Michigan’s insurance law requires every driver to carry a minimum amount of coverage that protects everyone from the high costs of accidents. This coverage includes personal injury protection and property damage that adheres to Michigan’s no-fault insurance system as well as extra coverage for liability.
Required Insurance Coverage
Michigan mandates a combination of coverage that provides no-fault benefits for you and your family as well as liability coverage for injuries caused in a serious accident and property damage that occurs outside the jurisdiction of Michigan’s law. All drivers are required to carry:
- Personal Injury Protection (PIP) – This coverage will pay for all reasonable costs associated with injuries to you in an accident. Also covered are lost wages, up to 85% with a current limit of $5452 per month up to three years, and household needs that you can no longer perform as a result of injuries. PIP will also pay death benefits to your family if you are killed in an accident.
- Property Protection (PPI) – This coverage will pay up to $1 million in damages for property damage that is done by your vehicle in an accident.
- Residual Liability Insurance – Bodily Injury and Property Damage – This coverage will protect you in the event that you are sued after an accident that meets the Michigan standards for a serious accident. The minimum coverage is $20,000 per person and $40,000 per incident for bodily injury or death to others. Also required is $10,000 for property damage that occurs in another state where Michigan no-fault laws do not apply.
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Optional Insurance Coverage
Michigan drivers can choose to increase their auto insurance coverage to provide extra protection from liability and to cover their own property from unforeseen events. Coverage options include:
Collision Coverage – While no-fault benefits provide coverage for injuries to you in an accident, they do not provide coverage for the damage to your vehicle. Collision coverage will pay for repair or replacement of your car. There are three types of collision coverage sold in Michigan:
- Limited Collision covers you for all repairs after your deductible if you are less than 50% at fault, but offers no coverage if you are more than 50% at fault
- Standard Collision pays for all repairs after the deductible, without regards to fault
- Broad Form Collision pays all repairs after the deductible if you are more than 50% at fault, and pays all repairs in full with no deductible applied if you are less than 50% at fault
Comprehensive Coverage – This coverage will pay for repairs or replacement of your vehicle if it is damaged due to anything other than an accident. This includes theft, vandalism, fire, or weather damage. Comprehensive can also pay for glass repairs.
Uninsured/Underinsured Motorist Coverage – If you are involved in an accident with a motorist who is at fault but is uninsured or does not have sufficient insurance to cover the damages, this option provides coverage to pay for pain and suffering and wage loss. It will also cover you in a hit and run situation.
Limited Property Damage Insurance – This provides $1000 in “Mini Tort” coverage for property damage in an accident in which you are more than 50% at fault and excess damages that are not otherwise covered.
Additional Coverage – There are several other options available to motorists in Michigan to provide extra coverage for drivers. Among these are rental reimbursement, which pays for a rental car during a covered loss, and towing and labor, which covers towing costs and roadside assistance.
Proof of Insurance Laws and Penalties
It is illegal to drive without insurance in Michigan, and there are penalties for drivers who are caught doing so. Drivers are required by law to present proof of insurance upon the request of a law enforcement officer, and failure to do so can result in a variety of consequences:
- Fines of $200-$500
- Suspension of driver’s license for 30 days or until proof of insurance is submitted
- $25 – $50 fee to reinstate driving privileges
- Jail time of up to one year
If a Michigan driver is involved in an accident and is not insured, they can be held fully responsible for all damages and injuries. An uninsured driver cannot sue for pain and suffering even if they are not at fault in the accident.
Michigan uses an Electronic Insurance Verification system (EIV) through which all auto insurers must submit policy information for every driver they insure. Previously optional, this reporting became mandatory in 2011. The EIV system does not replace the need for drivers to carry and present proof of insurance upon request.
No-Fault Insurance in Michigan
Michigan is one of a few states that use a no-fault insurance system. This means that certain benefits are payable by the insurance company regardless of fault in an accident. Personal Injury Protection and Property Protection are both required no-fault insurance coverage that is available to anyone in the household where the policy is held no matter who is at fault in the accident.
Michigan insurance companies still determine fault in an accident, and certain coverage is applied based on fault. Fault will also determine which driver will have an accident appear on their driving record, which can result in increased insurance rates.
While no-fault insurance is designed to reduce lawsuits following car accidents, Michigan law does allow for lawsuits if an accident meets certain standards. Lawsuits are allowed in accidents involving serious injuries or fatalities, and suing for pain and suffering is permitted.
Shopping for Car Insurance in Michigan
Michigan state law helps to regulate car insurance rates, but in spite of this, the state ranks as the most expensive to buy car insurance, according to Insure.com. A 2017 study found that the average annual rate in Michigan is $2394. The study states that the high limits on no-fault personal injury protection may be responsible for the cost of car insurance in Michigan.
Michigan law also controls which rating factors can be used to determine rates, including age and experience, type of vehicle, location, and driving history. Auto insurance companies can choose how much weight to give to each factor, allowing consumers to shop around for insurance rates. The Department of Insurance and Financial Services provides a search page to obtain information about insurance companies doing business in the state.
Michigan law mandates insurance must be available to all drivers, regardless of risk factors. Insurance companies, however, can refuse to insure a particular driver based on their own eligibility requirements. High-risk drivers who have trouble finding insurance can apply for a policy through the Michigan Auto Insurance Placement Facility (MAIPF). This program helps drivers to get the coverage they need.
Any insurance agent can help a driver to apply for a MAIPF policy and is required by law to do so at your request. The program provides drivers with a list of participating insurance companies or will assign you to one if you do not select one. This insurance costs more than a standard insurance policy, so it is a choice of last resort for most drivers. The program will make certain that you do get coverage, keeping everyone on Michigan’s roads financially responsible.
Teen Drivers in Michigan
Teen drivers in Michigan must graduate through a three-level graduated licensing system in order to obtain a full license. This system helps teens to learn the skills necessary to drive as safely as possible. Each level has rules and restrictions that must be followed at all times.
Level 1: Permit. The first level of the program is a learner’s permit. Teens in Michigan can apply for this permit at 14 years and 9 months of age. In order to obtain a permit, a parent or guardian must give written permission, and the teen must complete Segment 1 of an approved driver education course. During this time the teen may only drive with an approved driver over the age of 21 who holds a full license.
Level 2: Intermediate. The intermediate license allows a teen driver to drive unsupervised under certain restrictions. In order to obtain this license, the teen must:
- Be at least 16
- Hold a permit for at least 6 months
- Complete 50 hours of driving practice time, 10 of which must be at night
- Complete Segment 2 of an approved driver education course
- Pass a road test to display driving skills
- Have a clean record for at least 90 days prior to applying
Restrictions for teen drivers during this period must be followed at all times:
- Driving between 10 p.m. and 5 a.m. is prohibited unless the teen is driving to or from employment or an authorized activity, or an authorized driver over the age of 21 is in the passenger seat
- No more than one passenger under 21 can be in the vehicle, except when driving to and from employment or authorized activities, or when an authorized driver 21 or over is in the passenger seat
Level 3: Full License. At 17 years old, a teen driver will graduate to a full license without restrictions, providing they have kept a clean driving record for 12 months and have had a Level 2 license for at least 6 months.
Teen drivers at Level 2 and above are required to carry insurance that meets the state’s legal minimums. Teens can be insured under the policy of a parent or guardian, and this coverage can continue even for teens away at school until the teen establishes their own residence.
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