Last updated on April 26th, 2018
Michigan is one of a handful of states in the U.S. that does not rely on a tort law to govern car insurance, which means that Michigan is technically a no-fault state. As a no-fault state when two or more drivers are involved in an accident each driver’s insurance company will pay for the injuries or damages exported by their policy holder. In other words, each driver is financially responsible for paying for their own damages, regardless of who is at fault. This is in direct contrast to the tort laws used by most states, which requires the at-fault driver to pay for all damages resulting from the accident. While drivers in most other states have to purchase a liability car insurance policy those in Michigan are required to purchase a no-fault auto insurance policy that complies with state regulations. No-fault auto insurance policies in Michigan generally consist of three different types of coverage. The first type of no-fault insurance required is personal injury protection, which will cover any medical costs if the driver of the insured vehicle is injured in an accident. A no-fault car insurance policy in Michigan is also required to have property protection coverage, which will pay for damage caused by the policyholder’s vehicle in an accident. Michigan state law sets the minimum limit of property protection coverage at $1,000,000. The third type of insurance required by state law, known as residual bodily injury and property damage liability insurance is not a type of insurance seen in most other states. Residual bodily injury and property damage liability insurance or BI/PD for short, will pay for any damages that the driver of the vehicle is found to be liable for after an accident. BI/PD will also pay for any necessary defense costs should the policy holder or driver be sued or required to make an appearance in court. The minimum limits of BI/PD coverage are set by the state of Michigan at $20,000 for each person injured in an accident and $40,000 for all injuries sustained in an accident; BD/IP must also include at least $10,000 in property damage coverage. Although BD/IP is unique to Michigan the liability insurance that is a required part of the policy is almost identical to the liability insurance required in states that have Tort laws.
Due to the various form of insurance required and the minimum levels of coverage a vehicle must have Michigan is often considered have one of the most comprehensive car insurance systems in the country. If a vehicle is insured in Michigan and meets the minimum levels of coverage everyone in the policy holder’s home will receive unlimited medical and rehabilitation payments if they are injured in an accident. A no-fault policy in Michigan will also guarantee wage loss benefits and $20 a day for up to three years in replacement benefits if the driver is injured in an accident. The handful of coverage types not required by Michigan State law include comprehensive and collision coverage, which will pay for any damages to the insured vehicle. Although it is not required y state law, Michigan residents are able to purchase both comprehensive and collision insurance along with their no-fault policy if they chose to do so. Uninsured and underinsured motorist coverage is also available to Michigan drivers though it is not used as much as in other states since Michigan requires unlimited personal injury protection to be added to every auto insurance policy sold to a Michigan resident.
According to state law, every vehicle that is registered with the state must meet the above mentioned minimum requirements. If a vehicle is not insured with minimum coverage it is illegal to operate it on a public road. Michigan also holds the vehicle owner directly responsible for maintaining auto insurance on any vehicles registered in their name. If a vehicle owner drivers a vehicle without insurance, or allows someone else to drive the vehicle without car insurance, the owner will be personally liable in any accident involving the vehicle and can even be sued according to state law. In addition to being held personally and financially liable for any accident, Michigan residents that drive an uninsured vehicle also risk being penalized by the state if they are caught driving without insurance. Driving uninsured in the state of Michigan is treated as a misdemeanor and will result in a minimum fine of $200, though the fine could be as much as the $500 maximum allowed by state law. As a misdemeanor driving uninsured can also result in up to a year in jail in addition to any fines levied by the court. Michigan courts also have the power to suspend the license of any motorist caught driving without insurance for up to 30 days or until the driver is able to provide proof of insurance on the vehicle.