Michigan No-Fault Insurance Explained

To ensure your safety on the mitten’s roads, you must be familiar with auto insurance in Michigan and what the no-fault laws require from you. Let’s take a deep dive into Michigan’s no-fault laws and requirements and what they might mean for you.

Michigan’s no-fault car insurance law mandates drivers to carry a minimum of PIP and PPI on their auto insurance policies. In an accident in a no-fault state, drivers immediately file a claim with their insurer to help cover the cost of their medical expenses (PIP) and repairs to the other party’s vehicle or property (PPI). 

The required amount of PIP drivers must carry in the Great Lakes State is typically about $250,000 unless the policyholder has Medicare or Medicaid or is otherwise eligible for lower limits or to opt out entirely. The PIP limit you carry on your policy will dictate how much financial assistance you may receive from your insurer to help you cover your medical expenses.

In Michigan, PIP coverage may extend beyond coverage for the policy-holding driver. Policies may differ based on your insurer, but in some instances, PIP may cover the policyholder’s passengers, family members, and even the policyholder if they are hit by a vehicle as a pedestrian or while riding a bicycle.

In Michigan, no-fault insurance refers to two coverage types: personal injury protection (PIP) and property protection insurance (PPI). The state mandates these no-fault coverages by law, so failure to have these coverages on your auto insurance policy may result in hefty fines, license suspension, or even jail time.

In an accident, once you file a claim with your insurer to invoke your PIP benefits, your PIP will help you cover the cost of your medical expenses, loss of wages, or, in the worst event, help your family with funeral expenses. No-fault insurance provides ample medical benefits to policyholders.

The policyholder may invoke PPI to help cover the cost of repairs for damages to the other party’s property, regardless of who is at fault in the accident. PPI wouldn’t help the policyholder cover the expenses owed to the other party to pay for damages to their vehicle if it was damaged while in use. 

The details of no-fault laws vary in each state, but they all follow the idea that drivers will be responsible for, at least, their own medical expenses should they be injured in a car accident. The Michigan no-fault statute requires drivers to file a claim with their insurer to receive financial assistance for their medical expenses regardless of who is at fault in the accident.

Michigan’s no-fault car insurance law requires all drivers to have around $250,000 in PIP and, at most, $1 million in PPI on their auto insurance policies. The law doesn’t end there, though, as there are several other stipulations to be familiar with to ensure you abide by Michigan’s no-fault auto insurance law.

The most significant stipulations to Michigan’s auto accident law are:

No, Michigan isn’t an at-fault state, otherwise known as a state with tort liability. Many tort liability states don’t mandate no-fault coverages like PIP or PPI because drivers must have liability coverage on their auto insurance policies.

To put it simply, in tort liability states, drivers carry liability coverage on their auto insurance policies to protect other drivers they may injure. Drivers in no-fault states have no-fault coverage on their auto insurance policies to protect themselves from other drivers on the road in the event of an accident.

Yes, Michigan is a no-fault state. Being a no-fault state means that policyholders immediately default on their insurance in an accident to help them cover their medical expenses.

While Michigan’s no-fault law has recently been reformed, it is still a no-fault state. 

Michigan has legally required its driver to have no-fault insurance since 1973. Before passing the no-fault law, it was a tort liability state. When the original no-fault law was passed in 1973, all drivers were required to carry unlimited PIP as a stipulation under the law. In 2020, however, the state reformed its no-fault law.

Before 2020, no-fault auto insurance in Michigan required drivers to have unlimited PIP on their policies. In 2020, a reform to the law proposed in 2019 passed and allowed drivers to choose from a few different PIP limits to lower premium costs.

Prior to 2020, when all drivers in the state were required to have unlimited PIP, Michigan had the most expensive premiums in the country. The state has high premiums because PIP is a costly coverage type to carry due to the broad range of expenses it will help cover for the policyholder.

Now that the state has reformed its no-fault law, drivers are seeing a gradual reduction in premiums, especially those who opt for a PIP limit lower than unlimited coverage. 

States may decide to adopt no-fault laws for various reasons. Michigan’s no-fault car insurance law was put into place due to two related issues: population and uninsured drivers. The Great Lakes State is one of the most populated states in the nation, and over 25% of drivers on Michigan’s roads are uninsured.

With higher populations comes more drivers on the roads, leading to a higher statistical likelihood of car accidents. When many drivers get into accidents and file auto insurance claims, auto insurers take an increased risk in insuring drivers in the state because there’s a higher likelihood their insured drivers will require financial assistance for repairs or medical expenses. 

Population alone can drive states to mandate no-fault laws, but when coupled with a high number of uninsured drivers, it’s almost necessary for states to adopt these laws to protect the citizens who follow them. With over 25% of drivers on the state’s roads lacking sufficient insurance, there’s a one in four chance of an insured driver getting into an accident with an uninsured driver who has no way to pay for the expenses accrued due to the accident.

In a tort liability state, otherwise known as an at-fault state, the driver who caused the accident is responsible for filing a claim with their insurance to cover the expenses accrued by the accident victim. Since drivers in Michigan proved they couldn’t be responsible for carrying sufficient insurance, it became a no-fault state to allow law-abiding citizens to depend on themselves for insurance coverage.

Drivers in Michigan must have three coverage types on their auto insurance policies: liability coverage, PIP, and PPI. All drivers in the state must have at least $50,000 of bodily injury liability per person per accident, $100,000 of bodily injury liability per accident, $10,000 of property damage liability (or 50/100/10 in liability coverage), around $250,000 in PIP unless they qualify for lower limits with their healthcare coverage, and, at most, $1 million in PPI. 

While PIP and PPI are coverage mandated by the no-fault law, liability is a coverage type many Americans must have on their auto insurance policies, regardless of where they live. Many states have minimum requirements for liability coverage, as it is tort coverage and provides protection for the other party in an accident caused by the policyholder.

Michigan’s minimum required liability coverage is 50/100/10, or $50,000 bodily injury liability per person per accident, $100,000 bodily liability per accident, and $10,000 property damage liability per accident. As previously stated, liability is a tort coverage that protects the people or property the policyholder may harm in an accident.

You may be wondering why, in a no-fault state, drivers are required to carry tort coverage. While, yes, Michigan is a no-fault state, insurers may still investigate claims to designate fault to those involved in an accident. When it comes to property damage, they must assign liability so the victim of the accident can file a claim with the at-fault party’s insurer to receive assistance in paying for damages to their vehicle.

In Michigan and many other no-fault states, drivers use their legally mandated no-fault coverage if they’re injured in an accident. Policyholders injured in an accident file a claim with their insurer to invoke their PIP coverage. Once their claim has been approved, they can begin receiving payouts to help them cover the resulting medical expenses.

Most drivers will have somewhere between $250,000 and $500,000 of annual PIP coverage available to them, their family members, and any passengers injured in an accident. The specifics of what PIP may cover can change depending on your insurer, so it’s essential to ensure you’re familiar with what your PIP covers.

If you have questions about your Michigan PIP coverage or decide it’s time to shop around for a new policy with better PIP rates than what you’re getting with your current insurer, the best way to begin your research is to get and compare quotes online.

Here at Clovered, we make it easy for you to get auto insurance quotes in Michigan with some of the top insurers. Simply use our free quoting tool to get started. If you prefer to speak with an agent directly, feel free to call us at 833-255-4117 or email us at [email protected].