Michigan Car Insurance Laws: Everything You Need to Know

By Randy Luton | Last Updated: 05/17/2024

Auto insurance is a legal requirement for Michigan drivers. To comply with state requirements, drivers must have a minimum amount and type of auto insurance. A driver with insufficient Michigan liability insurance faces severe penalties, even if it is their first offense.

Whether you are a veteran Michigander or a new driver in the state, it is essential that you have a thorough grasp of Michigan auto insurance requirements. Recently, Michigan altered its auto insurance rules. The PIP coverage regulations were revised by the Michigan car insurance laws, which impact all Michigan drivers.

What are the minimum auto insurance requirements in Michigan?

Michigan auto insurance laws are among the most stringent in the country. Theoretically, this implies that Michigan drivers are adequately protected against physical harm. However, you should be aware that there are gaps in coverage that might put you at danger.

Having physical damage coverage might be an excellent approach to limit risk and safeguard your car, particularly if you are traveling outside of Michigan. Before buying insurance, you should always try to compare car insurance rates online.

These are the minimum auto insurance requirements in Michigan:

Coverage Types Amount
Bodily Injury Liability Coverage Per Person$50,000
Bodily Injury Liability Coverage Per Accident$100,000
Property Damage Liability$10,000
Personal Injury Protection (PIP)Depends on health insurance
Property Protection Insurance (PPI)$1 million

Drivers who have minimal Michigan liability coverage often pay the lowest rates. Nonetheless, the majority of insurance providers advise that drivers acquire greater liability coverage than is legally necessary. There is no assurance that the minimal liability limitations in Michigan will pay the whole cost of an accident.

New Changes in the Michigan Auto Insurance Requirements

The most significant change for Michigan drivers is the replacement of mandatory comprehensive lifetime no-fault personal injury protection (PIP) insurance coverage with a segmented structure that lets people opt-out or purchase as little as $50,000 worth of PIP coverage for medical expenses in certain situations. There are other choices for $250,000, $500,000, and No Limit.

PIP Coverage Options

  • No Limited PIP
    • This option is offered to all purchasers of No-Fault insurance and is the most similar to what we all had under the Old Law. This option covers all reasonable costs associated with a person’s treatment, recuperation, and rehabilitation.
    • Under this Option, the new legislation demands average premium reductions of at least 10 percent per car. These savings in premium are not guaranteed for all policyholders. This discount only applies to your PIP insurance premium share.
  • $500,000 PIP
    • Those who purchase No-Fault Insurance also have access to this option. This option only covers up to $500,000 for the treatment, recuperation, and rehabilitation of the wounded individual.
    • Under this provision, the new legislation demands average premium reductions of at least 20 percent for each car. These savings in premium are not assured for all policyholders. This discount only applies to your PIP insurance premium share.
  • $250,000 PIP Option
    • This option is accessible to all individuals who purchase No-Fault Insurance. This option only covers up to $250,000 for the treatment, healing, and rehabilitation of the wounded party.
    • Under this provision, the new legislation demands average premium reductions of at least 35 percent per car.
  • $50,000 PIP Medicaid Option (Limited Availability)
    • This option is only accessible to Medicaid-eligible individuals whose spouse and domestic members are also covered by Medicaid, another health insurance plan, or a separate PIP policy.
    • Under this provision, the new legislation demands average premium reductions of at least 45 percent per car. This discount only applies to your PIP insurance premium share.
  • Opt Out (Limited Availability)
    • This option is only accessible if you, your spouse, and your household relatives satisfy specific qualifications, including being “eligible people” under Medicare Parts A and B or other qualifying health insurance plans as carefully defined by the No-Fault Act.
    • If you choose this option, you will also be subject to stringent notification requirements if you or a family member lose eligible health coverage.

Rating Factor

New Michigan auto insurance laws mention that auto insurers are no longer permitted to use gender, marital status, homeownership status, credit score, education level, employment, and ZIP codes as rating factors. This is meant to make pricing more uniform and keep insurance firms focused on how you drive, as opposed to your identity.

Consumer Protection

Michigan state has formed a new fraud investigative team to deal exclusively with insurance-related offenses for the sake of consumer protection. The auto insurance requirements in Michigan also mandate state approval of new auto insurance rates and enhance penalties for some insurance infractions.

Is Michigan a no-fault State?

Yes, Michigan is one of 12 states that use a variant of “no-fault” auto insurance. In a no-fault system, your own auto insurance coverage covers your medical care and other out-of-pocket expenses after a car accident, up to the policy limits, irrespective of who caused the accident.

In Michigan, not only the policyholder is eligible for PIP coverage. PIP payments are also offered to:

  • Anyone who lives in the policyholder’s house.
  • Any passenger or crosswalks who doesn’t have their own no-fault policy and gets hurt in a crash caused by the policyholder’s car.
  • Any motorcyclist who gets injured in a traffic collision affecting the policyholder’s car.

