Regardless of whether you have a short commute from Troy to Sterling Heights or driving from downtown to up north any time you set out on the road it can be dangerous. Having the right coverage on your leased, financed or free and clear vehicle can make all the difference when disaster strikes.
Here at Envision Insurance (located in Troy, Michigan) we have a team of highly trained, licensed insurance professionals ready to help with determining what auto insurance coverage is most appropriate for your vehicle.
Listed below is a brief explanation of Michigan No-Fault Insurance and a few general types of auto insurance coverage to help you gain a better understanding of what your Michigan auto insurance policy may cover. This list is not comprehensive and determining what coverage is right for your unique situation should be left to the experts, call us today with your questions on which coverage is most appropriate for you and ask us for a free quote!
Brief Explanation of Michigan No-Fault Insurance
No-Fault Insurance is required by law in Michigan. Every owner of a car must buy certain basic coverages in order to get license plates. It is against the law to drive or let your car be driven without no-fault insurance.
If you have an auto accident, no-fault insurance pays for your medical expenses, wage loss benefits, replacement services, and the damage you do to other people’s property. It does not matter who caused the accident.
Your basic no-fault insurance does NOT pay for repairs to your car. For an explanation of insurance coverages providing protection for your car additional, optional coverages are required (as explained below).
The Basic No-Fault Policy You Must Buy Has Three Parts:
1. Personal Injury Protection (PIP)
If you are hurt in an auto accident, this part of your no-fault policy will pay all reasonably necessary medical expenses with no maximum limit. It will also pay up to 85% of the income you would have earned if you had not been hurt, for up to three years. However, the amount that you would be paid for lost income is limited and the limit is revised annually. Effective 10/1/18, the maximum is $5,700 per month. If you are killed in an accident, your policy will pay your family up to $5,700 per month for three years, depending upon what they would have received from your earnings and fringe benefits. In addition, you are entitled to “up to” $20 per day in replacement services. This is to pay for routine household services which injured persons are no longer able to provide for themselves or their families, such as housekeeping and yard work.
2. Property Protection (PPI)
No-fault will pay up to $1 million for damage your car does in Michigan to other people’s property, such as buildings and fences. It will also pay for damage your car does to another person’s properly parked vehicle. It does not pay for any other damage to cars. Please note that this is different from Property Damage coverage which will cover damage caused to other’s property outside of Michigan, as described below.
3. Residual Liability Insurance - Bodily Injury and Property Damage
The no-fault law protects insured persons from being sued as a result of an auto accident except in certain special situations. In general, you can only be sued:
(a) if you cause an accident in Michigan in which someone is killed, seriously injured, or permanently disfigured;
(b) if you are involved in an accident in Michigan with a non-resident who is an occupant of a motor vehicle not registered in Michigan;
(c) if you are involved in an accident in another state; or
(d) for up to $1,000 if you are 50% or more at fault in an accident which causes damages to another person’s car which are not covered by insurance.
Your required minimum coverage no-fault policy will pay up to certain amounts if you are found legally responsible. Although you may purchase additional coverage with higher limits, the minimum coverage offers:
Up to $20,000 for a person who is hurt or killed in an accident.
Up to $40,000 for each accident if several people are hurt or killed.
Up to $10,000 for property damage in another state.
Bodily Injury Liability Coverage
What is bodily injury liability coverage?
When you are found legally responsible for a car accident, bodily injury liability coverage is the part of your insurance policy that pays for the costs associated with injuries to the other person or people involved. This coverage also provides a legal defense in the event that you are sued for damages.
How is Bodily Injury Liability Structured?
Bodily injury liability limits are typically displayed as two dollar amounts next to each other, such as: $50,000/$100,000.
As mentioned above, the minimum limit in Michigan is $20,000/$40,000.
The first dollar amount ($50,000) represents the coverage limit for damages if only one person is injured in an accident. In this example, you would be covered for damages up to this amount. However, if the damages to this person exceeded $50,000, you would be responsible for covering what remains.
The second dollar amount ($100,000) represents the coverage limit for the total amount of damages if more than one person is injured. If the damages exceed this amount, you would be responsible for covering what remains
The Benefits of Additional Bodily Injury Liability Coverage
Michigan, like most states, requires a minimum amount of bodily injury liability insurance, but this may not be enough to cover the total amount of damages you may be responsible for paying. Purchasing a higher limit of bodily injury liability insurance will further protect your assets and future earnings against the risk of a large financial loss.
Property Damage Coverage
What is property damage liability coverage?
When you are found legally responsible for a car accident, property damage liability coverage is the part of your insurance policy that pays for the costs associated with repairing or replacing another person's property. This typically means damage to someone else's car, but it could apply to any other type of property you damage in an accident.
How is Property Damage Liability Structured?
