Is Michigan a No-Fault State?
Last Updated on December 17, 2022
Michigan is a no-fault state. It’s one of 12 states using a no-fault insurance system.
Under Michigan’s no-fault insurance system, your own insurer covers medical expenses, lost wages, and certain other damages after an accident, regardless of fault.
Michigan’s no-fault insurance system does not extend to property damage. If you damage another driver’s vehicle in an accident, then you (or your insurer) must cover the cost of repairing that damage.
Keep reading to find out everything you need to know about Michigan’s no-fault insurance system and how it works.
Table of Contents:
- How Michigan’s No-Fault Insurance Works
- Michigan’s No-Fault Insurance System Limits Your Ability to Sue
- Other Things to Know About Michigan’s No-Fault Insurance System
- Michigan Recently Changed Its No-Fault Insurance Law
How Michigan’s No-Fault Insurance Works
Michigan requires no-fault insurance by law. To drive on public roads in Michigan, you must carry a certain minimum amount of no-fault auto insurance.
After an accident, your no-fault insurance pays for your medical expenses, lost wages, replacement services, and damage you cause to other people’s property, regardless of who caused the accident.
Any no-fault insurance policy in Michigan must have three basic coverages, including:
Personal Injury Protection (PIP): Personal injury protection covers reasonably necessary medical expenses incurred in an auto accident, regardless of fault. It also covers up to 85% of your lost wages for up to three years (assuming you cannot work because of the injury that occurred in the auto accident).
Property Protection (PPI): Property protection insurance (PPI) covers up to $1 million in damage your car causes to others’ property in Michigan, including building, fences, and properly parked vehicles. However, it does not cover other damage to vehicles. If you damage someone else’s car in an accident and are found to be at fault, you must pay to repair the damage (or your insurer must pay).
Residual Liability Insurance, Including Bodily Injury and Property Damage Liability Coverage: Michigan’s no-fault insurance system protects insured individuals from being sued as a result of an auto accident. Like other no-fault states, Michigan limits the ability of drivers to sue after an accident. You can only file a lawsuit against the at-fault driver in situations involving serious injuries.
Michigan requires a minimum policy of 20/40/10, which includes the following:
- Up to $20,000 in compensation for a person who is hurt or killed in an accident
- Up to $40,000 in compensation for each accident if multiple people are hurt or killed
- Up to $10,000 in compensation for property damage in another state
Michigan’s No-Fault Insurance System Limits Your Ability to Sue
Under Michigan’s no-fault insurance system, drivers have a reduced ability to sue other drivers for damages.
In most states, drivers can sue for non-monetary damages – including pain and suffering and emotional distress – after an accident. This can significantly increase accident compensation beyond medical bills and vehicle damage, leading to multimillion-dollar settlements even for minor injuries.
In Michigan, however, drivers cannot sue for minor injuries in an accident – even if the other driver was at fault. Instead, your own insurance company covers any costs you incurred up to the limits of your policy.
Per Michigan insurance law, drivers in Michigan can file a lawsuit in certain situations involving major injuries.
You can only be sued after an auto accident in Michigan if you:
- Cause an accident in Michigan where someone is killed, seriously injured, or permanently disfigured
- Are involved in an accident in Michigan with a non-resident who is an occupant of a motor vehicle not registered in Michigan
- Are involved in an accident in another state
- Are 50% or more at fault in an accident that damaged another person’s car when damages are not covered by insurance (in this situation, you can only be sued for up to $3,000)
If you are sued in Michigan, your no-fault insurance policy covers your liability up to the limits of your policy. Even if you fall into the categories above, for example, your insurance can cover you up to the limits of your policy, which means you could end up paying nothing out of pocket.
