Michigan No-Fault Automobile Insurance Basics

Michigan law requires that no-fault insurance be purchased. Michigan law requires that every auto owner purchase basic coverages to register their vehicle. It is illegal to drive or allow your car to be driven without insurance. There are 3 parts to the basic no-fault policy:

1) Personal Injury Protection (PIP).

This part of your policy covers all medical expenses if you are hurt in a car accident. The policy will pay up to a maximum amount for earnings that you would have earned if you were not injured for up to three consecutive years.

The monthly allowance under no-fault was $4,589. Your policy will pay your family the maximum monthly amount per month if you are injured in an accident. This is based on your earnings and fringe benefits. In addition, you may be eligible to as much as $20 per day to replace services such housekeeping that you no longer have the ability to provide for your family or yourself.

To reduce your PIP premium, you can synchronize PIP coverage and any other health or disability insurance (except Medicaid, Medicare, or a Medicare Supplement policy). The primary payer for medical and wage loss expenses is the health or disability plan, while the auto policy would pay the remainder. These coverages can also be referred to as excess medical or excess wage loss.

2) Property Protection Insurance (PPI).

Michigan’s no-fault policy will cover up to $1,000,000 for any damage to property owned by others, such as fences and buildings. It will also pay for damage to properly parked vehicles of other people.

Residual Liability Insurance Bodily Injuries and Property Damage (BI/PD).

Except in exceptional situations, the no-fault law protects insurance companies from being sued for an auto accident. These are just a few of the situations in which you might be sued.

One: If you cause an accident that results in someone being seriously or fatally injured in Michigan

Two, if you are in an accident in Michigan and you are the occupant of a motor car not registered in Michigan.

Three if you are in an accident in another country.

If you are more than 50% at fault for the accident, you could be sued for damages up to $500 to another person’s vehicle.

If you are sued or held legally responsible for damages, your Michigan-required no-fault policy will cover you up to the limits of your coverage.

The minimum Residual Liability Insurance Bodily Injuries and Property Damage coverage limits is:

For someone who has been injured or killed in an accident, you could receive up to $20,000

If multiple people are injured or killed in an accident, it could cost as much as $40,000

Property damage in another state can be up to $10,000

These limits are commonly called 20/40/10.

Sometimes, courts will award more than this amount. You would be responsible to pay the difference. Many people purchase extra liability insurance to protect themselves.

You may be interested in some optional insurance coverages. These optional insurance coverages are not required by Michigan law.

Collision Insurance pays for the repairs of your car after it is involved in a collision. Comprehensive Insurance pays for the repairs of your car if your car is stolen or damaged by fire, flood, vandalism or an animal. Uninsured Motorists Insurance covers you if an uninsured driver seriously injures your or a family member.

A person is eligible for auto insurance if they have a Michigan-registered vehicle or a valid Michigan driver’s license. There are instances when a company may refuse to insure your vehicle.

Car insurance can be denied if you:

You are not required to have no fault insurance by law.

Your driver’s licence has been suspended or revoked.

You have been convicted for attempting to defraud insurance companies within the last five years. Or you have been denied payment of a claim exceeding $1,000 because of evidence of fraud.

You have been convicted of driving under the influence of alcohol, drugs, failure to stop at an accident scene, reckless driving, and a felony with motor vehicle within the last three years.

-The car you are looking to insure is not compliant with Michigan safety regulations.

Your auto insurance policy has been cancelled due to non-payment of premium within the last two years. If you pay all premiums upfront, this can be waived.

You must be a member or a guest of a club, club, or organization to purchase the insurance you want to purchase.

Your driving record contains more “eligibility points” than is allowed.

-You do not meet the requirements for a company’s underwriting rules.

Insurance eligibility points

Certain traffic violations are eligible for insurance points.

These points do not count towards your driving record. If you have seven points or more from violations in the last three years, you may be denied auto insurance.

How insurance companies determine eligibility points

Careless driving (driving at more than 15 mph above the speed limit) – Four points

Driving 11-15 mph faster than the speed limit. Three points

-Driving at 15 mph or less than the speed limit on freeways, which used to have an upper speed limit of 70 miles per hour – two points

-Other moving violation – 2 points

-The first accident where you are more 50% responsible – three points

-The second and subsequent accidents in which more than 50% of the blame is on you – four points

Guidelines for Companies

To determine whether you will be insured, insurance companies use underwriting rules. Although these rules might be different for every company, they must all apply the same rules to everyone.

Ineligible persons

If you feel you are not eligible to purchase auto insurance, your agent may be able to help you apply for the Michigan Automobile Insurance Placement Facility. This facility was established to provide insurance for those who are having difficulty finding insurance through regular companies. You can apply for insurance through this Facility by any licensed agent.