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Top 5 ways to pay for vehicle damage repairs after an auto accident in Michigan

Auto insurance attorney discusses types of collision coverage, mini tort, suing the ‘at fault’ driver and paying out-of-pocket

Of all the questions I am asked by clients, friends and visitors to the Michigan Auto Law website, the one that comes up the most often is:

“My car was damaged in a Michigan accident. How am I going to pay the vehicle damage repair costs?”

The answer is there are only four ways to pay for vehicle damage repairs after a car or truck accident in Michigan. They are:

  1. File a claim under a person’s broad form or standard collision coverage insurance policy.
  2. File a claim under a person’s limited collision coverage (with or without deductible) insurance policy.
  3. File a claim for a $1,000 mini tort recovery (as of October 1st, 2012).
  4. Sue the “at fault” driver, but only under limited circumstances.
  5. Pay out-of-pocket.

I discuss each of those options in greater detail below.

Broad form collision and standard collision coverage

If a person has broad form collision or standard collision coverage insurance for her car or truck, then the person’s auto insurance company will pay for accident-related vehicle damage repairs “regardless of fault,” i.e., whether the operator or driver of the insured vehicle was “more than 50% of the cause of the accident” from “which the damage arose.” (MCL 500.3037(1)(b), (2) and (7)(b))

Although a deductible generally must be paid, if the damaged vehicle was covered by broad form collision coverage AND the operator or driver was “not substantially at fault” in causing the “accident from which the damage arose,” then the deductible will be “waived.” (MCL 500.3037(1)(b))

Limited collision coverage (with and without a deductible)

If a person has limited collision coverage insurance for his car or truck, then the person’s auto insurance company will pay for accident-related vehicle damage repairs ONLY if the operator or driver the covered vehicle was “not substantially at fault in the accident from which the damage arose,” i.e., not “more than 50% of the cause of the accident.” (MCL 500.3037(1)(a), (2), (7)(b))

However, if the operator or driver of the covered vehicle is “at fault” for the accident, then the auto insurance company will not cover the vehicle damage repair costs.

Accordingly, the vehicle’s owner will be personally responsible for all of the vehicle damage repair costs, unless an alternative payment source can be identified.

In the event that a person’s limited collision insurance provides coverage, a deductible will be required only if the vehicle is covered by limited collision coverage with a deductible. (MCL 500.3037(2))

Mini tort

If a person’s damaged vehicle was covered by a valid No-Fault auto insurance policy at the time of the accident and if the person was 50% or less “at fault” for the accident which damaged his vehicle, then he may invoke the Michigan mini tort law to recover “up to $1,000” from the “at fault” driver to help pay for accident-related vehicle damage repair costs. (MCL 500.3135(3)(e) and (4)(a) and (e))

The mini tort recovery can be used in one of two ways:

  • Cover the collision deductible: If the owner of the damaged vehicle has collision coverage insurance and a deductible must be paid, then the Mini Tort recovery may be used to cover all or a portion of the deductible. However, if the deductible is less than $1,000, then the dollar amount of the Mini Tort recovery will not exceed the dollar amount of the deductible because the Mini Tort covers “[d]amages … to a motor vehicle … [only] to the extent that the damages are not covered by insurance.” (MCL 500.3135(3)(e))
  • Pay directly for vehicle damage repair costs: If the owner of the damaged vehicle does not have collision coverage, then he may apply his $1,000 Mini Tort recovery directly toward payment of the full amount of his vehicle damage repair costs.

Suing the ‘at fault’ driver

If an “at  fault” driver was uninsured, i.e., operating a vehicle that was not covered by a valid No Fault auto insurance policy, then he may be sued and held personally liable for the full amount of the repair costs incurred by the owner of the vehicle that was damaged by the “at fault” driver.

Generally, the owner of a car or truck that was damaged in a Michigan motor vehicle accident is prohibited from suing an insured “at fault” driver for the full amount of the vehicle damage repair costs.

Under Michigan’s No-Fault law, an “at fault” driver’s “tort liability [for vehicle damage] arising from the ownership, maintenance or use … of [an insured] motor vehicle … is abolished except as to … [d]amages up to $1,000.00 to a motor vehicle …” (MCL 500.3135(3)(e))

However, Michigan courts have determined the flipside to be true when vehicle damage arose from the “at fault” driver’s “ownership, maintenance or use” of an uninsured vehicle, i.e., a vehicle not covered by a valid No-Fault auto insurance policy.

In other words, under Michigan law, full “tort liability” for accident-related vehicle damage continues to exist for the “at fault” driver operating a vehicle without No-Fault coverage.

Under those limited circumstances, an uninsured “at fault” driver can be sued and held personally liable for the full cost of repairing the vehicle damage he caused.

‘Out-of-pocket’

If a person has no collision coverage for her car or truck and she was either uninsured by a valid No-Fault auto insurance policy at the time of the accident and/or she was “more than 50% at fault” for the accident, then she will be personally responsible for and must pay out-of-pocket for all of the accident-related vehicle damage repair costs. (MCL 500.3135(4)(a) and (e))

(Sources: Michigan Compiled Laws; Michigan Office of Financial and Insurance Regulation (OFIR) publications, “[A] consumer’s guide to No-Fault Automobile Insurance in Michigan” and “The Three Types of Collision Coverage.”)

Posted in: BLOG, Michigan No Fault Benefits, Michigan No Fault Insurance, Michigan No Fault Law and tagged , .

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