- Insurance

Michigan No-Fault Automobile Insurance Basics

No-fault insurance is required by law in Michigan. Every auto owner must purchase certain basic coverages in order to register a vehicle in Michigan. It is against the law to drive, or let your car be driven, without no-fault insurance. The basic no-fault policy has 3 parts:

1) Personal Injury Protection (PIP)

If you are injured in a car accident, this part of your no-fault policy will reimburse all of your medical costs. It will also pay, up to a maximum amount, for the earnings you would have made if you had not been injured, for up to three years.

In 2007, the allowed amount under no-fault was $4,589 per month. If you are killed in an accident, your policy will pay your family up to the monthly amount for three years, based on what they would have received from your earnings and fringe benefits. You may also be entitled to up to $20 per day for replacement services, such as housekeeping, that you are no longer able to provide for yourself or your family because you are injured.

You may synchronize PIP coverage with any health or disability policy you have (except Medicaid, Medicare or a Medicare supplemental policy) to reduce your PIP premium. The health or disability plan then becomes the primary payer for medical or wage loss expenses, and the auto policy would cover remaining medical or wage loss expenses. These coverages are also called excess medical and excess wage loss.

2) Property Protection Insurance (PPI)

In Michigan, no-fault will pay up to $1 million for damage your car does to other people’s property, such as buildings and fences. It will also reimburse for damage done to other people’s properly parked vehicles.

3) Residual Liability Insurance Bodily Injury and Property Damage (BI/PD)

The no-fault law protects insured persons from being sued as the result of an auto accident except in certain special situations. These are some of the circumstances under which you could be sued:

One, if you cause an accident in Michigan in which someone is killed or seriously injured.

Two, 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.

Three, if you are involved in an accident in another state.

Four, you can be sued for up to $500 in damages to another person’s car, which is not covered by insurance, if you are 50% or more at fault in the accident.

A Michigan required no-fault policy will pay up to your coverage limit amounts if you are sued or are legally responsible for damages in these situations.

The minimum required Residual Liability Insurance Bodily Injury and Property Damage coverage limits are:

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.

These limits are often called 20/40/10.

Courts sometimes award more than these amounts. If this happens, you would be responsible for paying the amount not covered by your policy. To look after themselves, many people buy extra liability insurance.

There are some optional insurance coverages you may wish to consider. Michigan state law does not require that these be purchased-

Collision Insurance which pays for repairs to your car when it is damaged in a crash, Comprehensive Insurance which pays for your car if it is stolen or for repairs if it is damaged by falling objects, fire, flood, vandalism, or collision with an animal, and Uninsured Motorists Coverage which covers you if an uninsured motorist seriously injures you or a member of your family.

An eligible person for auto insurance is a person who has a car registered in Michigan or has a valid Michigan driver’s license. However, there are times when a company can refuse to insure you.

You can be denied car insurance if:

-you are not required by law to have no-fault insurance.

-your driver’s license is suspended or revoked.

-within the past five years, you have been convicted of attempting to defraud an insurance company, or have been denied payment of a claim over $1,000 because there is evidence of fraud on your part.

-within the past three years, you have been found guilty of a felony with a motor vehicle, driving under the influence of alcohol or drugs, failing to stop at the scene of an accident, or reckless driving.

-the car you want to insure does not meet Michigan safety requirements.

-within the past two years, your auto insurance has been canceled because of non-payment of premium. This can be waived if you pay the entire premium on the policy you are buying in advance.

– the insurance you would like to buy requires you to be a member of a group, club or organization and you are not a member of the group or do not join the club or organization.

-your driving record has more than the allowable number of “eligibility points.”

-you do not meet the requirements of a company’s underwriting rules.

Insurance Eligibility Points

Insurance companies assign insurance eligibility points for certain traffic violations.

These points are not the same as points on your official driving record. You can be turned down for auto insurance if you have seven or more eligibility points from violations within the past three years.

How insurance companies assign eligibility points:

-Driving more than 15 mph over the speed limit (careless driving) – four points

-Driving 11-15 mph over the speed limit – three points

-Driving 15 mph or fewer over the speed limit on freeways that used to have a maximum speed limit of 70 mph – two points

-Other moving violations – two points

-The first accident in which you are more than 50% at fault – three points

-The second and all following accidents in which you are more than 50% at fault – four points

Company Guidelines

Insurance companies also use certain guidelines, called underwriting rules, to help determine whether they will insure you. These rules may be different for each company, but each company must apply its rules in the same way to everyone.

Ineligible Persons

If you find you are not eligible for auto insurance, you may want to ask your agent to apply to the Michigan Automobile Insurance Placement Facility for you. The Facility was created to offer insurance to those persons who have difficulty finding insurance through regular companies. Any licensed agent can help you apply for insurance through the Facility.