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Car Insurance For College Students Out-of-State: Top 5 Facts To Know

August 8, 2019 by Steven M. Gursten

Car Insurance For College Students Out of State: 5 Facts To Know

If you live in a state other than Michigan, but your child is going to be attending college in Michigan and he or she is going to be driving the family car, then you and your college-age son or daughter must know the following top 5 facts about car insurance for college students out-of-state and attending a college or university in Michigan.

What I’m going to share with you in this blog post, few people in this state yet know. Most attorneys – even the ones who do car accident and insurance litigation – still do not fully understand this yet. I also doubt your own insurance agent back home will know this. And it’s a good bet that your child’s college or university doesn’t yet fully understand this either. 

Knowing these facts about car insurance for college students out-of-state will do a lot more than just helping your college-age child avoid a ticket or a hefty civil fine.  

Knowing these facts will be essential to making sure your child attending college in Michigan is properly protected in the event they are involved and injured in a car accident.

Car insurance for college students out-of-state may be mandatory for your child 

If your out-of-state child who is going to college in Michigan drives your family’s vehicle in Michigan for a total of more than 30 days during one calendar year, then he or she will have to maintain a valid No-Fault auto insurance policy for the motor vehicle.

Yes, you did read that correctly. 

When it comes to car insurance for college students out-of-state and attending college in Michigan, you or your college-bound child are going to have to buy car insurance (in addition to paying out-of-state tuition).

There are two reasons for this, and they both stem from Michigan’s unique auto No-Fault insurance laws:

  • “Owner” status: By “having the use of [the] motor vehicle . . . for a period that is greater than 30 days,” the out-of-state college student becomes the vehicle’s “owner.” (MCL 500.3101(3)(l)(i))
  • 30-day insurance rule for nonresidents: As the “owner” of the vehicle, the out-of-state college student must comply with Michigan’s 30-day auto insurance rule for nonresidents, which requires nonresidents (such as out-of-state students attending college in Michigan) who drive their vehicle in Michigan for more than 30 days during a calendar year to maintain a valid No-Fault auto insurance policy on the vehicle. (MCL 500.3102(1))

IMPORTANT FACT ABOUT REGISTERING YOUR OUT-OF-STATE COLLEGE STUDENT’S VEHICLE IN MICHIGAN: If your out-of-state child who is going to college in Michigan drives your family’s vehicle in Michigan for more than 90 days, then he or she will have to obtain Michigan registration for the vehicle. Specifically, the Michigan Vehicle Code provides that 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))

It’s a big deal to break the law requiring car insurance for college students out-of-state

When I first tell some people about this 30-day requirement for car insurance for college students out-of-state attending college in Michigan, I’ve had some parents say:

“Ok, big deal. So my child gets a ticket.”

Wrong! Breaking this requirement that a car be insured can result in fines between $200-$500 and even a misdemeanor conviction. (MCL 500.3102(2)). The statute I’ve cited also mentions the possibility of jail time, but I’ve never seen or heard of that being applied.

But that’s just the beginning in regards to car insurance for college students out-of-state and attending a college or university in Michigan. 

If an out-of-state student fails to comply with the 30-day insurance rule for nonresidents and is involved and/or injured in a car crash, then he or she will  be deemed “uninsured” or “driving without insurance.” 

And the penalties for driving without insurance in Michigan are very severe and very extreme:

  • No No-Fault benefits: An out-of-state college student who is determined to be an “uninsured” driver will be precluded from collecting No-Fault benefits to cover medical expenses as well as lost wages (if he or she is working while going to college). (MCL 500.3113(b)) 
  • No pain and suffering damages: An out-of-state college student who is determined to be an “uninsured” driver will be precluded from collecting pain and suffering compensation to cover “noneconomic loss” damages. (MCL 500.3135(2)(c))
  • No mini tort recovery or protection for vehicle damage: An out-of-state college student who is determined to be an “uninsured” driver will be barred from using the mini tort to get the at-fault driver to pay for vehicle damage and – if the out-of-state college student was at-fault – he or she could be held liable for the full value of damage to other vehicles. (MCL 500.3135(3)(e) and (4)(e)). 
  • Financial liability for other drivers’ medical bills and lost wages: An out-of-state college student who is determined to be an “uninsured” driver could be held financially liable to reimburse any and all auto insurers for money they spent on No-Fault benefits to the other people who were injured in the crash (which could include costs, expenses and attorney fees). (MCL 500.3177(1)) What makes this very severe, draconian sanction even worse is that it applies even if the student was 100% innocent and the crash was caused by a speeding, texting, drugged, drunk and distracted driver.

