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

March 20, 2023 | Thomas L. Stroble
Michigan No-Fault Car Insurance—What Does It Cover?

Injured victims deserve to be adequately compensated for their losses no matter what state a car accident occurs in. Auto accident claims are handled differently in each state.

Michigan is one of only 12 states that rely on a no-fault insurance system. No-fault states require drivers to carry their own Personal Injury Protection or PIP coverage. Also known as medical payments or med pay, this coverage allows injured drivers and passengers to get all or some of their medical expenses paid and receive compensation for other accident-related out-of-pocket costs without having to go through the process of proving fault in an auto insurance claim or lawsuit.

Liability for the accident doesn’t matter; each injured party files a PIP claim with their own insurance carrier.

The Importance of PIP

Michigan No-Fault Car Insurance—What Does It Cover

PIP coverage has several benefits. First, it gives injured motorists immediate coverage for their medical expenses instead of making them prove the fault of the liable driver through the court system. This allows injured parties to get medical claim payments more quickly. It also decreases the burden on the court system, decreasing the number of claimants who need to litigate their cases.

What Benefits Does PIP Provide?

The benefits provided by Michigan PIP coverage include:

  • All medical expenses related to the motor vehicle accident. For example, ambulance and emergency room care, surgery, in-patient hospital stays, doctor and specialist visits, prescriptions, rehabilitation, physical therapy, and mental health services
  • Lost income resulting from the injury. As much as 85 percent of the income the claimant would have earned if they hadn’t suffered an injury for up to three years (the exact amount recoverable for lost income changes every year)
  • As much as $20 per day for replacement services. For example, for paying someone to take care of household chores that the claimant can’t physically perform because of their accident injuries

Property Protection Insurance

As a no-fault state, Michigan also addresses coverage for damaged property through a “Property Protection Insurance” component of Michigan’s no-fault rules. This coverage provides for as much as $1 million in compensation for any damages your vehicle causes to another person’s property. This only applies to other parked vehicles and other property types, such as buildings, fences, and light poles. Property protection insurance doesn’t cover any damages to your vehicle or moving vehicles.

Who Can File a PIP Claim in Michigan?

It’s not just the PIP driver or policyholder who is entitled to PIP benefits in Michigan.

The following parties may tap into these crucial benefits:

  • Any family member who lives with the policyholder— even if the family member is a passenger in someone else’s car and a crash occurs, or they suffered an injury in a car accident as a pedestrian
  • Passengers or pedestrians who suffered an injury in an accident involving a PIP policyholders vehicle and don’t have their own no-fault coverage
  • Motorcyclists who suffer injuries in an accident involving the PIP policyholder’s vehicle

What is “Choice” PIP Coverage?

Complicated changes to Michigan’s no-fault and PIP laws that went into effect in 2020 allow Michigan drivers to decide on the level of PIP medical coverage they want.

Their choices include:

  • 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

Michigan’s Department of Insurance and Financial Services details the changes further:

  • Insurance carriers must reduce their PIP premiums according to the level of coverage chosen by the policyholder.
  • Policyholders can select different Bodily Injury and Property Damage (BI/PD) coverage levels, which will impact their premiums.
  • Each individual policyholder’s total premium and potential premium savings depend on the types and amounts of coverage they choose.
  • Car insurance carriers must give their customers documents explaining the benefits and risks of their various coverage options.

These rules only apply to auto insurance policies issued or renewed after July 1, 2020.

Michigan No-Fault and Liability Claims

Under the law, Michigan’s no-fault insurance also provides what’s known as residual liability protection. This type of coverage pays for your legal defense and any damages you are liable for in an auto accident up to your policy limits.

If you caused a motor vehicle collision, unless you previously elected to pay more for higher limits, your no-fault policy will provide:

  • $20,000 per individual who suffers injuries or dies in an accident
  • $40,000 per accident in which more than one individual suffers an injury or dies
  • $10,000 per accident for property damage if the accident occurs outside of Michigan

Michigan’s injured parties should note that PIP/no-fault coverage doesn’t compensate for your pain and suffering or any other non-monetary damages caused by the crash.

Can You File a Car Accident Lawsuit In Michigan?

The only way to receive compensation for your pain and suffering and other non-economic damages after a car accident that wasn’t your fault is to file a third-party insurance claim or lawsuit.

To step outside Michigan’s no-fault auto insurance system and file a third-party insurance claim or lawsuit against an at-fault driver in Michigan:

  • The accident must result in severe bodily function impairment, permanent and serious disfigurement, or a fatality.
  • The at-fault driver must be a non-resident whose vehicle is not insured in Michigan.
  • The accident must have happened outside of Michigan.
  • The claim or lawsuit must be for $1,000 or less for damages to your vehicle, your own insurance policy must not cover the damage, and the other driver must be 50 percent or more at fault in causing the accident.

If one or more of these requirements applies, you can hold the at-fault driver accountable for the accident via a third-party car insurance claim or personal injury lawsuit. Your claim or lawsuit will allow you to seek compensation for all categories of losses, including pain and suffering and all other available non-economic damages that aren’t available to you in a no-fault/PIP claim with your own insurance company.

