A Guide to No-Fault Insurance Laws in Michigan • Thumbwind

The issue of car insurance is often in a state way, so everywhere you go the requirements and limits are different. 90% of the time in the United States, the driver who caused the accident is the one whose insurance is responsible for covering the damage. These are commonly referred to as fault laws, and almost every state has them. Of course, there are those who don’t. The Great Lakes state of Michigan is an example where there are no-fault auto insurance laws. Although auto insurance is used the same way as in other states, how and when it is used is where things get different. We will review all of the terminology and assumptions about no-fault insurance laws in Michigan.

What is a no-fault insurance state like Michigan?

In this context, fault refers to the driver who caused the damage or accident. Since they are at fault, their insurance would cover damage to other people’s property and medical treatment of injuries. The type of auto insurance that covers this is basic liability coverage, and it’s required in 95% of the United States. Michigan is one of those states where auto insurance is required, but when it is used differs. For a brief history, Michigan has been a no-fault auto insurance state for almost 50 years. No-fault auto insurance is really just auto liability insurance, but fault doesn’t matter, as the name suggests. When drivers are involved in an accident in Michigan, their respective insurance will cover their own damages and injuries. Of course, all regular auto insurance top-ups are available but not mandatory like in other states.

Why is Michigan a no-fault insurance state?

The ordinary liability auto insurance system, or tort as it is known, was used in Michigan as in almost every other state before 1973. During this time, several injured drivers claimed they were not receiving compensation appropriate. In some cases, the offending driver’s insurance provider has also waived the damage. Needless to say, being a tort state was doing more harm than good to Michigan drivers. They then passed the No Fault Insurance Act and made some changes to it in 2019, which we will look at later. No-fault insurance provides the same protection as a tort state, and Michigan drivers have enjoyed excellent auto coverage ever since.

No-Fault Insurance in Michigan Today

Michigan’s no-fault auto insurance laws remained as previously described from 1973 to 2019. In that year, new laws and legislation were passed that changed the way Michigan drivers shop. car insurance for the better. One of the biggest changes in 2019 was the optional inclusion of Personal Injury Protection (PIP) coverage in Michigan’s no-fault auto insurance. PIP has always been required for regular Michigan no-fault auto insurance, but it’s now an option that drivers can opt out of if they choose. PIP coverage insures the driver for all their medical and personal injury treatment, regardless of fault, so it fits right in if chosen. This is the most significant change to no-fault auto insurance in Michigan, but there have been others over the next two years during the COVID pandemic:

  • Medicare as PIP – This change was made in 2021 – Michigan drivers can opt out of PIP coverage and use their health insurance to cover injuries sustained in a car accident as it would. Hospitals and treatment centers will be able to bill everything for medical care based on coverage limits. Medicare is known to cover a large portion of treatment costs.
  • Medical Staff Limits – Michigan seemed to be taking a step back in 2021 when it decided to make it optional for insurance companies to cover more than 56 hours per week of in-home personal care after a car accident.
  • Bodily Injury Coverage – In 2020, Michigan adopted bodily injury coverage requirements for its drivers. This does not include property damage, just personal injury and accidental injury. The minimum coverage limits are $250,000 and $500,000 respectively.
  • Qualified health insurance – Some coverage options may be available if policyholders have certain health insurance. This is known as qualified health insurance and was implemented in Michigan in 2020.
  • Mini Increase in Tort Liability – The normal mini-tort allows drivers who have been involved in an accident to collect a certain amount of money from the responsible driver’s insurance company. Mini-crimes are usually charged against repair costs or deductible assistance. In 2020, Michigan increased its maximum tort recovery amount from $1,000 to $3,000. This has helped the drivers enormously.
  • Excess medical expenses – Likewise, if a Michigan driver has an accident and has medical expenses that exceed their PIP coverage, they have the option of suing the offending driver for a tort amount to cover their remaining balances.
  • Catastrophic Loss Association – The Michigan Catastrophic Claims Association (MCAA) pays medical expenses for seriously injured drivers if they choose the unlimited coverage option for their auto policy.
  • Assigned claims plan – Michigan’s Assigned Claims Plan is another way for auto accident victims to claim insurance benefits. They recently put a $250,000 cap on medical payments.

Other Michigan Recommended Auto Insurance

Photo by Michael Jin on Unsplash

In addition to the required no-fault auto insurance, there are obviously several other types of options that can expand your auto coverage. Collision and Comprehensive Coverage, or Comprehensive Automobile Insurance, is one such recommendation. Despite its name, no-fault car insurance won’t cover damage to a car that was no one’s fault, such as storm damage while it’s parked. For this reason, comprehensive coverage is recommended by the State of Michigan. The collision aspect of comprehensive coverage can also cover more damage to a car in an accident. The aforementioned mini-offence is also recommended, especially with the recent cap increase. Roadside assistance or towing coverage is also suggested by Michigan. No-fault auto insurance does not cover roadside services such as towing to an auto shop. Of course, you can also choose whether or not you want to transport the PIP.

How much does no-fault car insurance cost?

Like any other type of insurance, no-fault auto insurance rates depend on a variety of personal factors such as age, driving history, and place of residence. Of course, the number of add-ons and coverage also affect the cost. In no-fault states, drivers have been found to pay between $890 and $950 per year for no-fault auto insurance. This is just basic coverage with state minimums in mind. When it comes to finding the cheapest no-fault car insurance, it helps to look to local and national providers. Being a no-fault state, you can bet that Michigan has car insurance providers that specialize in this area. It also means you can consider competitive rates.

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