February 2, 2022 by Steven M. Gursten

Out Of State Car Insurance Coverage In Michigan: Here's What To Know

Non-Michigan residents who regularly drive their own motor vehicles in Michigan cannot rely on their out of state car insurance coverage to fully comply with Michigan law. Michigan law requires non-residents to maintain a valid No-Fault auto insurance policy on their vehicle if they drive in the state for more than 30 days per year.

Non-Michigan residents who drive in Michigan but who fail to comply with the requirements of our No-Fault auto insurance law are considered “uninsured” drivers. Unfortunately, the consequences for driving uninsured in Michigan are dire:

  • 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

Who needs to know Michigan’s rule against out of state car insurance for non-residents?

The non-resident drivers who are typically most at risk with only their out of state car insurance are: (1) Tourists who spend weeks here on vacation; (2) college students who are here for the school year; (3) “snowbirds” who live in Michigan only for the summers; and (4) work commuters from Ohio, Indiana, Wisconsin and Ontario.

What is Michigan’s rule against car insurance for non-residents?

Michigan’s rule against out of state car insurance coverage provides that non-Michigan residents who drive their own vehicle in Michigan for “more than 30 days in any calendar year” must maintain Michigan No-Fault auto insurance coverage on their vehicle.

That means that nonresidents must purchase and maintain a valid No-Fault auto insurance policy issued by an auto insurer authorized to conduct insurance business in Michigan.

Specifically, Michigan’s Insurance Code states:

“A nonresident owner or registrant of a motor vehicle or motorcycle not registered in this state shall not operate or permit the motor vehicle or motorcycle 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 pursuant to this chapter.” (MCL 500.3102(1))

How can you insure an out of state car if you are a non-resident who drives regularly in Michigan?

In order to obtain the required Michigan No-Fault auto insurance, a non-resident who plans to drive his or her own vehicle in Michigan for more than 30 days in a year must: (1) obtain the necessary form from the insurer; (2) complete it with details about intended driving; and (3) submit the form to the insurer.

The question of how a non-Michigan resident complies with Michigan’s rule against out of state car insurance and obtains the necessary No-Fault car insurance when they plan to drive in Michigan for more than 30 days during a calendar year has not always been an easy one to answer.

Our lawyers have explained to non-Michigan resident drivers what the law is for out of state car insurance coverage and we have quoted to them the rule as set forth in No-Fault law, specifically MCL 500.3102(1).

However, the reality of complying with the law for out of state car insurance coverage has left many non-resident drivers frustrated and unable to find a way forward.

They tell us that when they reach out to insurance companies and agents for help obtaining Michigan No-Fault insurance for non-residents – as required by MCL 500.3102(1) – they are encountering the following challenges:

  • First, insurance agents are insisting that auto insurance policies from the out-of-state drivers’ home states are sufficient. However, this advice directly contradicts the the plain language and unambiguous meaning of MCL 500.3102(1).
  • Second, insurance agents are insisting that these out-of-state drivers’ vehicles cannot be insured by a Michigan No-Fault auto policy unless the vehicles are registered and titled in Michigan. However, requiring registration contradicts 500.3102(1)’s insurance requirement which specifically applies to vehicles that are “not registered in this state.” Additionally, a vehicle cannot be registered in Michigan without proof of insurance – so having a valid, existing policy is a prerequisite to registration. Also, there’s no titling requirement in 500.3102(1).

Based on the clear requirements of MCL 500.3102(1) and the very real, commonly-experienced concerns described, we reached out to the Department of Insurance and Financial Services (DIFS) for out of state car insurance coverage guidance on how non-Michigan residents who drive in Michigan for more than 30 days in a calendar year can comply with the state auto insurance requirements.

Here is what DIFS told us:

  • “Out-of-state residents who plan to bring their car to Michigan should know that they are required to obtain a Michigan auto insurance policy if they intend to drive their vehicle in the state for more than 30 days in a calendar year.”
  • “In this circumstance, the insured [i.e., the out-of-state resident] may make a written statement of their intention to drive in Michigan for 30 days or more on a form approved by the Director of the Michigan Department of Insurance and Financial Services in order to obtain a no-fault auto policy.”
  • “Each insurer is responsible for developing its form and submitting to DIFS for review and approval.”
  • “Drivers [i.e., non-Michigan resident drivers] would need to contact their insurer or insurance agent for this form, and submit the completed form to their insurer or agent in order to obtain an insurance policy.”
  • “Producers [i.e., insurance companies and insurance agents] should know that this allows a non-resident who has not yet registered their vehicle in Michigan the right to seek a Michigan insurance policy.”
  • “Out-of-state residents are encouraged to disclose and document the specifics of their individual circumstances with their auto insurer and carefully review all policy documents.”
  • “Consumers and producers with questions or concerns” or “[i]f a consumer has a concern that cannot be resolved directly with their insurer, contact the Michigan Department of Insurance and Financial Services Monday through Friday 8 a.m. to 5 p.m. at 833-ASK-DIFS (275-3437) or via email at [email protected]

Under Michigan’s Insurance Code, an “insurance producer” is “a person required to be licensed under the laws of this state to sell, solicit, or negotiate insurance.” (MCL 500.1201(g)) A “person” can include “an individual, insurer, company, association, organization, Lloyds, society, reciprocal or inter-insurance exchange, partnership, syndicate, business trust, corporation, and any other legal entity.” (MCL 500.114)

Is it illegal for a non-Michigan resident to only have out of state car insurance coverage?