How Soon Should I File an Insurance Claim?

After any loss, accident, or injury, you should file an insurance claim as soon as possible. However, if you need medical care, make that a priority. Then your next steps should be contacting an experienced car accident attorney to discuss your accident, injuries, and any potential claim you might have.

If you are filing a claim against your insurance policy, the policy declarations or contract likely require you to file one as soon as possible. Waiting to file one can increase the risk of further damages and possibly decrease your financial recovery.

An insurance policy is a legal contract between the insured and the insurance carrier. When an accident occurs, the insurance company is responsible for fulfilling their end of the agreement to take care of you.

You also have obligations that are in the cooperation clause of your policy. Typically, you must participate in and cooperate with any investigations involving your claim.

For instance, you must:

  • Promptly report your accident
  • Share any information necessary for the investigation of your claim
  • Sign medical releases so that the insurance company can review your medical records

Not upholding your contractual obligations can result in your insurance company refusing to renew your policy. They can also raise your rates or potentially even cancel your policy.

Michigan’s Statute of Limitations

Those injured in Michigan car accidents need to be aware that they only have a limited time to pursue filing a claim and a potential lawsuit. Under Michigan’s statute of limitations, you must file personal injury lawsuits within three years of the date of the injury. If they are not, the court can dismiss the lawsuit, and the injured party won’t have other legal options for pursuing compensation.

Causes of Michigan Car Accidents

Numerous factors can contribute to the causes of car accidents in Michigan. Sadly, the majority are attributable to driver negligence. Drivers have a duty to follow traffic laws and to drive defensively. It’s when they don’t that collisions happen.

Causes of accidents linked to driver negligence include:

  • Speeding
  • Failing to stop at a stoplight or stop sign
  • Failing to yield the right of way
  • Adjusting controls within the car, such as on the sound system
  • Texting or otherwise using a smartphone
  • Other forms of distraction, such as talking to passengers or performing personal hygiene tasks
  • Driving under the influence of drugs or alcohol
  • Following too closely behind another vehicle
  • Lack of proper vehicle maintenance

Negligent and careless drivers must be held liable for the injuries and damages they cause. However, to protect their bottom line, their insurance companies will use many tactics to avoid paying claims or paying them to the extent victims deserve.

Prevent this from happening to your claim by hiring a Michigan car accident lawyer. Your attorney will investigate and identify the cause of your crash and pinpoint who is liable. They aren’t afraid to stand up to big insurance companies.

It’s not just negligent drivers that cause car accidents. Sometimes, it is the manufacturers of vehicles or their parts. If something is defective, it can cause a serious accident. Your car accident lawyers will dig deep to determine what caused or contributed to the cause of your accident. If it is a manufacturer, they have the knowledge and resources to help you pursue compensation from them.

In addition, motor vehicle crashes can be caused by faulty or ill-maintained roads, making the municipality responsible for them liable for any injuries that result. Keep in mind that if your claim is against a government entity, different laws might apply. Hiring Michigan car accident attorneys who are well-versed in Michigan personal injury laws can help increase the chances that you will have a successful claim in these cases.

Do You Have a Valid Car Accident Claim?

Sometimes individuals hurt in a car accident are reluctant to seek legal help or pursue compensation. They aren’t sure whether or not their claim is valid. The best thing for them to do is seek legal advice. After reviewing the facts and circumstances of the accident and your injuries, they can tell you if your claim is valid and what steps to take next. In general, if another party is even partially responsible for your accident and you suffered injuries exceeding the amounts of your PIP policy coverage, you likely have a valid personal injury claim.

Your attorney will work hard to prove the four elements of negligence in your claim, which include:

  • Duty of care: The other driver owed you a duty of care- for example, to drive the speed limit, put down their phone while driving, or stop at a stop sign.
  • Breach of duty: The driver violated that duty of care somehow.
  • Injuries: Their breach was the direct cause of your injuries- for instance, they didn’t stop at a stoplight and hit your vehicle. As a result, the other driver t-boned your car, causing you to suffer a broken leg and severe gashes to your head.
  • Damages: Your injuries caused damages such as medical bills, lost wages, and pain and suffering.
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Meet With a Skilled Michigan Car Accident Attorney Today

Insurance coverage can be confusing if you’ve suffered an injury in an auto accident. Determining where to file your claim and how much you deserve for your injuries is often time-consuming while you are trying to recover from your injuries.

When you enlist a Bloomfield Hills personal injury lawyer, they can get your claim filed, handle the insurance companies, and negotiate a fair settlement. They will know what your PIP coverage will pay for and what losses you may need to file a third-party insurance claim for. In addition, you can maximize your compensation after a car accident with a skilled Michigan car accident attorney’s help.

Thomas L. Stroble Author Image

Thomas L. Stroble


Mr. Stroble is a highly accomplished graduate of Michigan State University, with degrees in both science and law. He specializes in commercial lawsuits and personal injury cases. Licensed to practice law in Michigan and even the U.S. Supreme Court, he’s a well-qualified legal expert. Besides his career in law, he loves outdoor activities and volunteers as a part-time police officer in Birmingham.

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