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The Basics of Michigan’s No-Fault Insurance

By Karen Flores, J.D., Hotline Attorney 

 The Legal Hotline for Michigan Seniors frequently receives calls from seniors asking questions about car insurance, usually after they’ve been involved in an accident. Every driver in Michigan is required to have basic no-fault auto insurance to cover claims for property damage and personal injury. If you are caught driving without auto insurance, you could be convicted of a misdemeanor.  

The no-fault law in Michigan is very complicated. The following information is a very brief explanation from the Michigan Department of Insurance and Financial Services (DIFS) regarding some of the key aspects of Michigan’s no-fault insurance.   

The basic no-fault policy has three parts: Personal Injury Protection (PIP), Property Protection (PPI), and Residual Liability Insurance – Bodily Injury and Property Damage. 

  1. Bodily Injury and Property Damage (PIP) pays for medical expenses if you are injured in an accident. 
  2. Property Protection (PPI) pays for damages your car does to someone else’s property, such as buildings or a legally parked car (but not damage to other cars). 
  3. Residual Liability Insurance – Bodily Injury and Property Damage protects you from being sued except in special circumstances. For instance, you could be sued if you cause an accident which kills or seriously injures someone.     

No-fault insurance does not pay for damages your car sustains in an accident unless you purchase additional Collision coverage. The deductible under collision coverage is the amount you pay for the repairs before the insurance company pays the remaining amount. You may also want to purchase Comprehensive insurance which pays you if your car is stolen or if you hit an animal.  

Sometimes when people own an older car which has minimal replacement value, they only pay for the minimum no-fault coverage required to save on the cost of monthly premiums. If someone is in an accident and their car is damaged, their insurance will not cover the cost of damages to their car; however, they can sue the other driver for up to $1,000 if they are less than 50% at fault. This action is known as a mini-tort.  

If your car is damaged in an accident which is not your fault, talk to your insurance agent who can find out if the driver who hit you has insurance coverage. If they do have coverage, there may be no need to file a lawsuit in small claims court to recover the $1,000. Because the limit you can recover is $1,000, if the damages cost more than $1,000, or if your car is worth more than $1,000 and is totaled, you will have to pay for any additional costs to repair or replace your car.   

The above information is Michigan’s no-fault law in a nutshell. For more specific advice and information, you can contact your insurance agent, the Michigan Department of Insurance and Financial Services, or an attorney who specializes in Michigan’s no-fault law.