Michigan No-Fault Car Insurance—What Does It Cover?

by Thomas Stroble | August 10th, 2012

Individual U.S. states determine how they will handle personal injury car accidents and what level of financial liability a driver must show to secure or retain driving privileges within the state. Until July 2020, Michigan required all drivers to maintain an unlimited no-fault insurance policy, a requirement that often confuses motorists from other states who are unfamiliar with the concept.

While Michigan still has a no-fault law in place, the law has changed, and the new one effective in 2020 is quite different from the law in place since 1973. While no-fault laws were confusing before, they might be even more so in the common months and years, as residents try to decipher their options and which type of no-fault coverage is best for them. It is important to fully understand what each policy covers to protect yourself in the event of serious car accident injuries.

If you sustained injuries in a traffic accident, seek the guidance and representation of an experienced Michigan car accident attorney. At Michigan Injury Lawyers, it is our goal to recover the full benefits and compensation you need and deserve following a crash. Contact us directly for a free case evaluation.

New Options for No-Fault Coverage

Under Michigan law, anyone who owns a vehicle must have a basic no-fault insurance policy in place to get plates for the vehicle. It is illegal to operate a vehicle or let someone else operate your vehicle without this coverage. The only way you may not have no-fault coverage is to prove that you qualified to opt-out, and the requirements to opt-out are set out by law.

Michigan’s no-fault car insurance coverage aims to cover some of the basic financial costs associated with a motor vehicle accident. In essence, it is an attempt to head off personal injury liability accident lawsuits. Because Michigan requires motorists to carry no-fault insurance, a driver who carries the required insurance at the time of an accident can be sued as a result of the accident only under special circumstances. On the other hand, drivers without the required coverage have no protections from legal action from injured accident victims.

The major change in the no-fault law is that drivers now have options other than unlimited coverage.

You can choose:

  • Unlimited PIP coverage
  • PIP coverage up to $500,000
  • PIP coverage up to $250,000
  • PIP coverage with lower limits if you can prove qualified health coverage or Medicaid coverage
  • Opting out of PIP coverage altogether if you have qualified coverage from other sources

You might want to have lower premiums, so you might choose to have coverage with limits. It is easy to feel comfortable with $500,000 or even $250,000 of coverage. However, if you suffer a severe injury, your medical bills and other losses can quickly exceed this amount. At this point, you will need to seek additional compensation directly from the at-fault driver.

What Does Michigan No-Fault Insurance Cover?

No matter whether your policy is unlimited or not, if you suffer injuries in an accident in Michigan, your no-fault insurance policy will pay for your medical bills, wage loss benefits, replacement benefits, and property damage – up to the limits of your policy, of course. No-fault insurance does not pay for damage to the policyholder’s vehicle. The policyholder must purchase an additional type of coverage if they want it to cover any potential damage to their own vehicles.

No-fault insurance should cover medical bills that result from the accident. In addition, no-fault insurance will pay for wage replacement at the rate of 85 percent of what you earned before the accident, for up to three years.

There is, however, a limit to the amount of wage replacement benefits available. The state revises the cap each year. You may also be entitled to “replacement services,” which is a per diem payment intended to cover the cost of household services that you can’t perform because of the injuries you suffered in the accident. Finally, if you are killed in an accident, your wage replacement benefits will be paid to your family for up to three years.

A no-fault policy can also cover certain amounts of damage to someone’s property. This is limited to damage to things like a building, home, business, or livestock. It does not cover damage to a moving vehicle.

When Can I File a Lawsuit Filed?

The goal of the Michigan no-fault system is to eliminate litigation over minor accidents or “fender-benders.”

Therefore, you can only file a claim or lawsuit against an at-fault driver if one of the following is true:

  • Your losses exceed the limits of your no-fault policy
  • The accident resulted in death, serious injury, or permanent disfigurement
  • A non-resident with an out-of-state registered vehicle caused the accident
  • The accident happened in another state

The big change here is that you can sue if your losses exceed your policy, as that would not happen with the previously required unlimited coverage.

If that you sue for excess losses or under one of the exceptions to the “no lawsuits” rule, you must prove that the other driver was negligent and responsible for the crash and your injuries.

Then, their own bodily injury coverage will come into play, which could involve the following coverage, depending on their purchase:

  • $50,000 to $250,000 for a person who is hurt or killed in an accident
  • $100,000 to $500,000 for each accident if several people are hurt or killed

Contact Our Michigan Car Accident Lawyers

If you were in a Michigan car accident, speak to a Michigan car accident attorney immediately. Because the insurance laws can be confusing, especially now that they are different in 2020, you should consult an attorney so you receive all the benefits to which you are legally entitled from every liable source.

Contact the Michigan Injury Lawyers today by calling (888) 454-0801, or take a few minutes to fill out our online contact form for more information or to schedule a consultation.

Posted In: Car Accidents, Personal Injury