People often ask me: “How much car insurance do I need in Michigan?”
The answer to this question should ideally be simple and straight-forward, but unfortunately as with many things insurance-related the answer is a both more complex and less definite.
In making decisions about the auto insurance coverage they purchase to protect themselves and their families, Michigan drivers have several significant factors to consider:
- Will they choose unlimited No-Fault PIP medical benefits or settle for less coverage with one of the lower, capped PIP coverage levels?
- What minimum coverage limits will they choose for their bodily injury liability insurance which helps if a driver is held legally liable for injuring or killing someone in an accident?
- Would they rather collect No-Fault medical benefits on a “no-fault” basis through their own insurer or would they rather file a negligence lawsuit to force the at-fault driver to pay for their medical bills? Michigan law allows a person who has been seriously injured in an accident to sue the person who caused the crash for all medical bills and economic loss over the amount of No-Fault PIP medical benefits selected at the time of the crash (assuming the person who causes the crash has enough liability insurance and assets to pay for what can now be tens or hundreds of thousands of dollars in unpaid medical bills).
- Do they want to purchase a higher liability limit in case they cause a crash and they’re held legally liable for an injured person’s medical expenses? Under Michigan’s No-Fault law, drivers who cause accidents that result in serious injury can be sued by injured persons for their “excess” medical costs and economic loss (i.e., medical bills that exceed the No-Fault PIP medical benefits coverage level selected in the policy through which they’re claiming benefits), thereby potentially exhausting the drivers’ liability insurance and requiring them to use family assets to pay out-of-pocket for damages that are owed.
Today, I will share my car insurance coverage recommendations for how much car insurance you need to purchase to protect you, your family and your family’s assets.
For additional information on the car insurance coverage recommendations discussed here, get a free copy of my book titled, “How much car insurance do I need?”
How much car insurance do I need for No-Fault medical coverage?
Of all the choices that Michigan drivers must make when deciding how much car insurance they need to purchase, this is the most important.
That is why I am talking about it first.
MY CAR INSURANCE COVERAGE RECOMMENDATION IS THIS: Michigan drivers should purchase unlimited car insurance coverage for No-Fault PIP medical benefits.
As an auto accident attorney, this is the most important car insurance coverage recommendation for you and your family that I am making. Unlimited No-Fault insurance provides you the best medical protection if you or a loved one is seriously in an accident. Here’s why:
- Unlimited No-Fault PIP medical benefits provides lifetime, life-altering catastrophic for accident victims such as survivors of traumatic brain injuries and spinal cord injuries.
- Unlimited No-Fault medical benefits ensure that accident victims will have access to the medical treatment, care, services and specialists that are necessary to their care, recovery or rehabilitation.
- Unlike No-Fault PIP medical benefits, most health insurance plans do not cover or place limits on the following medical services that are essential for accident victims: Residential care; Attendant care by an agency; In-home attendant care by a family member; Prescriptions; Hospitalization; Doctors/lab; Rehabilitation services; Case management; Transportation [possibly including medical mileage]; Home purchases/modifications; Prosthesis; Equipment; and, Vehicle purchases/modifications.
- The inadequacy of the caps on No-Fault PIP medical benefits (i.e., anything less than “unlimited”) for seriously injured accident victims, especially those requiring emergency room visits, hospitalizations and surgeries, cannot be overstated. If a person is injured in a bad crash, the capped, insurance levels could be blown through and exhausted in just one weekend at a hospital. Once the No-Fault benefits are gone, the only way for victims to pay for their accident-related medical expenses is through health insurance, suing the at-fault driver (and hoping they are independently wealthy and, thus, able to pay for the hundreds of thousands of dollars – maybe even millions – in medical care that the victim will need), relying on Medicaid or Medicare, spending down the family’s assets to pay out-of-pocket or going without necessary medical care and treatment because there’s no way to pay for it.
I strongly encourage drivers to resist the temptation to try to save a few dollars by choosing a lower PIP option.
The potential savings that a driver may experience by opting for limited No-Fault medical benefits will be extremely disappointing (if not downright devastating) when compared to what he or she will be losing in terms of protection after a serious accident by forfeiting his or her unlimited No-Fault PIP medical benefits.
Additionally, if you select a No-Fault PIP deductible, make sure that it does not exceed $500.
Is managed care part of our recommended car insurance coverage?
No. Our recommendation is to have Michigan drivers decline the managed care option for their No-Fault insurance policies.
Managed care means that if you are injured in an accident, you will not be able to choose your own doctor. You will have to go to doctors hired by your insurance company. Additionally, you will have to have your insurance company’s permission for treatment, procedures, services and surgeries you may desperately need.
To best understand No-Fault’s managed care option, think of the bureaucratic red tape you have to fight through with your HMO. Now multiply that by the fact that many of these doctors that will be selected to oversee your managed care are the same “company doctors” that insurance company adjusters routinely use to cut people off and deny them benefits after accidents.
The managed care option is an all-around loser for people.
How much liability car insurance do I need?
