In Michigan, auto insurance is governed by the Michigan No-Fault Automobile Insurance Act under Michigan Compiled Laws (MCL) Section 500.3101. This law mandates that all drivers carry no-fault insurance coverage to ensure legal, financial, and property protection in case of accidents or other unforeseen circumstances on the road, regardless of who is at fault.
Two key state entities oversee the regulation and management of auto insurance in Michigan. The Michigan Department of Insurance and Financial Services (DIFS) regulates insurance policies, approves coverage options, and addresses consumer complaints related to insurance practices.
Meanwhile, the Michigan Secretary of State (SOS) oversees vehicle registration and driver licensing and enforces Michigan's auto insurance requirements. It also manages the suspension or revocation of driving privileges for individuals who fail to maintain proper insurance coverage.
Maintaining the required auto insurance ensures compliance with state law and provides essential protection and peace of mind for drivers on Michigan's roads.
What are the Auto Insurance Requirements in Michigan?
In Michigan, every car owner must purchase no-fault auto insurance to register and drive a vehicle. The Michigan Auto Insurance Reform Law, effective July 1, 2020, introduced several fundamental changes, including adjustments to the choice of coverage limits.
The no-fault insurance policy consists of three essential components:
Personal Injury Protection (PIP)
PIP pays for medical expenses incurred from an auto accident within the policy's maximum limit. It also offers compensation for lost wages and replacement services for up to three years post-accident and covers funeral and burial costs.
The available options for PIP medical coverage are:
- Unrestricted coverage
- Maximum of $500,000 coverage per individual per accident
- Maximum of $250,000 coverage per individual per accident
- Maximum of $250,000 coverage per individual per accident with specific exclusions
- Maximum of $50,000 coverage per individual per accident
- No PIP medical coverage
Property Protection Insurance (PPI)
PPI covers damage caused by a vehicle to other people's property in Michigan. It also covers damage to properly parked vehicles but excludes vehicles not parked correctly. The minimum PPI coverage required is $1 million.
Residual Bodily Injury and Property Damage Liability (BI/PD)
Despite Michigan's no-fault insurance system protecting individuals from lawsuits after car accidents, exceptions exist. These exceptions occur when the injured party's coverage is insufficient for medical costs or when there is a need for compensation for serious injuries or deaths.
According to the updated state law, the limits for BI/PD coverage are:
- Maximum of $250,000 for an individual injured or died in an accident
- Maximum of $500,000 for each accident involving multiple injuries or deaths
- Maximum of $10,000 for property damage occurring in another state
Non-Mandatory Auto Insurance Coverages in Michigan
There can be damages beyond the coverage of no-fault insurance in Michigan. Thus, individuals might consider optional insurance coverages:
Collision Coverage
To have coverage for damage to one's vehicle in an accident, it is necessary to purchase collision coverage. The other driver's insurance will not cover repairing or replacing the policyholder's vehicle. Similarly, collision coverage only applies to the policyholder's vehicle and does not cover damage to the other driver's car.
Collision coverage comes in three types:
- Limited Collision Coverage
- Standard Collision Coverage
- Broad Form Collision Coverage
Comprehensive Coverage
This coverage offers compensation for vehicles stolen or damaged due to vandalism, flooding, fire, falling objects, or accidents involving animals.
Uninsured and Underinsured Motorist Coverage
This coverage compensates if an uninsured or underinsured driver causes serious injury to the policyholder or a household member. Suppose the policyholder receives a settlement from the at-fault driver, but the driver has insufficient or no liability insurance. In that case, this coverage will cover the remaining costs.
Limited Property Damage Coverage
This coverage, commonly known as Mini-Tort, allows for legal claims if an individual is at least 50% at fault in an accident. The responsible party can be sued for up to $3,000 to cover the other driver's deductible or for actual damages to a vehicle not covered by collision insurance.
Towing and Rental Car Coverage
This coverage covers or reimburses expenses related to towing a vehicle and renting a car in case of a covered incident or accident.
Attendant Care Rider
This coverage is offered as an optional rider under the PIP coverage options. It assists injured individuals with daily activities such as eating, bathing, dressing, grooming, and medication administration.
Penalties for Driving Without an Auto Insurance in Michigan
Driving without insurance coverage in Michigan is illegal, as specified under MCL Section 500.3102. If an individual is caught driving without the required insurance, they may face several penalties, including fines of up to $500, imprisonment for up to one year, or both.
Their driver's license may also be suspended for 30 days, and their vehicle registration may be restricted until proof of insurance is provided. Additionally, failing to provide proof of insurance when requested by law enforcement, even if the driver has an active policy, can result in a $25 fine.
How To Choose the Right Auto Insurance in Michigan?
