MICHIGAN NO-FAULT INSURANCE: THE BASICS
Automobile Insurance is Required Under the Law
Under Michigan’s No-Fault Act, every owner of a motor vehicle in Michigan is required to maintain certain automobile insurance coverage. In fact, it is ILLEGAL to be operating or allowing someone else to operate your car that isn’t covered by automobile insurance.
What Automobile Insurance is Required?
Specifically, all automobile insurance policies offered in Michigan must include coverage for (1) personal protection insurance, (2) property protection insurance and (3) residual liability insurance. Each of those benefits and what they cover are discussed in more detail below.
- Personal Protection Insurance
Also referred to as Personal Injury Protection or “PIP” benefits, this part of your insurance policy covers what are deemed reasonably necessary medical expenses if you are injured in an automobile accident. Specifically, PIP covers medical expenses “consisting of reasonable charges incurred for reasonably necessary products, services and accommodations for an injured person’s care, recovery, or rehabilitation.” That includes a benefit known as “Attendant Care Services” which can pay an hourly rate towards friends, family members or even professionals who need to assist a victim of an automobile accident with personal care such as bathing and getting dressed.
PIP will also pay 85% in lost wages for the income you would have earned if you had not been injured for up to three (3) years from the date of the accident.
Lastly, PIP will pay $20.00 per day for household or “Replacement” services. Specifically, this covers daily household services which an injured person is no longer able to do and must instead rely upon others to perform, including friends and family members. Examples of replacement services include, but are not limited to, vacuuming, dusting, taking out the trash, laundry, cutting the grass and shoveling the snow.
2. Property Protection Insurance
On the other hand, Property Protection Insurance or “PPI” will pay up to $1 million for accidental damage your vehicle does to another’s property in the State of Michigan, such as a fence or building. It also covers damage your car does to other people’s properly parked vehicles.
3. Residual Liability Insurance
Residual Liability Insurance provides coverage for a person who is alleged to be at-fault or liable for causing an accident and is being sued as a result. Under the No-Fault Act, a driver who causes an automobile accident which results in another’s injury in Michigan can be sued “only if the injured person has suffered death, serious impairment of body function, or permanent serious disfigurement.”
Residual liability insurance also provides the victim of an automobile accident a maximum of $1,000.00 for damage to his or her vehicle not otherwise covered by insurance. This is known as a “Mini Tort” claim. For accidents that occur after July 1, 2020, however, the maximum recovery amount for Mini Tort claims increases from $1,000.00 to $3,000.00.
What is Considered a “Motor Vehicle” for Purposes of the No-Fault Act?
A “motor vehicle” is defined under the law as “a vehicle, including a trailer, that is operated or designed for operation on a public highway by power other than muscular power and has more than 2 wheels.” A “public highway” essentially means any road, track, path or street that is publicly maintained and open for public use.
What is Not Considered a “Motor Vehicle” Under the Law?
Under the law, a “motor vehicle” does not include the following:
- Farm tractors
- Off-road vehicles (“ORVs”) – vehicles not operated or designed for operation on a public highway
- Golf carts
- Power-driven mobility devices – a wheelchair or other mobility device designed to be used by someone with a mobility disability
- Commercial quadricycles
- Electric bikes
Who is Considered an “Owner” of a Motor Vehicle?
An “owner” of a motor vehicle includes the following:
- A person renting or having use of the vehicle (such as under a lease) for more than 30 days.
- A person that holds title to the vehicle.
- A person that has immediate right of possession to the vehicle under an installment sale contract.