Auto Insurance In Michigan: Understanding The Minimum Requirements

Michigan is a no-fault state, meaning that your insurance provider will cover hospital or medical expenses, wage losses, and funeral costs in the event of a car accident, regardless of who is responsible. In Michigan, the minimum amount of auto insurance coverage is $50,000 per person for bodily injury, with a total maximum of $100,000 per incident, and $10,000 for damage to another person's property.

Minimum liability coverage

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

The minimum liability coverage in Michigan is 50/100/10, which means:

• $50,000 in bodily injury liability per person per accident
• $100,000 total bodily injury liability per accident
• $10,000 in property damage liability per accident

These minimum requirements for bodily injury and property damage liability are designed to help financially protect the other driver and their passengers if you are in an accident, as well as any property that does not belong to you.

While these are the state-mandated minimums, the default coverage limits offered by insurance companies are typically higher, at 250/500/10. These higher limits offer more robust coverage and cost more. If you can afford it, it is generally recommended that you purchase as much coverage as possible, as the minimum coverage may not be sufficient in a serious accident.

In addition to the minimum liability coverage, Michigan law also requires drivers to have personal injury protection (PIP) and property protection insurance (PPI) as part of their no-fault insurance policy. PIP coverage pays for medical expenses and lost wages, while PPI coverage pays for damage to other people's property, such as fences, parked cars, or homes, up to a limit of $1 million.

It is important to note that the minimum liability coverage in Michigan only applies to accidents that occur outside of the state. For accidents that occur within Michigan, your no-fault insurance will cover the property damage to your vehicle.

Personal injury protection (PIP)

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 return to work, whichever comes first. There is a monthly maximum and a limit of $6,615 per month, and payments reflect 85% of the person's wages.

PIP also provides a benefit of up to $20 per day to cover tasks that the injured person would normally handle but cannot due to their injuries. These tasks include laundry, house cleaning, and snow shovelling. There are limits on this benefit, so it is important to check with the insurance provider.

In the unfortunate event that a policyholder dies in a car accident, PIP would cover funeral and burial expenses of 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 a maximum of $6,615 per month.

The cost of PIP in Michigan depends on various factors, including the level of medical coverage chosen, whether the coverage is coordinated with health insurance, the selection of a deductible, driving history, age, and income. Since the no-fault law changed in 2020, Michigan has mandated insurers to reduce statewide PIP medical premiums. However, Michigan still has the highest average cost for car insurance in the country.

Property protection insurance

PPI does not cover damage to vehicles, their contents, or trailers if they were parked in a manner that caused an unreasonable risk of damage. It also does not cover damage to utility transmission lines, wires, or cables arising from the failure of a municipality, utility company, or cable television company. This insurance also does not cover out-of-state accidents.

PPI is mandatory and required on every insurance policy in Michigan, with a mandatory coverage of $1 million. This coverage applies regardless of fault. If the driver of the insured vehicle is found to be at fault and the damage exceeds the $1 million limit, the property owner may be able to sue the driver for "tort liability" for damages of up to $4 million.

Residual bodily injury liability

In Michigan, drivers are required to carry No-Fault auto insurance, which covers personal injuries, property damage, and liability for bodily injury. This includes Residual Bodily Injury Liability (BI) coverage, which protects drivers financially in the event they cause a car accident that results in serious injuries to someone else. While the minimum bodily injury liability coverage limits are $250,000 per person and $500,000 per accident, drivers can choose to purchase lower limits of $50,000 per person and $100,000 per accident.

The cost of bodily injury insurance varies based on the driver and the amount of coverage they choose to purchase. It is generally recommended that drivers carry a total bodily injury liability limit that is equal to or higher than their net worth to adequately protect their assets in the event of a severe accident.

While Michigan is a No-Fault state, it is important to understand that BI liability coverage is still necessary. No-Fault insurance covers your own expenses in the event of an accident, while BI liability coverage is for the expenses of others when you are at fault. By having both types of coverage, you can ensure that you are protected financially and legally in the event of a car accident.

Property damage liability

In Michigan, drivers are required to carry No-Fault auto insurance, which covers personal injuries, property damage, and liability for bodily injury. This includes property damage liability, which safeguards your assets if you are found legally responsible for a covered accident, including certain damage you may cause to another party's property or vehicle.

The minimum amount of property damage liability coverage in Michigan is $10,000 per accident. This means that if you are found to be at fault for an accident, your insurance will cover the cost of repairing or replacing the other person's property, up to a maximum of $10,000. This coverage only applies if the accident occurs in Michigan and the damaged property is a fixed or parked object, such as a building or a parked car. If you are driving outside of Michigan or collide with a moving vehicle, your property damage liability coverage will not apply, and you will need to rely on your residual liability insurance (bodily injury and property damage) to cover the costs.

It is important to note that property damage liability coverage does not cover any damage to your own car. If you want to protect yourself financially in the event of damage to your vehicle, you will need to purchase additional insurance coverage, such as collision insurance or comprehensive insurance. Collision insurance covers damage to your vehicle resulting from a collision with another vehicle or object, while comprehensive insurance covers damage caused by non-collision incidents such as theft, fire, or vandalism.

In addition to the minimum required property damage liability coverage, Michigan drivers are also required to carry Property Protection Insurance (PPI) as part of their No-Fault insurance policy. PPI provides coverage for damage caused to parked vehicles or other fixed objects within the state of Michigan. The minimum required amount of PPI coverage is $1 million, which is significantly higher than the property damage liability minimum. This higher coverage amount reflects the fact that repairing or replacing damaged property can often be costly, and it provides added protection for Michigan drivers in the event of an accident.

While the minimum property damage liability coverage in Michigan is $10,000, it is worth considering purchasing a higher amount of coverage. If you are found to be at fault for an accident and the property damage exceeds your coverage limit, you will be responsible for paying the difference out of pocket. By increasing your property damage liability coverage, you can reduce your financial risk and ensure that you are adequately protected in the event of a covered accident.

Frequently asked questions