Michigan is the most expensive state in the US to get auto insurance. This is due in large part to their special no-fault insurance status that provides extra coverage that is unheard of in most other states. As a mandatory insurance state you must have insurance to drive. The fact that most vehicles are made in the Auto State is a little irony that is not lost on most residents when they face their large insurance bills.
No Fault State
One of only a dozen or so No Fault states, Michigan also takes the cake when implementing a system that is also the most expensive. The no fault insurance in Michigan, like most other states, requires drivers to exhaust their own insurance coverages to pay for accidents including injury and property damage.
If you are a resident in Michigan in an accident with another Michigander you both will make a claim to your insurance company under this system. There are a few exceptions to this rule. If you are a Michigan resident driving in another state and get into an accident, Michigan’s No Fault system does not apply. You are subject to the system of the state you are in. Also, if you get into an accident with a non-resident of Michigan while driving in Michigan a standard at fault system applies to the accident. Lastly if the claim is only up to $500 in damages, the suit will be handled under traditional tort laws.
The Michigan Department of Transportation (MDOT) requires every registered vehicle to have auto insurance in the following minimums:
- $20k per injured person in an accident
- $40k per accident in multiple persons accidents
- $10k property damage
These requirements are often referred to in the State as PLPD which mean Personal Liability/Personal Damage coverage.
In addition to these minimums, the no fault portion of the insurance is a Personal Injury Protection policy (PIP) that covers injuries and their expenses of those involved in an auto accident.
However this is where Michigan insurance takes a turn for the expensive. First in the state you can coordinate your health insurance with your auto PIP insurance, where your medical insurance pays your medical bills up to its limits and then the auto PIP insurance covers the rest, generally an interesting protection.
Yet the system also covers up to 85% of earned income in the event you are hurt and cannot return to work immediately up to a monthly maximum of $5,392 for an astonishing 3 years of recovery. This alone is one of the reasons for Michigan’s outrageously expensive insurance policies. In the end, those involved in accidents have one of the best coverage and recovery policies in the nation.
The Property Protection Insurance (PPI) portion of the no fault policy will also cover up to $1 million of damage to third-party property in an accident, just not the vehicles involved in the accident.
The no fault system can be replaced with at fault damages if you are involved in an accident that causes severe personal injury such as a permanent disfigurement or loss of bodily function or if a person is killed in the accident.
Interestingly enough, Michigan provides for a three tier comprehensive collision insurance option. These three tiers include limited, standard and broad form collision coverage. Limited coverage will only cover the repairs to your vehicle if you were less than 50% at fault. Standard coverage will pay for repairs after your deductible is paid whereas broad form will pay for coverage whether you are more or less than 50% at fault in a collision.
With one of the highest rates of uninsured drivers in the country it is surprising in this no fault system that uninsured and underinsured policies are optional.
Michigan Auto Insurance Placement Facility
Is a private and non-profit organization that helps people get insurance when they are turned down by auto insurers because of a poor driving record. Applying to MAIPF at any insurance company, even if you have been previously turned down is legislated giving you options for insurance.
In Michigan, if you do not have insurance or were involved in an accident without insurance the Michigan Assigned Claims Program is meant to help pay for medical bills in such events. Those responsible for the uninsured vehicle will be responsible for paying back the medical costs, even if it is a family member.