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UPDATED: Mar 19, 2020
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Many states have no-fault auto insurance that restricts individuals from suing for medical expenses if their own insurance does not pay for those costs. Michigan, however, takes the concept of no-fault insurance even further. Michigan is the only state where all drivers must use their own auto insurance to cover repairs; individuals without collision coverage cannot have their vehicles repaired.
Because car insurance laws in Michigan are so different from other states, it’s important to understand how they work and how they apply to you and your vehicles. By understanding your insurance policy, you can be sure you get the best coverage to suit your needs.
How No-Fault Insurance Works
In every state, liability insurance is required by all drivers. This insurance generally pays for damage that a person may cause to another individual’s property. In most states, the person whose property was damaged can file a claim directly with the at-fault driver’s insurance. This enables them to have their vehicle repaired regardless of what coverage they carry.
Michigan does not allow this. Whether or not a person is at fault for damage, they must file the claim with their own insurance. This means that drivers with liability-only policies can never get their vehicles repaired following an accident. Although there are some exceptions, the only way to obtain coverage for an auto accident is to carry collision on the insured vehicle.
No-fault insurance only applies to collisions between two vehicles. If a person collides with a fixed object, such as a fence or mailbox, the person whose property was damaged will receive reimbursement for that damage whether or not the item was insured.
Three Types of Collision
Most states only offer a single type of collision coverage. This would provide coverage to any accident caused by a vehicle colliding with another person or property. Collision coverage comes with a deductible that must be paid in order to complete repairs. People not at fault in an accident can recover a reimbursement on that deductible from the at-fault driver.
Michigan handles collision differently. In Michigan, there are three types of collision coverage that can be purchased, and each functions differently:
— Normal Collision
This coverage functions in the same way as collision coverage in other states. The insured will have a deductible that they are responsible for paying. If they are not at fault for an accident, they have a limited opportunity to get this deductible reimbursed, but that is the extent of payments they can seek from another person’s insurance company.
— Broadform Collision
The most common type of insurance in Michigan, this coverage applies to both at-fault and not-at-fault accidents. If a driver is not at fault for an accident, the deductible is waived; otherwise, the insured must pay the deductible in order to seek repairs for the vehicle.
— Limited Collision
The least common type of coverage in the state, limited collision is also the most affordable. Limited collision coverage only pays for damage if the driver is not at fault for the accident. If an insured causes the collision, the claim will be denied.
How Fault is Determined
In order to be considered at-fault for a collision, a driver in Michigan must be found to have been 51% or more responsible for causing the accident. Some accidents are clear liability claims. For example, if a person rear-ends another vehicle, they will automatically be found at fault. The same is true for a person who hits a parked vehicle or a fixed object.
All other cases require an adjuster to review the facts of the accident and make a liability determination based on these factors. In order to assess the liability, an adjuster will get statements from all members involved. They may also interview witnesses and order a police report.
What happens once a claim is filed?
After liability is addressed, the insured will have their vehicle inspected. The adjuster will assess the damage and offer settlement based on the cost of the repairs. If the insured qualifies for a deductible waiver, the full amount of repairs will be paid. Otherwise, the deductible amount will be subtracted from the overall cost of repairs and the insured will be issued a check for the difference.
If the insured is not at fault and carries regular collision coverage, he or she can still file a mini-tort claim. This enables the insured to recover up to $500 or the amount of their deductible, whichever is lower.
Additionally, if an insured is not at fault for an accident and without collision coverage, they can also file a mini-tort claim against the at-fault driver’s insurance. In this case, the individual will receive a settlement of $500 or the worth of the vehicle’s repairs, whichever is lower. This is the only damage settlement that an individual is entitled to if they do not have collision coverage.
What if I’m Visiting Michigan and Get Involved in an Accident?
All drivers visiting Michigan from another state are automatically granted broadform collision. This means that as long as you have any sort of collision coverage on your vehicle and you get into an accident that’s not your fault, your deductible will be waived.
Michigan insurance laws are complex, and it’s a driver’s responsibility to know what insurance they carry and how it will apply. If you have any questions about what coverage to get or how your insurance will work in any particular situation, you can contact your insurance company’s toll-free customer service number or discuss the matter with your local agent. By reviewing your needs and selecting the appropriate coverage, you can be ensured that you won’t be unpleasantly surprised by any situation that may arise.