The question of car insurance is often a state manner, so everywhere you go, the requirements and limits are different. 90% of the time in the US, the driver who caused the accident is the one whose insurance is responsible for covering the damages. These are commonly known as at-fault laws, and nearly every state has them. Of course, there are those that don’t. The Great Lake State of Michigan is one such example of where there are no-fault car insurance laws. While car insurance is used in the same fashion as other states, how and when it is used is where things get different. We’ll look at all the terminology and what-ifs about no-fault insurance laws in Michigan.
What is a No-Fault Insurance State Like Michigan?
In this context, fault refers to the driver that caused the damage or accident. Since they are at fault, their insurance would cover the damage caused to another person’s property and medical treatment for injuries. The type of car insurance that covers this is basic liability coverage, and it’s required in 95% of the United States. Michigan is one such state where car insurance is required, but when it is used differs. For a brief history, Michigan has been a no-fault car insurance state for nearly 50 years. No-fault car insurance is really just liability car insurance, but the fault does not matter, as the name suggests. When drivers are involved in an accident in Michigan, their respective insurance will cover their own damages and injuries. Of course, all the regular car insurance add-ons are available but not required like in other states.
Why is Michigan a No-Fault Insurance State?
The regular liability car insurance system, or tort liability as it is called, was used in Michigan as it was in nearly every other state prior to 1973. During this time, several injured drivers claimed that they weren’t receiving proper compensation. Some cases involved the at-fault driver’s insurance provider shortchanging the damage as well. Needless to say, being a tort liability state was doing more harm than good for drivers in Michigan. They passed the no-fault insurance law then and made some changes to it in 2019, which we’ll look at later. No-fault insurance offers all the same protection as a tort state would, and Michigan drivers have been receiving great auto coverage ever since.
No-Fault Insurance in Michigan Today
No-fault car insurance laws in Michigan remained how they were previously described from 1973 to 2019. That year, new laws and legislation passed that changed the way Michigan drivers buy auto insurance for the better. One of the biggest changes in 2019 was the optional inclusion of personal injury protection (PIP) coverage in no-fault Michigan car insurance. PIP was always required for regular no-fault Michigan car insurance, but now it’s an option that drivers can elect to drop if they want. PIP coverage insures the driver for all their medical and injury treatments regardless of fault, so it fits right in if it is chosen. This is the most major change made to no-fault car insurance in Michigan, but there were some others over the next two years during the COVID pandemic:
- Medicare as PIP – This change was made in 2021 –drivers in Michigan can opt-out of PIP coverage and use their medicare to cover injuries sustained in a car accident just as it would. Hospitals and treatment centers will be able to charge everything for medical care depending on coverage limits. Medicare is known for covering large portions of treatment costs.
- Medical attendant limits – Michigan seemed to put its foot down in 2021 when they decided to make it optional for insurance companies to cover more than 56 hours a week of personal attendant care at home after a car accident.
- Bodily injury coverage – In 2020, Michigan passed bodily injury coverage requirements for their drivers. This does not include property damage, just injury per one person and injuries per accident. The minimum coverage limits are $250,000 and $500,000, respectively.
- Qualified health insurance – Certain coverage options may be available if policyholders have certain health insurance. This is known as qualified health insurance and was implemented in Michigan in 2020.
- Mini tort increase – Normal mini-tort allows drivers that have been in an accident to collect a certain amount of money from the at-fault driver’s insurance company. Mini torts are usually put towards repair costs or assistance with deductibles. In 2020, Michigan increased its maximum tort recovery amount from $1,000 to $3,000. This has helped drivers immensely.
- Excess of medical costs – Similarly, if a driver in Michigan gets into an accident and has medical costs that exceed their PIP coverage, they have the ability to sue the at-fault driver for a tort amount to cover their remaining balances.
- Catastrophic Claims Association – The Michigan Catastrophic Claims Association (MCAA) pays the medical costs of severely injured drivers if they select the unlimited coverage option for their auto policy.
- Assigned Claims Plan – Michigan’s assigned claims plan is another way that car accident victims can claim an insurance payout. They have recently put a cap of $250,000 on medical payments.
Other Car Insurance That Michigan Recommends
In addition to the required no-fault liability car insurance, there are obviously several other types of add-ons that can broaden your auto coverage. Collision and comprehensive coverage, or full car insurance, is one such recommendation. Despite the name, no-fault car insurance will actually not cover damage to a car that was no one’s fault, like storm damage while it is parked. For that reason, full coverage is recommended by the state of Michigan. The collision aspect of full coverage can also further cover damage to a car in an accident. The aforementioned mini-tort is also recommended, especially with the recent cap increase. Roadside assistance or towing coverage is also suggested by Michigan. No-fault car insurance doesn’t cover roadside services like tows to an auto shop. Of course, you also get to choose whether or not you want to carry PIP.
How Much Does No-Fault Car Insurance Cost?
Like any other type of insurance, no-fault car insurance rates depend on a variety of personal factors like age, driving history, and place of residence. Of course, the number of add-ons and coverage also affect the cost. In no-fault states, it has been found that drivers pay anywhere from $890 to $950 annually for no-fault car insurance. This is just basic coverage with the state minimums in mind. When it comes to finding the cheapest no-fault car insurance, it helps to look at both local and national providers. Being a no-fault state, you can bet that Michigan has car insurance providers that specialize in such. That also means you can be looking at some competitive rates.