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Buying Car Insurance

What Is Collision Insurance? Standard vs Broad From vs Limited Explained

Collision insurance is a coverage that will help pay your repair costs for accident-related car or truck damage.

It is an optional coverage and it is not required by law. But it’s a relatively certain and comprehensive way of paying for accident-related vehicle damage.

Why Collision Insurance Coverage Is Important

Without collision insurance coverage, a vehicle owner has nearly no other way of paying for the vehicle damage repair costs.

For instance, the owner of a damaged vehicle is generally prohibited from suing the “at fault” driver for the full amount of the repair costs because Michigan’s No-Fault law has essentially “abolished” the “at fault” driver’s “tort liability” for “[d]amages … to a motor vehicle.” (MCL 500.3135(3)(e))

Standard vs Broad Form vs Limited Collision Insurance Coverage

Below are the three main types of collision insurance coverage explained along with how each can help pay for your car accident damage:

Standard Collision 

Under Michigan’s Insurance Code, Michigan drivers may purchase standard collision coverage for their vehicles. (MCL 500.3037(2))

The main difference between broad form collision and standard collision is the deductible.

As stated below, with broad form collision insurance coverage the deductible is waived if the operator or driver of the insured vehicle was “not substantially at fault” in causing the accident which resulted in damage to the insured vehicle.

But, under standard collision insurance coverage, the deductible must still be paid even if the damaged vehicle’s operator or driver was not “at fault,” according to the Michigan Office of Financial and Insurance Regulation (OFIR)’s publications, “[A] consumer’s guide to No-Fault Automobile Insurance in Michigan” and “The Three Types of Collision Coverage.”

Benefits are payable “regardless of fault” under standard collision just as with broad form collision.

Broad Form Collision 

Under Michigan’s Insurance Code, “Broad form collision coverage … shall pay for collision damage to the insured vehicle regardless of fault … [and] deductibles shall be waived if the operator of the vehicle is not substantially at fault in the accident from which the damage arose.” (MCL 500.3037(1)(b))

An operator or driver is “substantially at fault” when his “action or inaction was more than 50% of the cause of the accident.” (MCL 500.3037(7)(b))

Highlights for broad form collision insurance coverage:

  • Pays for all of the costs relating to the repair of the vehicle damage resulting from an auto accident “regardless of fault,” i.e., whether the operator or driver was at fault in causing the accident.
  • Deductible is “waived” and, thus, no deductible must be paid when the operator or driver of the covered vehicle was “not substantially at fault,” i.e., 50% or less at fault, in causing the accident.

However, the deductible on a broad form collision coverage policy must be paid as a prerequisite to the insurer’s payment of benefits when the covered-vehicle’s operator or driver was “more than 50%” at fault in causing the accident.

Limited Collision Without A Deductible

Under Michigan’s Insurance Code, “Limited collision coverage … shall pay for collision damage to the insured vehicle without a deductible amount when the operator of the vehicle is not substantially at fault in the accident from which the damage arose.” (MCL 500.3037(1)(a))

An operator or driver is “substantially at fault” when his “action or inaction was more than 50% of the cause of the accident.” (MCL 500.3037(7)(b))

Highlights for limited collision insurance coverage without a deductible:

  • Pays for covered-vehicle damage resulting from an auto accident.
  • No deductible must be paid when the operator or driver of the covered vehicle was “not substantially at fault,” i.e., 50% or less at fault, in causing the accident.

However, if the operator or driver was more than 50% at fault in causing the accident that gave rise to the vehicle damage in question, then:

  • Limited collision without a deductible provides no benefits or coverage; and,
  • The vehicle’s owner will be forced to pay out-of-pocket for most, if not all, of the repair costs for his or her accident-related vehicle damage.

Limited Collision With A Deductible

The owner of a damaged vehicle which is covered by a limited collision coverage with a deductible policy must pay a deductible before his or her insurance company begins paying for the vehicle damage repairs, even if the operator or driver of the insured vehicle was not at fault in causing the accident.

Under both types of limited collision coverage, if the operator or driver of the covered vehicle was more than 50% at fault in causing the accident that gave rise to the vehicle damage in question, then:

  • Limited collision coverage provides no benefits or coverage; and,
  • The vehicle’s owner will be forced to pay out-of-pocket for most, if not all, of the repair costs for his or her accident-related vehicle damage.

Why Fault Matters

For broad form and standard collision policies, “fault” on the part of the vehicle’s operator or driver does not affect the payment of benefits. Collision benefits are paid “regardless of fault.”

However, under a broad form coverage policy, the deductible may be waived if the operator or driver of the insured vehicle was “not substantially at fault” in causing the accident which resulted in damage to the insured vehicle.

Meanwhile, “fault” is a critical factor in determining whether benefits are payable under limited collision coverage policies, whether with or without a deductible.

In particular, limited collision coverage and benefits will be denied when the operator or driver of the insured vehicle was “substantially at fault” in causing the accident which resulted in the vehicle damage.

What If I Don’t Purchase Collision Insurance Coverage?

Failure to purchase any of these collision policies means that, unless you find an alternative source of payment (such as the Michigan mini tort or the No-Fault Law’s Property Protection Insurance benefits), you will pay for all of the repair costs associated with your accident-related motor vehicle damage.

Note: Michigan’s mini tort Law can pay up to $1,000 (or up to $3,000 after July 1, 2020) of your vehicle damage. Read all about the Michigan mini tort here.