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Out of of State Car Insurance Coverage in Michigan: Is it illegal to use?

June 25, 2019 by Steven M. Gursten

Out of State Car Insurance Coverage: Is It Illegal In Michigan?

After Michigan’s new auto law was enacted on June 11, 2019, the issue of out of state car insurance coverage for non-resident Michigan drivers has become more important than ever. 

Out of state residents who drive in Michigan, but who fail to comply with the requirements of our No-Fault auto insurance law could face the following dire consequences:

  • Possible jail time and fines.
  • Denial of No-Fault medical and wage loss benefits as well as pain and suffering compensation after a car crash.
  • Being forced to pay for their own medical expenses.
  • Losing the right to sue an at-fault, negligent driver who injures you in a car accident.  

 The types of out of state drivers now at risk include:

  • Tourists and passers-through – These are people who spend weeks vacationing in Michigan.  It includes people who spend their summers here. But it can also include people who are driving in Michigan for only a short time on a brief vacation or because they’re en route to somewhere else.
  • College students – These are students who live outside Michigan, continue to maintain their residences in their home states, but live (and drive) in Michigan during the school year to attend college.
  • Snowbirds – These are typically former Michiganders who have taken up residence in warmer states such as Florida, Arizona, and the Carolinas to avoid Michigan winters but who return here for our beautiful summers.
  • Commuters – These are drivers who live in Ohio, Indiana, Wisconsin and Ontario, but drive into Michigan every day for work.

Can you drive with out of state car insurance coverage in Michigan?

Whether a non-resident driver can drive with out of state car insurance coverage in Michigan or whether he or she needs to buy a Michigan No-Fault policy now depends on how long he or she will be in Michigan:             

  • 30 days or less: If a non-resident driver is just passing through and won’t be driving in Michigan for more than 30 days, then he or she can rely on out of state car insurance coverage because he or she is not required under Michigan law to obtain a valid No-Fault policy for his or her vehicle.
  • More than 30 days: If the non-resident driver is driving his or her motor vehicle in Michigan for more than 30 days total (not consecutive) in any given year, then he or she cannot rely exclusively on out of state car insurance coverage. In Michigan, this means he or she would need to purchase a valid No-Fault car insurance policy to cover his or her vehicle.

Specifically, Michigan’s No-Fault law provides:

“A nonresident owner or registrant of a motor vehicle . . . not registered in this state shall not operate or permit the motor vehicle . . .  to be operated in this state for an aggregate of more than 30 days in any calendar year unless he or she continuously maintains security for the payment of benefits” as required by the No-Fault law. (MCL 500.3102(1))

For reasons that will become clearer below, out of state drivers should also be aware of their obligation to obtain Michigan registration for their out of state vehicles:

If an out of state driver is driving his or her motor vehicle in Michigan for more than 90 days, then he or she must obtain Michigan registration for the vehicle.

The Michigan Vehicle Code provides:

“A nonresident owner of a pleasure vehicle otherwise subject to registration under this act shall not operate the vehicle for a period exceeding 90 days without securing registration in this state.” (MCL 257.243(4))

Neither the insurance nor the registration requirements discussed above were affected or changed by Michigan’s new No-Fault law.

Is it illegal to have insurance from another state?

No, it is not illegal for a non-resident driver to have only out of state car insurance coverage on a vehicle that he or she is operating in Michigan so long as he or she is not in Michigan more than 30 days total (not consecutively) during the course of a calendar year.

However, if the vehicle is driven in Michigan for more than 30 days, then it will be illegal for the out of state driver to not obtain a separate Michigan No-Fault auto insurance policy for the vehicle.

If the non-resident driver continued with their out of state car insurance coverage and failed to obtain a No-Fault policy, this would result in the non-resident driver being treated as an “uninsured” driver and, thus, subject to Michigan’s very drastic and severe sanctions for driving uninsured, including:

Can you get Michigan auto No-Fault benefits with only out of state car insurance coverage in Michigan?

No. If you are non-resident of Michigan (i.e., you are a nonresident) and the only coverage you have is from your out of state insurance policy, then you will be disqualified from collecting No-Fault benefits if you are injured in a Michigan auto accident.

Under changes made by Michigan’s new No-Fault law (Senate Bill 1/Public Act 21 of 2019, effective May 30, 2019), the circumstances under which an out of state driver can collect No-Fault PIP insurance benefits after a car accident are very limited.

Specifically, an out of state driver (or “nonresident”) is not entitled to collect No-Fault benefits (such as medical care and lost wages) after a Michigan car crash “unless the person owned a motor vehicle that was”:

  • “registered”; and
  • “insured in this state.” (MCL 500.3113(c))

In light of these new rules, it is essential that non resident drivers know and remember the out of state car insurance coverage and registration requirements I discussed above – as well as their respective time limitations.

Author’s Note:  These new laws for out of state drivers are extremely dangerous. Most agents are not aware of them, which means they are not advising customers about the dangers of these changes with regards to their out of state car insurance coverage in Michigan. These provisions are essentially hidden traps for completely unsuspecting and innocent out of state drivers who will be involved in car accidents in this state. People who come to spend their summers in Michigan and are not aware of the potential consequences of relying exclusively on their out of state car insurance coverage are being put at great risk, as are snowbirds, college kids, and people who come to work in Michigan.

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