Michigan is 1 of 12 states that requires drivers to have no-fault insurance. No-Fault insurance is a topic often talked about and debated about in legislation. This type of insurance is when your insurance company pays for your medical expenses, wage loss benefits, replacement services and damage you cause on another person’s property in the event of an accident. It does not matter who causes the accident.
There are two ways injured parties in a no-fault state can seek compensation in “serious” injuries: Quantitative Monetary Threshold or Qualitative Verbal Threshold. Michigan falls under the qualitative threshold. This threshold categorizes injuries from sufficiently serious to permit a tort. The advantage is an incentive to inflate damage amounts is removed. The disadvantage is broad interpretation by the courts can lead to over-compensation.
There are 3 parts to a no-fault policy every driver must have: Personal Injury Protection (PIP), Property Protection (PPI), and Residual Liability Insurance- Bodily Injury and Property Damage.
Personal Injury Protection (PIP)
In the event you are injured in an auto accident, PIP will pay all of your medical costs and up to 85% of income you would have earned if you weren’t injured, up to three years. The number is limited and is revisited annually. As of October 1st 2016, the maximum coverage amount is $5,452 per month for three years. If you were to die in an accident, your family would receive the coverage amount up to $5,542 up to three years depending on your earnings and fringe benefits.
Make sure you talk to your insurance company about whether or not you have a deductible on your policy. If you do, you are required to pay up to a certain amount for expenses before the insurance company will start to cover the cost of your medical expenses.
Property Protection (PPI)
No-Fault insurance in Michigan will pay up to $1 Million in damages your car does to another’s property such as buildings and fences. You are also covered for damages your car does to another person’s properly parked vehicle. However, it does not cover other damage to cars. The statue of limitations in a PPI insurance claim is 1 year. Keep in mind that outside the state of Michigan, your Property Damage Liability Insurance only covers your legal liability for property damage.
Residential Liability Insurance
This part of the no-fault insurance protects you from being sued as a result of an auto accident. However, there are exceptions. You can be sued in Michigan if the following happen:
(a) if you cause an accident in Michigan in which someone is killed, seriously injured, or permanently disfigured;
(b) if you are involved in an accident in Michigan with a non-resident who is an occupant of a motor vehicle not registered in Michigan;
(c) if you are involved in an accident in another state; or
(d) for up to $1,000 if you are 50% or more at fault in an accident which causes damages to another person’s car which are not covered by insurance.
To further understand Michigan’s No-Fault insurance, you can check out the Consumer Counselor a document provided by the Michigan Legislature. Or you can call a Compass Agent today and they can walk you through the details and answer any questions you might have.