Michigan Car Insurance Laws


Michigan state flagIn order to provide better benefits to residents injured in automobile accidents and decrease the amount of premium dollars being spent on legal and administrative costs, Michigan adopted a no-fault system in 1973. In order to acquire license plates or legally operate a motor vehicle within the Great Lakes State a motorist needs to first purchase coverage that meets the state’s minimum requirements. Residents with basic coverage in MI are required to have a policy that includes three essential parts: Personal Injury Protection (PIP), Property Protection (PPI), and Residual Bodily Injury and Property Damage Liability Insurance (BI/PD).

PIP is designed to pay for all necessary medical costs that are the result of an accident, including wages the motorist would have earned had they not been injured for up to three years (an amount that is regularly adjusted). This may also include up to $20 a day in replacement services, which typically includes the types of services that a motorist can no longer accomplish because of injuries, such as housekeeping and yard work. If a policyholder is killed as the result of an accident then family members may be awarded a monthly sum based on the policyholder’s salary for up to three years.

PPI is in place to pay for damages, up to $1 million, that may be caused by the insured’s automobile, including damages done to other people’s property and properly parked vehicles. However, it is important to note that this does not include damages caused by striking another’s automobile while it is being operated.

BI/PD generally pays for costs associated with damages for which a motorist is found liable, and for defense costs that may occur as the result of an accident. Although collision related lawsuits are less common in states such as Michigan that require resident motorists to purchase no-fault car insurance because of laws limiting motorists’ ability to sue, there are still situations where a suit can be filed. This may include being at fault for an accident that leads to serious injury or a person’s death, or being involved in a collision outside of the state.

To ensure that all motorists in the Great Lakes State are properly insured, all resident drivers must carry proof of insurance while driving. If a vehicle owner is unable to produce the necessary documentation they may have their license suspended for at least 30 days and may not be able to get it reinstated unless able to produce proof of coverage. Driving without the proper protection may also result in a fine of up to $500, a jail sentence up to a year, or even additional fines and consequences for more severe situations. Failure to sustain the necessary coverage may also have other repercussions as well.

State of Michigan with blue backgroundIt is particularly important to carry Michigan auto insurance because failure to do so could be financially devastating after an accident. In the event that an uninsured motorist is involved in an accident, the offending motorist could be sued and held personally liable. This means that the uninsured motorist may have to pay for a lawyer and various court costs in addition to potential medical and repair costs. Additionally, the driver in question would not receive any of the benefits that typically come from a vehicle protection plan, including coverage for medical expenses, lost wages, or other such expenses. For this reason residents are encouraged to remain adequately insured and in order to obtain the necessary benefits after an accident and avoid a number of undesirable consequences.