A No-Fault System

When it comes to auto insurance the state of Michigan follows a "no-fault" system. Under the Michigan car insurance requirements every registered vehicle must be insured and each insurance policy will cover various things regardless of who is at fault in an accident.

A no-fault insurance policy in Michigan has three basic parts to it:

Personal Injury Protection (PIP) - this will pay for all necessary medical expenses if you are injured in an automobile accident.

Property Protection (PPI) - this coverage will pay up to $1 million for any damage that your car does to someone else's property. This includes damage to fences, buildings, and any other type of property, not just other automobiles.

Residual Bodily Injury and Property Damage Liability Insurance (BI/PD) - this coverage will pay for your defense costs and any damages that you may be found liable for as the result of an automobile accident. The minimum amount of this type of coverage is $20,000 for a person that is hurt or killed in an accident and $40,000 per accident if multiple people are injured. This type of coverage also requires $10,000 for property damage that occurs in another state.

The amounts and coverage types listed above are the absolute minimums you are allowed to have under the Michigan car insurance requirements. You may purchase additional coverage but you must have at least the minimums to be in compliance with state laws. If you do not carry at least a basic no-fault policy you can be sued and held personally liable for any damages you might cause. If you drive without insurance you may also be convicted of a misdemeanor and fined $200 to $500, put in jail for up to one year, or both. You may also have your license suspended for 30 days or until you are able to provide proof of financial responsibility.

 As you can see it is very important to make sure you are in compliance with Michigan auto insurance requirements. The problem for a lot of people is that auto insurance can be quite expensive so you may want to take some time to shop around for the best price. There are many car insurance companies competing for your business and with so many options to choose from is very likely that you'll be able to find a company that is offering the coverage you need at an affordable price.