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Michigan no-fault and Liability Claims

Michigan’s “no-fault” insurance pays for your defense costs and any destruction you are found to be responsible for in an auto accident, up to the policy’s limits. This is called “residual liability.”

In other words, if you are found to be legally responsible for an auto accident, your no-fault policy will cover at least the following:

  • Accidents cost $20,000 per person hurt or killed.
  • $40,000 for accidents that hurt or kill more than one person.
  • For property damage caused by an accident in another state, the cost is $10,000 per accident.

It’s important to know that if you file a PIP/no-fault claim, you can’t get money for “pain and suffering” or other non-financial damages caused by the accident.

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Michigan Additional Car Insurance Coverage Options

Even though Michigan auto insurance requirements are liability, PIP, and PPI insurance, many drivers choose to buy additional insurance with auto insurance quotation.

If you buy extra coverages, your car insurance premium will go up, but you will be better protected. Here are some of the most common types of extra insurance that Michigan drivers can get:

  1. Comprehensive: This coverage covers damages to your car that occur under circumstances other than a collision. It protects against risks such as theft and weather-related damage.
  2. Collision: This coverage compensates for damages to your car caused by a collision with another vehicle or an immobile object.
  3. Loan/Lease Payoff: Also known as gap coverage, this coverage pays the difference between what you owe on a loan and the actual cash worth of your car. This might be beneficial if you owe more than your vehicle is worth.
  4. Rented Car Reimbursement: If your vehicle is inoperable, this coverage might assist pay for a rental car while yours is repaired.
  5. Roadside Assistance: The majority of insurance providers provide roadside assistance to aid with flat tires, dead batteries, and other unforeseen costs.
  6. Uninsured/Underinsured Motorist Policy: This coverage will assist with payment if you are involved in an accident caused by an uninsured motorist.

Michigan’s Penalties for Driving without Proof of Insurance

According to Michigan car insurance laws, it is unlawful to drive without auto insurance. The state of Michigan imposes severe fines for drivers found without legal auto insurance.

If you opt to drive without insurance in Michigan, you may anticipate the following repercussions:

  • Your license might be suspended if you are stopped without proof of insurance.
  • You must pay a fee to get your license reinstated.
  • Before your license may be restored, the state may also need your insurance carrier to submit Michigan SR-22 form verifying you have insurance.
  • Your registration and license plates may be suspended until your insurance is restored.

If you are found to be at fault in an accident, your auto insurance will not pay the expenses. This implies that you may be responsible for tens of thousands of dollars in damages, and your possessions, such as your car, money, and house, may be at risk.

Frequently Asked Questions

  • Is auto insurance mandatory in the state of Michigan?

    Yes, drivers are required to have 50/100/10 levels of Michigan liability insurance, as well as PIP and PPI coverage.

  • Is PIP insurance mandatory in Michigan?

    Yes, PIP coverage is needed in Michigan in addition to the mandatory liability coverage. PIP refers to personal injury protection and provides coverage for medical bills and lost earnings incurred as a result of an accident. The obligatory no-fault auto insurance laws in Michigan provide limitless PIP coverage.

  • Does Michigan permit compensation for decreased value after an accident?

    Yes, Michigan permits compensation for lost value after an accident. Due to the fact that Michigan is a reduced value state, you may file a claim for the lost value of your car three years after an accident. In Michigan, you will only be entitled to diminished value compensation if the accident was not your fault.

  • What happens if I am injured in an auto accident and my medical expenses exceed the coverage I selected?

    If the cost of medical treatment surpasses the limits of your auto insurance policy, your employer’s health care plan, Medicaid, or Medicare may begin to pay the costs.

  • In Michigan, can you sue an uninsured driver?

    Yes, however you must first submit a claim with your own insurance company. Generally, your PIP policy will pay for medical expenditures and your collision coverage will pay for damage to your own vehicle, allowing your insurance company to sue the uninsured motorist for reimbursement of the money they paid out.

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  • Visited the Website of DIFS to understand auto insurance laws in Michigan.

Editorial Guidelines: The above is meant as general information to help you understand the different aspects of auto insurance. This information does not refer to any specific auto insurance policy. Coverages and other features vary between insurers, vary by state, and are not available in all states. References to costs of coverages/repair, average or typical premiums, amounts of losses, deductibles, etc., are indicative and may not apply to your situation. We encourage you to speak to our insurance representative and to read your policy contract to fully understand your coverages.

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Randy Luton is the Founder and CEO of RateForce. He is passionate about InsurTech services and has in-depth knowledge about the auto insurance sector of the USA.