Choosing the right auto insurance in Michigan involves understanding state requirements and selecting a policy that meets individual needs. Drivers must comply with mandatory coverage rules while considering additional options to tailor their insurance to their unique situation.
Factors to Consider in Selecting an Auto Insurance Provider
When selecting an auto insurance provider in Michigan, consumers can explore various options, including phone book listings, referrals from family and friends, or online searches for companies, agencies, or agents.
Popular comparison websites like The Zebra, Compare.com, and Gabi offer multiple quotes, user-friendly interfaces, and comprehensive comparisons, often including customer satisfaction scores and financial stability ratings.
Before making a decision, individuals should verify that the company and the agent are licensed in the DIFS Insurance and Financial Services Search.
For more information, check the "Purchasing Auto Insurance" page on the Michigan DIFS website.
Evaluating and Comparing Auto Insurance Quotes
When evaluating and comparing auto insurance quotes in Michigan, it is advisable to obtain quotes from different providers with the same coverage levels and deductibles. Individuals should provide specific vehicle information to get accurate quotes.
Consumers should carefully review policy details, understand exclusions and limitations, and check for additional benefits like roadside assistance or rental car coverage. While DIFS cannot recommend specific companies, agencies, or agents, it offers resources to simplify the comparison process, such as the worksheets in the DIFS Guide to Auto Insurance.
Customizing Auto Insurance Coverage
Customizing auto insurance coverage involves evaluating personal factors such as vehicle value, driving habits, and financial situation.
Consumers should consider optional coverages and explore discounts to balance protection and cost. Modifying deductibles can also help balance premium costs with personal expenses if a claim is filed.
By thoroughly researching options and utilizing resources, consumers can make informed choices that satisfy state requirements and personal needs while optimizing cost and coverage.
What Factors Affect Auto Insurance Rates in Michigan?
In Michigan, recent legislative changes have prohibited insurance companies from using certain personal factors to determine a driver's insurance rates.
These eliminated factors include sex, marital status, home ownership, credit history, level of education, job title, and postal code. This shift aims to create a more equitable pricing system based primarily on driving-related factors.
Despite these restrictions, auto insurers in Michigan still have several permissible factors they can consider when setting rates.
Driving Record
A driver's record, including previous claims, is considered when assessing risk and determining auto insurance rates. A spotless driving history usually results in reduced premiums, whereas one with several traffic violations or accidents can increase insurance costs.
Vehicle Characteristics and Usage
Factors such as the vehicle's make, model, age, and primary use influence one's auto insurance rates. High-performance cars and those used for long commutes typically have higher premiums. Additionally, higher annual mileage can lead to increased rates due to greater exposure to risk.
Driver's Age
In Michigan, age continues to be a significant factor in determining auto insurance premiums. Insurers consider age because it is closely linked to driving experience and risk. Drivers under 18 are required to remain on their parent's insurance policy.
General Location
While specific zip codes are no longer allowed as a rating factor, insurers may still consider the broader geographical area where the vehicle is primarily kept. This could account for regional differences in accident rates, theft statistics, or natural disaster risks.
Coverage Selections
The types and levels of coverage chosen by the policyholder, along with the deductible amounts, continue to play a significant role in determining the overall cost of the policy. More comprehensive coverage or lower deductibles typically result in higher premiums.
How To Save Money on Auto Insurance in Michigan?
Michigan has some of the highest auto insurance premiums in the United States, with average annual costs ranging from $1,360 to $3,643, compared to the national average of $627 to $2,008. However, drivers can employ several strategies to reduce their premiums.
Before purchasing a vehicle, it is advisable to obtain and compare insurance quotes. Specific models are less expensive to insure than others and insurance providers' prices and coverage options can vary significantly.
Drivers should also explore collision coverage when evaluating coverage choices. While not mandatory, lenders often require it for car loans. However, dropping optional coverages such as comprehensive insurance may be worth considering for older vehicles.
Selecting a higher deductible can reduce premiums. However, individuals need to be prepared for increased personal expenses if a claim is filed. Reviewing PIP and BI/PD coverage limits can help balance protection needs with budget constraints.
Many insurers also offer discounts for vehicle safety features, bundling multiple policies, or membership in specific organizations. Drivers should inquire about these potential savings opportunities.
While reducing auto insurance premiums is beneficial, it is essential to understand the trade-offs in coverage levels. By carefully considering these factors, drivers can potentially lower their insurance costs while maintaining adequate coverage for their needs.
For more information, check the "Frequently Asked Questions" page on the DIFS website.
Impact of Deductibles on Auto Insurance Costs
When a person insures their vehicle, they encounter the concept of a deductible. This is the initial sum they must cover when their car sustains damage before the insurance provider steps in financially.
