The car insurance law regarding college students who are out-of-state attending college in Michigan and he or she is going to be driving the family vehicle here for more than 30 days in a calendar year, then a valid Michigan No-Fault auto insurance policy must be purchased and maintained on the vehicle.
Few lawyers, let alone people with college-age children know about this. But obtaining Michigan auto No-Fault car insurance for college students coming from out-of-state is very important for students from different states who are attending a college or university in Michigan. As I wrote above, even most attorneys – even the ones who do car accident and insurance and No-Fault litigation – still do not fully understand this issue.
Unfortunately, many insurance agents will also likely not know about this situation.
And it’s a good bet that your child’s college or university is not giving guidance or writing letters to out-of-state college students and families to advise them of this dangerous car insurance loophole either.
Knowing these facts about the need for car insurance for college students out-of-state will not just help your college-age child avoid a ticket or a hefty civil fine. It’s actually far more important than that.
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 an automobile crash.
To help your college student keep his or her driving record clean and free of tickets, it is also important to know and follow Michigan’s vehicle registration rules for non-Michigan residents who drive in this state for more than 90 days.
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 must maintain a valid No-Fault auto insurance policy for the motor vehicle being driven in Michigan.
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.
There are two reasons for this, and they both stem from Michigan’s unique auto No-Fault insurance laws.
First, assuming your child is not on the car insurance policy already, an out-of-state college student’s use of a family vehicle will make your son or daughter a “constructive owner” under Michigan law. He or she will be legally considered an “owner” of the vehicle as Michigan law provides that by “having the use of [the] motor vehicle . . . for a period that is greater than 30 days,” the out-of-state college student becomes an “owner” of the vehicle. (MCL 500.3101(3)(l)(i))
Second, under Michigan’s insurance laws, all non-Michigan resident drivers who drive regularly in the state, including now your child as an “owner” of the vehicle, will be legally responsible for maintaining valid No-Fault auto insurance coverage on the vehicle if he or she drives it “in this state for an aggregate of more than 30 days in any calendar year.” (MCL 500.3102(1))
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. The penalties only get worse from there.
If an out-of-state college student fails to comply with the 30-day car insurance rule for nonresidents and is involved and/or injured in a 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 without a Michigan No-Fault car insurance policy is determined to be an “uninsured” driver and 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 without a Michigan No-Fault car insurance policy is determined to be an “uninsured” driver and 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 without a Michigan No-Fault car insurance in is determined to be an “uninsured” driver and will be barred from using the mini tort to get the at-fault driver to pay for vehicle damage and – if the out-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 without Michigan No-Fault car insurance is determined to be an “uninsured” driver and could be held financially liable to reimburse any and all auto insurers for money they spent on accident-related medical expenses and lost wages to the other people who were injured in the crash which could feasibly run into the millions of dollars. (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 No-Fault benefits are paid to the speeding, texting, drugged, drunk and distracted driver who was 100% at-fault for causing the crash.
This rule about car insurance for college students out-of-state is not new
Many of the lawyers – even car accident lawyers in Michigan – 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 in 2019.
But the 30-day car insurance rule that out-of-state college students driving in Michigan while going to college in Michigan must comply with is actually not a new at all. 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.
How do you get Michigan No-Fault car insurance for college students from out of state?
The three main things you must do to obtain No-Fault car insurance for college students from out of state who plan to drive here for more than 30 days in a year are: (1) obtain the necessary form from the insurer; (2) complete it with details about intended driving; and (3) submit the form to the insurer.
Even though the law on this issue is clear and straight-forward, the application of the law by insurance companies, especially, has not always been smooth, consistent or accurate.
Over the years, we have heard from many, many frustrated parents who have hit roadblock after roadblock in their attempts to comply with the requirements of Michigan law.
To try to get to the bottom of why this straightforward law is proving to be such a challenge to comply with for so many parents, we reached out to the Department of Insurance and Financial Services (DIFS) for guidance on how college students from out-of-state who drive in Michigan for more than 30 days in a calendar can comply with this state’s car 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)
Your home state policy does not provide the necessary coverage needed in Michigan
Your family’s insurance policy that was issued in your home state will not satisfy the requirements of Michigan law. A valid No-Fault auto insurance policy issued by a Michigan auto insurer is required to legally provide car insurance for college students from out-of-state who drive here for more than 30 days per year.
Many out of state parents of children who are going to college here in Michigan ask whether an “Out of State Car Insurance Coverage” clause or a “Broadening” clause in their home state auto insurance policy would satisfy Michigan’s insurance requirements as it applies to their children while they are in school.
Although the Insurance Code is not as clear as I would like it to be, I do not believe that an out-of-state insurance policy issued by an insurer in another state will satisfy Michigan’s auto insurance requirement.
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))
My advice to parents who have children who are college students going out-of-state to attend college in Michigan who are going to allow their children to take the family vehicle is that they purchase and maintain a valid No-Fault car insurance policy on the vehicle and that the policy be issued by an auto insurer authorized to conduct insurance business in Michigan.
A Michigan No-Fault car insurance policy will provide the best and safest protection for the out-of-state college student and his or her parents in the event of a crash.
Have you been injured in a car accident? Call Michigan Auto Law for a free consultation
If you or a loved one was injured in a Michigan car accident 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 (248) 353-7575 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.