This rule about car insurance for college students out-of-state is not new

Many of the lawyers and insurance agents I’ve spoken with think this is all new and stems from the new auto No-Fault law that was passed by the Michigan Legislature earlier this year. But the 30-day auto insurance rule that out-of-state students driving in Michigan while going to college in Michigan must comply with is not new. Neither are the rules prohibiting “uninsured” drivers from collecting No-Fault benefits or pain and suffering and imposing financial liability for No-Fault benefits paid out to other drivers.

All of those rules preceded – and were unchanged by – Michigan’s new No-Fault law.

The rule about car insurance for college students out-of-state is definitely not ‘fake news’!

When I wrote about this issue recently in a blog intended to warn out-of-state drivers coming in to Michigan – such as tourists, college students, snowbirds coming home over the summer and business people and commuters staying in the state for 30 days – some of the responses were, well, interesting.  

I realize this law is not great news. I realize when I share how dangerous this law is, that some people won’t be very happy when they first learn about it.  

But some people decided to shoot the messenger and put their heads in the sand, even though I was only sharing the rules (and citing the actual law by statute) on car insurance for college students out-of-state attending college in Michigan. Some people refused to believe what I was saying.

In one instance, a parent whose child is attending the Michigan Technological University asked the Dean of Students Bonnie Gorman about the rules about car insurance for college students out-of-state.

The parent posted the following reply from MTU’s Dean Gorman in a Facebook community:

After seeing the Facebook post, I e-mailed the following to MTU Dean of Students Bonnie Gorman in an effort to clear up her misunderstanding and mistatement of the law:

“We were recently contacted by a concerned student’s parent that you stated that our article on driving with out of state car insurance, and the laws regarding it, were not accurate.  A woman named Wendy then copied your email to her onto social media. She also stated that you had also been in contact with other directors at other colleges concerning this as well. . . . I hope this is not accurate. Please understand that this is the same information that Steven Gursten has presented at a No-Fault seminar to over 400 lawyers at the Michigan Association for Justice. As this poorly drafted law is currently written, it absolutely is true. If you have a case or statutory basis to disagree, please share this with us because this is of the utmost importance for your students, as well as all out of state residents, to be protected if they are involved in an auto accident.  Steve has also already met with Governor Whitmer’s team on this issue in Lansing. The article that the quotes are taken from was also written by Steven Gursten, who is considered one of the top experts on Michigan’s auto No-Fault law. Frankly, it is our job to understand this legislation and we provided this information with no gain for ourselves but out of real concern for people that this law will adversely impact as it is currently written. . . . Please contact us if you have any questions.  We would be happy to answer them and to try to clear up any confusion. Please feel free to contact me directly and I can also have you speak with an auto accident attorney.”

Unfortunately, Dean Gorman has not taken me up on my offer. I have yet to hear from her, from anyone else at the MTU or any of the other Admissions directors from around the state about their concerns or comments surrounding car insurance for college students out-of-state and attending a college or university in Michigan.

Not only is Bonnie Gorman’s conclusion wrong, but it is deliberately uninformed. And a Director of Admissions at a university should know the rules about car insurance for college students out-of-state and attending a Michigan university. But this type of head-in-the-sand, knee-jerk response will leave young people unprotected when they’re in a bad car crash while they’re away from home, going to college in Michigan.

Out-of-state policies will not satisfy Michigan’s rule about car insurance for college students out-of-state

People have asked me whether an “Out of State Coverage” clause or a “Broadening” clause in an out-of-state (non-Michigan) auto insurance policy would provide the necessary coverage to bring an out-of-state college student into compliance with Michigan’s 30-day insurance rule for nonresidents.

My answer is that I don’t believe it will and I certainly would not take the chance if it were my child whose welfare and safety was at stake.

The bottom-line for me is that the safe, prudent and legal way to proceed with car insurance for college students out-of-state who will be attending college in Michigan and driving in Michigan for more than 30 days is to maintain a valid No-Fault auto insurance policy issued by an auto insurer authorized to conduct insurance business in Michigan.

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Michigan has a new auto No-Fault law. Click Here to learn more.