WHAT IS NO-FAULT INSURANCE?
As a Michigan resident, you’ve certainly heard of no-fault insurance and you know that Michigan is a no-fault state, but, what exactly does that mean for Michigan drivers? Put simply, it means that in the event of a car accident, no-fault insurance pays for your auto-related injury medical expenses, wage loss benefits, replacement services (activities of daily living expense coverage = $20/day stipend for activities you’d normally perform around the house but can’t due to an auto accident) and third party property loss, regardless of fault.
WHY DOES MICHIGAN HAVE NO-FAULT INSURANCE?
No-fault insurance is meant to protect Michigan driver’s from the catastrophic financial effects an injury accident can have on Michigan families and sets rules governing when a person can sue for auto injury, reducing the number of lawsuits that would otherwise clog our court systems.
WHAT ARE THE MINIMUM REQUIRED NO-FAULT COVERAGE ITEMS EVERY MICHIGAN AUTO POLICY SHOULD HAVE?
A Michigan no-fault auto policy requires that every driver be covered in for three main exposures. While the below listed minimum coverage items are mandatory, there are other optional coverage items that can be purchased to improve coverage further and should be considered when purchasing your auto policy.
- Personal Injury Protection (PIP)
The “PIP” portion of your auto policy covers medical expenses related to an auto accident injury. Additionally, the policy pays for wage replacement up to 85% of your wage for up to three years if you can’t work because of an auto injury (as of 10/01/2014, the maximum benefit is $5392 per month). Lastly, if you are killed in an auto accident, your policy pays up to $5392 per month, capped at 85% of your current wage, for up to three years.
- Property Protection (PPI)
.The “PPI” portion of your auto policy will pay up to 1 million for damage you cause to other people’s property, including legally parked vehicles.
- Residual Liability Insurance – Bodily Injury and Property Damage
The no-fault law protects insured persons from being sued if they cause bodily injury or property damage to another person or another person’s property. Since very few states employ a no-fault based insurance solution and Michigan drivers often travel to and drive in other states, the PPI does not necessarily extend to that other state. Property Damage Liability is employed when you cause damage to other people’s property outside of the State of Michigan.
In Michigan and in general, you can be sued:
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- If you cause an accident in which the other party meets the definition of threshold injury – permanent disability, permanent disfigurement of death
- If you have an accident in Michigan with a non-resident who is an occupant of a motor vehicle not registered in Michigan
- If you are involved in an accident in another state, or
- For up to $1000 if you are deemed to be 50% or more at fault
Still have questions on Michigan’s no-fault policy? Call one of our knowledgeable insurance agents today at 616-949-9000 to get a free, no obligation quote, or request your free insurance quote online!
