What Are the Basic Parts of Michigan No-Fault Auto Insurance?


Michigan state flag on a brick wallAll motorists in Michigan are required to buy automobile insurance that includes three basic parts: personal injury protection (PIP), property protection (PPI), and residual liability. 

If policyholders are injured in an automobile accident, their PIP will cover all necessary medical costs. Additionally, this coverage will pay insured individuals up to 85 percent of their income that they would have earned had they not been hurt, for up to three years. This amount, however, is subject to a maximum of about $5,100 per month, and that maximum amount gets revised annually.

PIP may also entitle policyholders to up to $20 per day for replacement services. This is to cover the cost of household services that the injured individuals may be unable to complete themselves because of their injuries.

The PPI portion of the basic car insurance required in Michigan will pay up to $1 million for damages to other people’s property that the policyholder is responsible for. However, PPI is limited to damage to objects such as buildings and fences. The only time it covers damages to other people's vehicles is when they were properly parked at the time of the accident.

The residual liability insurance portion of a basic policy—also referred to as bodily injury and property damage liability—is designed to pay for other people's injuries or property damage when the policyholder is responsible for the accident, but only under certain circumstances. This is primarily designed to protect the insured from being sued after a car crash. Typically, an insured motorist in the Great Lakes State may only be sued after a collision if the accident resulted in death, serious injury, or permanent disfigurement; if it involved an out-of-state motorist; or if it took place out of state.
Michigan flag sticker
To avoid a lawsuit and financial loss after a collision, residents are encouraged to search for cheap auto insurance in Michigan that includes more extensive protection. For example, the minimum bodily injury and property damage liability limits are only 20/40/10, which could easily be exceeded in a serious crash.

Michigan motorists will have to look hard to find a reasonably priced policy, but residents luckily have the option of going online to compare several quotes at once. Shopping around and exploring prices from multiple companies may give Michigan vehicle owners the opportunity to find inexpensive coverage that extends beyond the basic requirements.