No, it is not illegal for a non-Michigan 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 non-resident driver to not obtain a separate Michigan No-Fault auto insurance policy for the vehicle.

What are the penalties for violating Michigan’s rule against out of state car insurance for non-residents?

If a non-Michigan resident drives his or her own vehicle in Michigan for more than 30 days in a calendar year and fails to maintain valid No-Fault coverage, he or she would be treated as an “uninsured” driver and could face penalties including jail, fines, denial of benefits and denial of compensation for injuries.

Michigan’s very drastic and severe sanctions for driving uninsured include:

  • Up to a year in jail, plus fines between $200 and $500.
  • Being denied all No-Fault benefits to cover medical expenses and lost wages.
  • Being denied all pain and suffering compensation.
  • Being denied recovery under the mini tort law.
  • Being held financially liable for another driver’s medical expenses, lost wages and vehicle damage – Even if the uninsured driver was 100% innocent and the crash was caused by a speeding, texting, drugged and drunk driver, the uninsured driver can still be sued to pay for all of the at-fault driver’s accident-related medical expenses and lost wages which could feasibly run into the millions of dollars. (MCL 500.3177(1))

Can I use non-resident auto insurance policy to comply with Michigan insurance requirements for non-residents?

An out of state car insurance policy will not comply with the No-Fault auto insurance requirements for a non-Michigan resident who drives his or her own vehicle in Michigan for more than 30 days in a calendar year. The law requires the non-resident driver to have a No-Fault policy issued by a Michigan insurer.

As insurance lawyers, we are sometimes asked whether an “Out of State Car Insurance Coverage” clause or a “Broadening” clause in an out-of-state (non-Michigan) auto insurance policy would satisfy Michigan’s insurance requirements for non-residents.

The answer isn’t very clear, but unfortunately we do not believe it will. Michigan law requires a “nonresident owner of a motor vehicle” who drives in Michigan for “an aggregate of more than 30 days in any calendar year” to “continuously maintain[] security for the payment” of No-Fault benefits in the event of a crash. (MCL 500.3102(1) and 500.3101(1)) The form that that “security” must take is “a policy of insurance” that has been “issued by an authorized insurer” (which is an insurance company authorized to transact insurance business in Michigan) “that affords insurance for the payment of [No-Fault] benefits . . .” (MCL 500.3101(4); 500.108(1))

The real dangers here are that a crafty insurance lawyer could make the argument that out of state car insurance coverage does not satisfy Michigan’s Insurance Code and law as it pertains to a non-Michigan resident and that he or she should be treated as an “uninsured” driver and subject to all of the draconian sanctions and penalties that accompany that status as an uninsured driver.

To avoid such a disastrous result, the prudent advice to non-Michigan residents who will be driving regularly in Michigan is that the best way to proceed is by purchasing and maintaining a valid No-Fault auto insurance policy issued by an auto insurer authorized to conduct insurance business in Michigan.

Can I have both out of state car insurance and Michigan No-Fault auto insurance?

A non-Michigan resident driver can continue to maintain his or her out of state car insurance from his or her home state while simultaneously maintaining the No-Fault auto insurance required by Michigan law. Not only is this possible, but it appears necessary in order to comply with Michigan’s unique requirement for out of state car insurance coverage in Michigan.

Our advice is that you speak with an independent insurance agent about the possibility of using an insurer that writes policies in both states, so that you can save as much money as possible while having in state and out of state car insurance coverage.

Can a non-resident get No-Fault benefits through a non-resident auto insurance policy?

A non-Michigan resident who is injured in a Michigan car crash cannot get No-Fault benefits to cover medical expenses and lost wages through his or her out of state car insurance coverage. No-Fault benefits are available to non-residents only if they have a motor vehicle that is both insured and registered in Michigan.

In other words, if you are a non-resident of Michigan and the only coverage you have is from your out of state car insurance policy, then you will be disqualified from collecting No-Fault insurance benefits if you are injured in a car accident in Michigan.

Michigan’s No-Fault law provides that a “person” who is “not a resident of this state” is disqualified from recovering No-Fault benefits “unless the person owned a motor vehicle that was registered and insured in this state.” (MCL 500.3113(c))

Do non-Michigan residents have to register their vehicles in Michigan?

Non-Michigan residents are legally required to register their own vehicles in Michigan only if they drive in Michigan for more than 90 days. If a non-Michigan resident’s driving time in Michigan is less than 90 days, then the registration requirement does not apply.

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))

The Vehicle Code also provides that a “nonresident owner” who drives his or her own vehicle in Michigan for less than 90 days “may operate or permit the operation of the vehicle within this state without registering the vehicle” so long as it carries proper registration from its home state. (MCL 257.243(1))

Have you been injured in a car accident? Call a Michigan Auto Law attorney for a free consultation

If you or a loved one was injured in an auto accident in Michigan and you have questions about your legal rights to pain and suffering compensation, economic damages and auto No-Fault insurance benefits, you can call toll free anytime 24/7 at (800) 777-0028 for a free consultation with one of our experienced car accident attorneys. You can also get help by visiting our contact page or you can use the chat feature on our website.

Out Of State Car Insurance Coverage In Michigan: Here\'s What To Know

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