coverage per person per accident (only for drivers enrolled in Medicaid who meet additional eligibility requirements)
• Opt-out with no PIP coverage (only for drivers who have Medicare parts A and B and meet additional eligibility requirements)

If a policyholder has a health insurance plan that covers car accident injuries, they can coordinate their car insurance coverage for a lower PIP premium. This means they would only need to use their PIP insurance for costs that their health insurance policy doesn't cover.

PIP covers medical services and medication, surgical services and hospital expenses, and treatment in accordance with a recognized religion. If a person is disabled in a car accident, PIP will pay for their lost wages for up to three years or until they recover and return to work, with a limit of 85% of their normal salary or $6,615 per month, whichever is smaller. PIP also provides up to $20 per day to pay for tasks the disabled person would normally handle but cannot, such as laundry, house cleaning, and snow shovelling.

In the event of the policyholder's death in a car accident, PIP would cover funeral and burial expenses up to $5,000. The policyholder's dependents are also entitled to work-loss benefits with the same limits: 85% of the policyholder's normal wages or up to $6,615 per month.

To claim PIP benefits, one must file an application within one year of the date of the car accident. The insurance company is supposed to pay the benefits within 30 days of receiving "reasonable proof" of what is owed. If the company doesn't pay on time, the unpaid PIP benefits are considered "overdue," and the policyholder can sue the company within one year of the date the benefits were incurred.

Property protection insurance (PPI)

PPI provides protection if you cause damage to properly parked vehicles or fixed properties such as buildings or lampposts within 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 limits are $1 million, and personal injury protection (PIP) limits match the total BI limits per incident that you choose.

Michigan became a no-fault state in 2019, so if you get into a car accident, your insurance policy will cover medical expenses and lost wages.

Residual bodily injury liability

The minimum coverage limits for residual bodily injury liability insurance in Michigan are $250,000 per person and $500,000 per accident. However, drivers have the option to purchase lower limits of $50,000 per person and $100,000 per accident. It is important to note that the coverage limit chosen will have financial consequences. If the damages exceed the policy limit, the driver may be required to pay any amount over the limit, which could result in severe financial consequences such as the seizure of assets, wage garnishment, or suspension of their driver's license.

While the minimum coverage limits are set by law, attorneys in Michigan recommend that drivers carry higher coverage limits of $500,000 per person and $1,000,000 per accident to ensure adequate protection. This is because, in the event of a serious accident, the costs of injuries and damages can quickly exceed the minimum coverage limits.

Residual property damage liability

In Michigan, auto insurance is mandatory and follows a "no-fault" system, meaning that in the event of a car accident, individuals must turn to their own insurance coverage to pay for their medical treatment and other out-of-pocket losses, regardless of who caused the crash. This is where residual property damage liability comes into play.

Under this type of insurance, your provider will pay up to your coverage limit if you are found legally liable for damages. The minimum coverage limits for policies issued before July 2, 2020, are 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 several people are hurt or killed.
• Up to $10,000 for property damage in another state.

However, with the recent changes in Michigan's auto insurance law, the default coverage limits have increased. For policies issued or renewed after July 1, 2020, the new default coverage limits are:

• 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 is worth noting that drivers have the option to purchase other coverage limits, but they must be mindful of the financial consequences of their choices. If they choose a lower coverage limit and are found responsible for injuries to another person, they may be liable for damages beyond their policy limit. This could result in significant financial repercussions, such as the seizure of assets, wage garnishment, or suspension of their driver's license.

Liability coverage

Michigan is a no-fault insurance state, meaning that your insurance provider will reimburse you for hospital expenses, medical expenses, wage losses, and funeral costs in the event of a car accident, regardless of who is responsible for the accident. However, no-fault insurance does not cover any damage to your car.

Property Damage Liability Coverage

Property damage liability coverage safeguards your assets if you are found legally responsible for an accident. It covers damage you may cause to another person's property or vehicle. The minimum coverage for property damage liability in Michigan is $10,000, but insurance providers recommend carrying a minimum of $100,000. This is because, if you cause an accident in another state, you may be responsible for the other driver's vehicle damage. For example, if you travel to Ohio and cause a crash, you would be responsible for the other driver's car damage as Ohio is a tort state.

Bodily Injury Liability Coverage

Bodily injury liability coverage safeguards your assets if you are found legally responsible for an accident and covers certain expenses associated with bodily harm sustained by the other parties. The minimum coverage for bodily injury liability in Michigan is $50,000 per person and $100,000 per incident. However, insurance providers recommend carrying a minimum of $500,000 per person and $1,000,000 per accident to fully protect yourself. This additional coverage only costs a few dollars more and can provide financial security in the event of an accident.

Frequently asked questions