Your property damage liability limit is a dollar amount that represents the maximum amount of property damage your insurance policy will cover. If you have a $50,000 coverage limit, your policy will only cover up to this amount and you would be responsible for covering what remains. As stated above, the minimum amount of coverage allowed for a Michigan auto insurance policy is $10,000 for coverage in another state.
The Benefits of Additional Property Damage Liability Coverage:
A minimum amount of property damage liability coverage may not be enough to cover the total amount of damages you may be responsible for paying. Purchasing a higher limit of property injury liability insurance will further protect your assets and future earnings against the risk of a large financial loss.
You may be sued because of an accident, as was discussed in the section on residual liability insurance. If this happens, your no-fault policy will pay up to the amounts shown in the residual liability section.
However, courts sometimes award more than these amounts. If this happens, you would be responsible for paying the amount not covered by your insurance policy. To protect themselves, many people buy higher limits of liability insurance.
A No-Fault Policy Covers the Whole Family
A no-fault policy covers all family members living in the same house. Personal injury protection benefits will be paid even when a family member is a passenger in another person’s car or is a pedestrian when an accident takes place. The personal injury protection coverage of your no-fault policy also covers anyone who does not have a no-fault policy and is hurt as a passenger or pedestrian in an accident involving your car. It will also cover a motorcyclist who is hurt in an accident involving your car.
This is only a brief summary of no-fault insurance. Some of the details have been left out. For more information read your policy, talk to your agent, or contact the Department of Insurance and Financial Services (DIFS) for any additional publications on this topic.
Additional (Non-Required) Insurance You May Want to Buy:
There are several types of coverage that you can choose to buy in addition to the required no-fault insurance. Three of the most common types of extra insurance are collision and comprehensive insurance, limited property damage liability insurance (mini-tort) and towing /rental car coverage (also known as rental car reimbursement), as described below:
1. Collision and Comprehensive Insurance
Your no-fault insurance DOES NOT pay for repairs to your car if it is damaged in an accident. If your car is properly parked and hit by another car, the other driver’s no-fault coverage will pay for the damage to your car. Except for this one situation, the only kinds of auto insurance that will pay for repairs to your car are collision and comprehensive coverage.
What is collision insurance coverage?
When your vehicle is damaged in an accident, collision insurance is an optional coverage that pays the cost of repairing or replacing it, minus the amount of your deductible. Collisions can involve another vehicle or an object, like a guardrail or a tree. If you lease or finance your vehicle, you may be required by your lender to purchase collision insurance coverage.
There are three basic kinds of collision insurance to choose from: limited, standard and broad form. The chart listed below describes each type and what it covers. The deductible mentioned in the chart is the amount of money you agree to pay toward the cost of repairs before the insurance company steps in and pays the remainder. The larger the deductible, the lower the cost of your collision insurance.
Collision Insurance Benefits:
Avoid paying out-of-pocket for repairs above the cost of your deductible.
Coverage for your loss when your damaged vehicle is deemed to be totaled.
Choosing Your Collision Insurance Deductible
Your collision deductible is the amount of money you will pay out-of-pocket in the event that a collision damages your car. When deciding on the amount of your deductible, evaluate the age of your vehicle, how much you think repairs might cost you, and your willingness to pay for repairs under the amount of the deductible. For instance, if you hit a concrete barrier and you have a $500 deductible, you would pay $500 and your insurance carrier would cover the rest of the repair costs above that amount. A higher collision deductible means that you will cover more of the cost of repairs when they arise, which in turn lowers your monthly premium.
The Three Types of Collision Coverage
Michigan law requires you to have no-fault automobile insurance on your car. If you have an accident, this required insurance pays for injuries to people and for damages your car does to other people’s property and to properly parked cars.
IT DOES NOT PAY FOR ANY OTHER DAMAGE TO CARS. You must buy collision coverage if you want coverage for damage to your car in case of an accident. The other driver’s insurance will not pay for damage to your car.
There are three kinds of collision insurance you can choose from: limited, standard, and broad form. The chart tells you when each kind of insurance will pay YOU if your car is damaged in an accident. Your collision coverage will not cover damage to the other driver’s car.
REMEMBER, you are not required by law to have collision insurance, BUT YOU MUST HAVE COLLISION INSURANCE IF YOU WANT INSURANCE TO PAY FOR DAMAGES TO YOUR CAR RESULTING FROM AN ACCIDENT. As mentioned above, your lienholder / lender (for leased and financed vehicles) may also require that you maintain collision and comprehensive coverage on the vehicle during the entire duration of the lease or until the vehicle’s loan is paid in full, if financed.
What is comprehensive insurance coverage?
Comprehensive insurance pays for your car if it is stolen or for repairs if it is hit by a falling object, collides with an animal, or is damaged in a fire, flood or by vandals.
