What Is a Michigan Mini-Tort Auto Insurance Claim?
Motorists in Michigan are required to purchase no-fault auto insurance that includes personal injury protection (PIP), and property protection (PPI) with residual bodily injury and property damage liability (BI/PD). Michigan does not require drivers to buy a policy that pays for other people's vehicle damages, so if they want to have their vehicle repairs covered, regardless of who was at fault, they need to buy collision insurance, which usually comes with a deductible. A "mini-tort" claim is filed when a driver wants compensation for the collision deductible they paid to get their car fixed.
While MI no-fault laws protect drivers from lawsuits in most situations, there are still incidents that can result in a vehicle owner being sued, like in mini-tort claims. The mini-tort provision of the law allows drivers to seek reimbursement for the amount they had to pay before their collision coverage kicks in, but this can only be done if the person seeking reimbursement was less than 50 percent at fault.
Mini-Tort Is Exclusive to Michigan
No other state in the nation has a mini-tort provision in its auto insurance law. That's because in every other state, when a driver is less than 50 percent at fault for an accident, at least a portion of his or her damages will be covered by the other driver's property damage liability, which pays for other people's property damages that were caused by the policyholder. Michigan is the only state that doesn't require drivers to buy property damage liability.
Mini-tort claims are assessed through comparative fault. For example, if a resident is being sued to cover a $100 deductible but was only 75 percent responsible for the accident, they would only have to pay $75 if they lost the case.
The limit on mini-tort claims is currently $500, but the state Legislature agreed in May 2012 to raise that limit to $1,000. The new limit goes into effect Oct. 1, 2012.
Mini-Tort Highlights Importance of Collision Coverage in Michigan
In most situations, damage to another person’s vehicle would be covered by their own collision coverage, but not all residents purchase this additional auto insurance. The PPI that drivers are required to buy covers up to $1 million worth of damage to other people’s property, like a fence or a wall, but covers another person’s car only if it was properly parked at the time of the accident.
The potential hazard of this no-fault system is that a motorist may only be able to collect $500 in damages (or $1,000 as of October 2012) through mini-tort if they are 50 percent or less at-fault in a collision, unless they have invested in additional protection. Often this small amount may not be enough to fully cover vehicle repairs, giving residents extra incentive to purchase collision.
The increased mini-tort threshold could mean slightly less risk when policyholders get a higher deductible (like $1,000), which is often done to lower collision premiums. With an increased mini-tort threshold, drivers may feel more comfortable increasing their deductible in the hopes in light of the fact that these costs will soon be more likely to be compensated through the state legal system.
Coverage for Mini-Tort Claims
The minimum amount of protection that is required in Michigan does not cover losses from these lawsuits. However, drivers have the option of buying limited property damage liability insurance, commonly referred to as mini-tort coverage. MI residents who purchase car insurance with additional protections may have to pay a higher premium, but they would be better prepared for possible expenses that may follow an automobile accident.