A look at Michigan's "no-fault" car insurance scheme, and the minimum types and amounts of coverage that are required for every registered vehicle in the state.
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After a car accident in Michigan, you probably have questions about car insurance. Whose coverage applies? What are your options for making a claim? In this article, we'll explain how Michigan's "no-fault" car insurance system works, and the types and amounts of insurance a Michigan driver is required to carry on a registered vehicle.
Michigan "No-Fault" Car Insurance Laws
In Michigan, auto insurance claims are governed by Michigan's no-fault car insurance scheme, one of the most comprehensive in the country. Basically, a "no-fault" system means that Michigan drivers involved in car accidents turn to their own insurance companies to pay claims and settle disputes, rather than filing a liability claim or lawsuit against another driver. In fact, Michigan's no-fault auto insurance laws prevent drivers from filing lawsuits against each other based on a car accident, except in a few very specific situations. We'll look at these situations in-depth later on.
Minimum Michigan No-Fault Insurance Requirements
Drivers in Michigan are required to purchase no-fault insurance with the following minimum limits:
- $20,000 per person hurt or killed in an accident;
- $40,000 per accident in which more than one person is hurt or killed; and
- $10,000 per accident for property damage.
These minimums are known among Michigan insurers as the "20-40-10" requirement. A policy that meets only these minimum limits is often called a "personal liability/personal damages" or "PLPD" policy. If you're in an accident in Michigan and the other driver tells you, "I only have PLPD," that means he or she has a "bare-bones" policy -- one that offers only the minimum coverage required by law.
What Does Michigan No-Fault Insurance Cover?
When two Michigan-insured drivers get into a car accident, the no-fault laws tell them to file a claim with their own insurance companies first. Every Michigan no-fault insurance policy is required to offer Personal Injury Protection, or PIP, which pays most or all of the accident victim's injury-related costs. It's not just the policyholder who is entitled to the PIP benefits of a policy. Under Michigan's no-fault rules, PIP benefits are also available to:
- all family members living in your house (even when a family member is a passenger in another person's car or is a pedestrian when injured)
- any passenger or pedestrian who does not have their own no-fault policy and is hurt in an accident involving your car, and
- a motorcyclist who is hurt in an accident involving your car.
The benefits provided by PIP coverage include:
- all of the medical care costs related to the accident
- up to 85 percent of any wages lost due to the injury, for up to three years, and
- up to $20 per day in "replacement services" -- for example, for someone to take care of chores at home, like cooking, cleaning, child care, and yard work.
These benefits, however, are capped at an amount that is revised annually. Therefore, if your medical costs are particularly high or you had a high-paying job before your accident, your insurance company may not be required to pay every dime you've lost, if some of that money would push your monthly benefits above the annual limit.
The "Property Protection Insurance" component of a Michigan no-fault policy will pay up to $1 million for damage your car does to another person's real property in Michigan -- for example, if your car hits a house. PPI will only pay for damage your car does to another vehicle if the vehicle was properly parked. PPI won't cover vehicle damage caused by an accident between moving vehicles, and it won't ever apply to damage sustained by your own vehicle.
Finally, no-fault insurance covers "residual liability," which refers to costs that come up when you're in an accident with a non-Michigan driver or an uninsured driver, or you're in an accident in another state. It also offers coverage for costs if another driver sues you for an accident.
Michigan No-Fault Insurance and Lawsuits
Michigan's no-fault insurance laws prohibit drivers from suing one another except in a few limited circumstances, such as when:
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the accident caused someone to be killed, or resulted in serious impairment of a bodily function, or caused permanent and serious disfigurement
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one of the drivers involved in the crash is a non-resident whose vehicle is not insured in Michigan
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you are involved in an accident in another state, or
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the suit is only for up to $1,000 in damage caused to another vehicle (the "mini-tort" provision) and you are 50 percent or more at fault.
The "20-40-10" liability limits apply to any damages you might be required to pay as the result of a lawsuit. For example, if you were in a car accident that left the other driver paralyzed, and the other driver decided to sue you in court and won, your insurance would pay a minimum of $20,000 (or $40,000 if more than one person was injured) towards the judgment.
Additional Coverage
Michigan no-fault insurance is not required by law to cover any of the following:
- repairs to your vehicle if it is hit by another vehicle (collision) or an object or animal (comprehensive);
- residual liability above the 20-40-10 limits; or
- the $1,000 "mini-tort" amount.
You may, however, purchase this additional coverage in Michigan if you want it.
More Information on Car Insurance in Michigan
The Michigan Secretary of State offers several informational brochures on no-fault insurance coverage in Michigan, including A Consumer's Guide to No-Fault Automobile Insurance in Michigan and A Brief Explanation of Michigan No-Fault Insurance.
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