The Requirements for Auto Insurance in Michigan
Michigan is a no-fault state with unique coverage rules
As a Michigan resident, you need to be educated on auto insurance requirements to make certain you meet state law and know what you are buying. Many times people rely on an insurance agent to select the appropriate coverage, but it is always important to know your state laws to ensure you are meeting all coverage minimums.
In Michigan, all drivers are required to purchase a no-fault insurance policy, which consists of three minimum requirements: personal injury protection, property protection, and residual liability. There are additional insurance options available to Michigan drivers, but these are not required. Learn more about the coverage you need to meet the legal minimums in the Wolverine state.
Personal Injury Protection
Personal injury protection, also known as PIP, is the medical portion of a Michigan policy for which the auto insurance company is responsible. In Michigan, insurance carriers are responsible for paying medical coverage up to the limit you select. Prior to July 2, 2020, all drivers were required to have unlimited PIP coverage. Michigan law now allows drivers to select from several options.
- Unlimited coverage: This covers all allowable personal medical expenses per person for medical care and recovery, including wage replacement for up to three years if you are unable to work.
- $500,000 limited coverage: Coverage for medical expenses is capped at $500,000 per person. Wage replacement is not affected.
- $250,000 limited coverage: Coverage for your medical expenses is capped at $250,000 per person. Wage replacement is not affected. This option also allows you to exclude some policyholders from PIP coverage, provided they have a qualified medical insurance policy. Wage replacement still applies.
- $50,000 limited coverage: This is only an option if you are covered under Medicaid and your spouse or any resident relatives on the policy have qualified health coverage, are enrolled in Medicaid, or have PIP coverage through another policy. Coverage for medical expenses is capped at $50,000 per person. Wage replacement is still covered.
- No PIP medical coverage: This is only an option if you are covered under Medicare Parts A and B and your spouse or any resident relatives on the policy have qualified health coverage or PIP coverage through another policy. Wage replacement is not affected.
If you are not enrolled in Medicare Parts A & B, you must have at least $50,000 in PIP coverage.
Property Protection Insurance
All Michigan drivers are required to carry $1 million in coverage for property damage. This property protection insurance (PPI) only covers damages that your vehicle does to other people's property within the state of Michigan. It also pays for damage your car does to another person's properly parked vehicle but does not cover any other vehicle damage.
Michigan residents must also have residual bodily injury and property damage liability (BI/PD) coverage. For policies issued on or after July 2, 2020, Michigan sets the lowest liability limits that may be purchased to the following minimum levels:
- Bodily injury: $50,000 for one person injured or killed, or up to $100,000 total per accident if more than one person is injured or killed
- Property damage: $10,000 for damages in another state
All insured Michigan drivers who elect unlimited medical PPI are required to pay Michigan's Catastrophic Claims Association (MCCA) fee (which was substantially reduced for policies issued on or after July 2, 2020). This nonprofit organization pays medical claims when they exceed a certain amount. This setup is unique to Michigan and ensures drivers who choose it will have unlimited medical coverage when injured in a car accident.
Even if you have the minimum insurance coverage in Michigan, you are still exposed to quite a bit of risk for damage to your vehicle or some medical expenses if you don't have much PIP or personal coverage. Michigan residents should also consider the following optional coverages:
- Uninsured and underinsured motorist: This protects you in the event you or someone in your vehicle is injured by a driver with insufficient or no insurance coverage.
- Limited property damage: This covers you if you are 50% or more at fault in an accident and the other driver sues you to recover their deductible.
- Comprehensive: This will pay for theft or damages to your vehicle from fire, flood, falling objects, vandalism, or collision with an animal.
- Collision: If you want your vehicle repair costs covered after an accident, you must have collision coverage. You can choose different levels of coverage with varying deductibles.
Because of Michigan's no-fault coverage laws, property coverage for vehicles only applies to parked cars that you hit or vehicles that you hit out of state. It does not apply to your own vehicle or to claims that exceed your residual liability limit for property damage. Michigan residents who travel out of state frequently should consider a higher residual property liability, and all Michigan drivers should consider collision coverage for their own vehicles.
Penalties for No Proof of Insurance in Michigan
Proof of insurance is required at the time you renew your registration, and you must keep it in your vehicle at all times. Failure to provide proof of insurance to a police officer could be cause for penalties.
- Your license could be suspended for 30 days or until you can provide proof of insurance.
- You could be fined anywhere between $200 and $500.
- You may be charged with a misdemeanor and subject to up to one year in jail.
- Another driver or property owner could sue you for injuries or damages from an accident.
The Bottom Line
Knowing Michigan's auto insurance requirements is the first step to becoming a legally licensed and insured driver. It is important not only to understand what coverage is required but how it works. As a no-fault state, Michigan has several unique rules. Brush up on your Michigan car insurance laws before taking to the roads to ensure your policy works for you and not against you.