An inverse relationship exists between an individual's deductible amount and their regular insurance expenses. By agreeing to shoulder a larger portion of potential repair costs through a higher deductible, a policyholder effectively takes on more financial risk. This cost structure reflects a balance in risk-sharing between the insured and the insurer.
Physical Damage Deductibles
Increasing the deductible for physical damage coverage, including comprehensive and collision, can significantly reduce the policy's cost.
PIP Deductibles
A deductible may apply to PIP claims after an accident. The policyholder must pay expenses up to the deductible before the insurance company covers any injury-related costs.
Discounts on Auto Insurance Premiums
To reduce auto insurance premiums, individuals should consider taking advantage of available discounts, which can vary by insurance company and may change over time. When shopping for coverage, requesting a list of discounts from each provider is essential to ensure they receive an accurate quote reflecting all applicable savings.
Discounts might apply to the total premium or specific parts of it. Common types of discounts include:
- Safety devices
- Multiple vehicles
- Multiple policies
- Good student status
- Students away at school
- Group memberships
What To Do After an Auto Accident in Michigan?
After an auto accident in Michigan, individuals must seek medical attention promptly. All injuries and symptoms should be documented, even if they seem minor.
The next step is to notify their insurance company immediately and provide all requested information to support the claim. It is essential to fulfill all responsibilities outlined in the auto insurance policy.
According to MCL 257.622, a police report must be filed if the accident results in injury, death, or property damage exceeding $1,000. This report should be made at the nearest police station or with a police officer.
In cases of hit-and-run accidents, a report must be filed within 24 hours if claiming benefits under uninsured motorist coverage, depending on the specific terms of the insurance policy. A police report is also typically required for no-fault benefits or legal actions.
To obtain a police report for an accident, individuals can request the UD-10 Traffic Crash Report from the Michigan State Police's Traffic Crash Purchasing System.
Filing an Auto Insurance Claim in Michigan
Typically, a crash victim may have three possible types of insurance claims they can file. The process and legal requirements for each type of car insurance claim in Michigan will vary based on the specific nature of the claim.
Upon receiving an auto insurance claim, the insurer must inform the policyholder within 30 days about any additional information required to process the claim. The company must pay any portion of the claim for which proper supporting documentation has been provided and settle the remaining amount once all necessary proof of loss is received.
Notably, accidents can raise future insurance rates in Michigan through increased premiums, points on the driving record, and frequent claims. Accident forgiveness programs may mitigate the impact, but overall, the effect on rates will depend on various factors, including the driver's insurance policy and state regulations.
Individuals should contact their insurance agent or claims adjuster for any questions or clarifications regarding the claim. Policyholders seeking more detailed information on insurance policies and claim procedures can refer to the "Insurance Policies and How to Claim What's Yours" PDF file provided by the DIFS.
How to File a Claim for No-fault Benefits
To file a claim for no-fault benefits in Michigan, a written notice of injury must be submitted to the insurer within one year of the accident, as required by MCL 500.3145. These benefits provide essential financial support, covering medical expenses, attendant care, travel costs for medical appointments, lost wages, and household replacement services,
For PIP claims, if payments for medical expenses are not made within 30 days after the insurer receives satisfactory documentation, they are considered overdue and accrue 12% simple interest.
How to File a Claim for Pain and Suffering Compensation
To seek compensation for pain and suffering from the at-fault driver in a crash, a case must be filed against the driver and their insurance company within three years of the incident, as per MCL 600.5805(2).
To obtain this compensation, one must meet the no-fault law's tort threshold by demonstrating a severe impairment of the body. Meeting this threshold may also enable recovery of excess medical expenses, lost wages, and other economic damages.
How to File a Claim for Auto Damage Repair Costs
To file a claim for auto damage repair costs in Michigan, one can use their collision coverage policy or a mini tort claim against the at-fault driver and their insurer. To file for a claim, one must prove that the other driver was at fault, that they were insured at the time, that the damage was not covered by insurance, and that the damage does not exceed $3,000.
Claims can be filed with the at-fault driver's insurer if they have mini-tort insurance or directly with the driver. If denied, a lawsuit may be filed in small claims court. If the insurer fails to make payment within 60 days after receiving the necessary documentation, the claim may be considered overdue, and the overdue amount may accrue 12% simple interest.
Filing an Auto Insurance Complaint
When facing disputes with auto insurance companies in Michigan, consumers should first attempt to resolve issues directly with their provider or agent. If dissatisfied, they should request a written explanation, including specific policy provisions justifying any denial or exclusion of coverage.
For unresolved matters, the Michigan DIFS can assist. Consumers can file a complaint through the DIFS online form or contact their Office of Consumer Services at 877-999-6442 for help. The department strives to address inquiries efficiently, resolve issues, and help consumers understand their options.