In Michigan, our recommendation is for driver’s to purchase liability car insurance with limits of at least $500,000 per person and $1 million per accident to protect them and their family.
As I wrote above, your own financial assets are seriously at risk if you cause an accident that seriously injures or kills someone.
Fortunately, liability insurance is very inexpensive. Paying the extra difference here to fully protect you and your assets is well worth it.
How much bodily injury insurance do I need?
For people who aren’t insurance agents or lawyers, this is really another way of asking how much liability insurance is needed. Insurance companies list the insurance that you buy to protect yourself if you cause an accident on your declaration sheet as either bodily injury insurance or liability insurance.
Again, our recommendation is that Michigan driver’s purchase bodily injury insurance (which is also referred to as liability insurance) with limits of $500,000 per person and $1 million per accident.
How much property damage car insurance do I need?
In Michigan, our recommendation is for drivers to purchase property damage liability insurance (which covers “injury to or destruction of property of others” resulting from an at-fault, out-of-state accident) with a minimum limit of $100,000.
How much car insurance do I need in case I damage someone else’s vehicle?
In Michigan, our recommendation is for driver’s to purchase mini tort (which is also known as Limited Property Damage insurance ) with a limit of $3,000.
How much uninsured motorist coverage do I need?
Because of the rampant, ever-growing problem of uninsured drivers in Michigan (in Detroit, it’s estimated that the uninsured driver rate is now over 50%), our recommendation is that drivers purchase uninsured motorist coverage with limits of at least $500,000 per person and $1,000,000 per accident.
This will protect your family and yourself in case of an accident caused by a driver who has no insurance.
If you don’t have this, and the person who hits you is driving without insurance, understand that no matter how serious your injuries are you will receive nothing for your injuries and pain and suffering and excess medical bills after an accident.
The good news is that this insurance is again, incredibly cheap. I often tell people that for the price of a movie and popcorn, you can buy up to $500,000 in uninsured and underinsured motorist insurance to protect you and your family.
How much underinsured motorist coverage do I need?
In Michigan, our recommendation is for drivers to purchase underinsured motorist coverage with limits of at least $500,000 per person and $1,000,000 per accident.
This will protect your family and yourself in case of an accident caused by a driver whose liability insurance limits are inadequate to fully compensate his or her victims for their injuries.
For example, if you are hit by someone who has the lowest amount of mandatory liability insurance of $50,000 in Michigan, and you have selected a lower, capped PIP medical coverage amount, you need to understand just how quickly tens or hundreds of thousands of dollars in medical bills can mount up with no insurance available to pay for it. That leaves Michigan drivers dangerously exposed.
The good news here is that, as with uninsured motorist insurance, underinsurance is also very cheap and you can buy a lot of underinsurance to protect your family and yourself for relatively little extra cost.
How much collision coverage do I need?
In Michigan, our recommendation is that drivers purchase either broad-form or standard collision coverage with at most a maximum deductible of $1,000.
How much comprehensive coverage do I need?
In Michigan, our recommendation is that drivers purchase comprehensive coverage, which covers theft and fire and glass damage unrelated to an accident, with a maximum deductible of $1,000.
How much full coverage car insurance do I need?
Our recommendation is that Michigan driver’s purchase the following full coverage No-Fault car insurance coverages:
- No-Fault PIP with unlimited medical benefits (and no managed care option).
- Liability/Bodily Injury insurance with limits of $500,000 and $1 million.
- Property damage insurance (for out-of-state accidents) with a limit of at least $100,000.
- Mini tort coverage with a limit of $3,000.
- Uninsured motorist coverage with limits of $500,000 and $1 million.
- Underinsured motorist insurance with limits of $500,000 and $1 million.
- Collision insurance with a maximum deductible of $1,000.
- Comprehensive insurance with a maximum deductible of $1,000.
What is the state minimum car insurance for Michigan?
Drivers who purchase the minimum car insurance required under Michigan law are buying what is called PLPD insurance – or “Personal Liability and Property Damage” insurance.
PLPD insurance coverage consists of:
- No-Fault PIP (personal injury protection) , which includes medical benefits, wage loss reimbursement, replacement services and attendant care services. Drivers have the option of unlimited medical benefits or opting for one of several lesser coverage levels. (MCL 500.3101(1); 500.3107c(1))
- Residual liability insurance that covers “bodily injury and property damage.” (MCL 500.3101(1); 500.3131)
- Bodily injury liability insurance with minimum limits of “$250,000.00 because of bodily injury to or death of 1 person in any 1 accident” or “$500,000.00 because of bodily injury to or death of 2 or more persons in any 1 accident.” (MCL 500.3131; 500.3009(1)(a) and (b))
- Property damage insurance with a minimum limit of $10,000 for “injury to or destruction of property of others” resulting from an out-of-state accident. (MCL 500.3131; 500.3009(1)(c))
- Property Protection Insurance (PPI), which covers property damage to buildings and other non-vehicular property, with a $1 million statutorily-mandated limit. (MCL 500.3101(1); 500.3121(5))