Other Things to Know About Michigan’s No-Fault Insurance System
Michigan’s no-fault insurance system is designed to simplify car insurance and reduce costs. The system has supporters and detractors, and some argue the system does not work as advertised. However, there are other things to know about Michigan’s no-fault insurance system and how it works:
It Does Not Cover Damage to Your Own Vehicle (Unless You Add Collision and Comprehensive Coverage): Michigan’s no-fault insurance system does not cover damage to your own vehicle. To cover damage to your own vehicle, you must purchase collision and comprehensive coverage (part of a full coverage policy). Michigan, like all states, does not require this coverage. If you do not buy collision or comprehensive coverage, then you must cover damage to your own vehicle out of pocket after an accident (unless the other driver was at fault).
Damage to Other Vehicles Does Not Fall Under No-Fault Coverage: Under Michigan’s no-fault insurance system, you claim medical bills, lost wages, and certain other expenses through your own insurer, regardless of fault. However, damage to other vehicles does not fall under no-fault coverage. If you damage another vehicle in an accident and are 100% at fault, you are legally obligated to pay for that damage (unless you damaged a parked car; parked car damage falls under Michigan’s no-fault insurance system).
No-Fault Insurance Covers All Family Members in the Same Household: A no-fault insurance policy covers all family members living in the same house. Michigan’s personal injury protection benefits pay out even when a family member is a passenger in another person’s car or a pedestrian injured in an accident. Your no-fault insurance also extends to passengers and pedestrians who are not otherwise covered by their own no-fault insurance policy.
You Can Buy Mini-Tort to Cover Certain Property Damage Liability: Above, we mentioned the possibility of paying up to $3,000 in vehicle damage to another driver after an accident, assuming you were at fault. If you want insurance to cover this amount, you can buy “mini-tort” coverage, also known as limited property damage liability insurance. Mini-tort insurance covers $3,000 of residual liability, the maximum amount you would pay under Michigan insurance law.
Consider Buying Towing & Rental Car Coverage: Most insurers in Michigan offer towing and rental car coverage. It’s one of three insurance coverages to consider buying, per Michigan.gov. Towing and rental car coverage can include roadside assistance, towing coverage after an accident, and more – often for just a few extra dollars per month.
Michigan Recently Changed Its No-Fault Insurance Law
Michigan’s no-fault insurance system remained largely unchanged for 40 years. Then, in 2020, in an attempt to lower Michigan’s high auto insurance rates, state legislators adjusted their no-fault insurance system, allowing drivers to adjust coverage to save money on insurance premiums. Drivers can also opt-out of certain parts of the no-fault insurance system.
Here are the changes you need to know about with Michigan’s no-fault insurance system:
Before 2020, Michigan required drivers to purchase “unlimited” personal injury protection (PIP) medical benefits. These benefits covered all reasonably necessary injuries resulting from a car accident with no limit.
Since July 1, 2020, Michigan has allowed drivers to choose unlimited coverage or to cap coverage at a certain amount. Drivers can cap their coverage at $50,000 (if they are enrolled in Medicaid), $250,000, or $500,000.
Drivers on Medicare, meanwhile, can now opt out of Michigan’s PIP medical benefits coverage. Drivers on Medicare can use their Medicare policy to cover certain injuries after an accident, making PIP unnecessary.
The “mini-tort” amount rose from $1,000 to $3,000 for car accidents occurring after July 1, 2020.
Drivers who exceed their PIP medical benefits level can sue the other driver (assuming the other driver was at fault) for any additional medical expenses, lost wages, and other costs after an accident.
Final Word on Michigan’s No-Fault Law
Michigan has used a no-fault insurance system since 1973. Under Michigan’s no-fault insurance system, drivers must carry a certain minimum amount of personal injury protection (PIP) coverage to cover their own medical bills and lost wages after an accident.
Although Michigan made certain changes to its no-fault insurance system in 2020, the state continues to maintain a no-fault insurance system with the goal of reducing costs and limiting unnecessary lawsuits.
Compare insurance quotes in Michigan today to find the best no-fault insurance for your unique needs.