If you have an older car, you may not want collision and comprehensive coverage.
When your vehicle is damaged as the result of an incident other than a collision, comprehensive insurance is an optional coverage that will pay the cost, minus your deductible, of repairing or replacing it. For example, you're covered if your vehicle sustains damage from a storm, a flood, a fire, vandalism, or theft. If you lease or finance your vehicle, you may be required to purchase comprehensive insurance coverage.
The Benefits of Comprehensive Insurance Coverage:
Avoid paying out-of-pocket for repairs or for a replacement vehicle after you've paid your deductible.
Compensation for your loss when your damaged vehicle is deemed to be totaled.
Choosing Your Comprehensive Insurance Deductible
Your comprehensive deductible is the amount of money you will pay out-of-pocket in the event of damage to your car not caused by a collision. When considering the purchase of comprehensive coverage or choosing the amount of your deductible, evaluate the age of your vehicle, how much you think repairs might cost you, and how comfortable you would be paying for repairs below your deductible amount. For instance, if a tree falls on your car and you have a $500 deductible, you would pay $500 and your insurance carrier would cover the remaining repair costs above that amount. A higher collision deductible means that you will cover more of the cost of repairs when they arise, which in turn lowers your monthly premium.
Comprehensive vs. Collision Coverage
Collision Insurance is an optional coverage that will pay for the cost of repairs up to a total loss, in which case your insurance carrier will give you the cash value of the vehicle. Including it on your policy requires the purchase of comprehensive coverage. While there are similarities between collision coverage and comprehensive coverage, here are the details of both (from a collision coverage perspective):
Comprehensive insurance is an optional coverage that will pay for the cost of repairs up to a total loss, in which case your insurance carrier will give you the cash value of the vehicle. Including it on your policy does not require the purchase of collision coverage. While there are similarities between collision coverage and comprehensive coverage, here are the details of both (from a comprehensive coverage perspective):
2. Limited Property Damage Liability Insurance - “Mini-Tort”
Most companies offer coverage for the $1,000 liability mentioned in (d) in the section on residual liability insurance. This coverage is provided in the event that you were deemed at-fault for an accident (or in other words, you caused the accident) and the not-at-fault party is suing you for either the cost of their deductible (up to $1,000) if they have standard collision coverage or up to $1,000 in repair / replacement damages if they do not maintain collision coverage on their vehicle. Please note: if the not-at-fault party maintains broad form collision coverage or limited collision coverage then they cannot pursue you for mini-tort, as they do not have a deductible (in the event they are found not-at-fault for an accident) and will be indemnified by their insurance carrier who will cover the total cost of repairs / replacement.
3. Towing and Rental Car Coverage
Towing and Rental Car Coverage is an optional coverage available from most insurance companies as an additional coverage on an automobile insurance policy. This coverage generally covers or reimburses the cost of towing and/or a rental car for covered events (accident, breakdown, flat tire, etc.). The cost is usually small in relation to the total policy premium. Some companies have towing and rental car coverage / reimbursement listed as one coverage or they may break them into two separate coverages. Please ask your agent if they are listed as separate coverages because you may believe you have both types but only have one or the other.
Alternatively, many insurance agencies offer memberships into clubs that offer these types of benefits to their members. These clubs generally offer limited reimbursement for the same types of events. The memberships may also offer additional benefits, and the membership fees vary greatly. You should ask your agent how much the membership costs, how the product works, and what other benefits are available with the membership to determine if the product is right for you.
Disclaimer: Please note, the information provided below is strictly for informational and educational purposes and should not be considered as legal and / or insurance counseling advice. If you have been involved in an accident please seek proper legal counsel and representation.
“Bodily Injury Liability Coverage.” “Liberty Mutual Insurance,” © 2019 Liberty Mutual Insurance, 175 Berkeley Street, Boston, MA 02116 | 36 USC 220506
“Property Damage Coverage.” “Liberty Mutual Insurance,” © 2019 Liberty Mutual Insurance, 175 Berkeley Street, Boston, MA 02116 | 36 USC 220506
“Collision Coverage.” “Liberty Mutual Insurance,” © 2019 Liberty Mutual Insurance, 175 Berkeley Street, Boston, MA 02116 | 36 USC 220506
“Comprehensive Coverage.” “Liberty Mutual Insurance,” © 2019 Liberty Mutual Insurance, 175 Berkeley Street, Boston, MA 02116 | 36 USC 220506
“Rental Car Reimbursement.” “Liberty Mutual Insurance,” © 2019 Liberty Mutual Insurance, 175 Berkeley Street, Boston, MA 02116 | 36 USC 220506
“Brief Explanation of Michigan No-Fault Insurance.” “Consumer Counselor: Insurance Information for Michigan Consumers” Michigan Department of Insurance and Financial Services