How Does Michigan No-Fault Insurance Work?
If you've ever shopped for car insurance in Michigan, you've probably heard the term "no-fault insurance." But what does that actually mean?
Michigan's no-fault system can be confusing, especially after the changes that took effect in 2020. Here's a simple breakdown of how Michigan no-fault insurance works and what drivers should know when choosing their coverage.
What Does "No-Fault" Mean in Michigan?
One of the biggest misconceptions is that no-fault insurance means nobody is ever responsible for an accident.
That's not what it means.
Michigan's no-fault system generally means that certain benefits for your own injuries after an auto accident are handled through the no-fault system regardless of who caused the crash. At the same time, fault can still matter for things such as liability claims, vehicle damage, and Michigan's mini-tort rules.
A basic Michigan no-fault auto policy includes Personal Injury Protection (PIP), Property Protection Insurance (PPI), and residual bodily injury/property damage liability coverage.
What Is PIP in Michigan?
Personal Injury Protection (PIP) is one of the most important parts of Michigan no-fault insurance.
PIP can provide benefits following an auto accident, including medical expenses as well as benefits such as wage loss and replacement services. One important distinction is that choosing a lower PIP medical limit doesn't necessarily eliminate these other PIP benefits.
Michigan offers several PIP medical choices, including:
- Unlimited PIP medical
- $500,000
- $250,000
- $250,000 with certain eligible individuals excluded
- $50,000 for certain Medicaid-eligible households
- Opting out of PIP medical for qualifying Medicare recipients
Not everyone qualifies for every option. Certain PIP medical selections require the insured or household members to have Qualified Health Coverage (QHC). Generally, QHC is health coverage that does not exclude or limit coverage for injuries related to auto accidents and meets Michigan's applicable individual deductible requirement. Medicare Parts A and B also qualify as QHC. Depending on the PIP option selected, your insurance company may require documentation showing that you or members of your household have QHC.
Should I Choose Unlimited PIP?
There isn't one PIP medical option that's right for everybody.
Your health insurance, household members, budget, risk tolerance, and the protection you want after a serious accident can all matter.
Unlimited PIP medical provides the greatest amount of PIP medical protection available under Michigan auto insurance, while choosing a lower limit may reduce the PIP medical portion of your premium.
Before reducing or opting out of PIP medical coverage, it's important to understand what your health insurance will and won't cover after an auto accident. Health insurance and Medicare may not provide every benefit available through Michigan PIP.
What Is Property Protection Insurance?
Michigan no-fault policies also include Property Protection Insurance (PPI).
PPI provides up to $1 million for certain property damage your vehicle causes in Michigan, including damage to things such as buildings, fences, and properly parked vehicles.
This is different from collision coverage, which is coverage you may purchase for damage to your own vehicle.
Does No-Fault Mean I Can't Be Sued?
No.
Michigan drivers still carry bodily injury and property damage liability coverage. Depending on the circumstances of an accident, an at-fault driver can still face liability for injuries or damages.
Michigan also has what's commonly called the mini-tort, which can allow recovery of up to $3,000 for certain uninsured vehicle damage resulting from an accident.
So while Michigan is called a "no-fault" state, fault absolutely hasn't disappeared from auto insurance.
Why Is Michigan Auto Insurance So Confusing?
Because there are a lot of moving parts.
Your auto policy may include PIP medical, bodily injury liability, property protection, collision, comprehensive, uninsured and underinsured motorist coverage, and other options. Your health insurance can also affect which PIP options are available to you.
That's why simply choosing the cheapest option on a screen isn't always the best way to build an auto policy.
Have Questions About Michigan No-Fault Insurance?
At Clear View Insurance, we help drivers in Sterling Heights, Macomb County, and throughout Michigan understand what they're actually buying.
We can explain your PIP options, deductibles, liability limits, and other coverages in plain English so you can make an informed decision.
Have questions or want to compare auto insurance options?
Call Clear View Insurance: (586) 742-0316
Request an Auto Insurance Quote Online
Visit Clear View Insurance to learn more.
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