No-fault insurance is required by law in Michigan. Every car owner must buy certain basic coverages in order to register a vehicle in Michigan. It is against the law to drive, or let your car be driven, without no-fault insurance. The basic no-fault policy has three parts: PIP, PPI and Residual Liability Insurance.

Michigan state law requires a minimum Personal Injury Protection (PIP) coverage of $10,000. If you are hurt in an auto accident, this part of your no-fault policy will pay all of your medical costs. It will also pay, up to a maximum amount, for the wages you would have earned if you had not been hurt, for up to three years.

Property Protection Insurance (PPI) is the second part of no-fault insurance and will pay up to $1 million for damage your car does in Michigan to other people's property, such as buildings and fences. It will also pay for damage your car does to other people's properly parked vehicles.

The third and final section of required auto insurance for Michigan drives is the residual liability insurance that you asked about.

Michigan requires residual liability insurance in the form of bodily injury and property damage. The no-fault law protects insured persons from being sued as a result of an auto accident except in certain special situations. In general, you can only be sued:

(a) if you cause an accident in Michigan in which someone is killed, seriously injured, or permanently disfigured;

(b) if you are involved in an accident in Michigan with a nonresident who is an occupant of a motor vehicle not registered in Michigan;

(c) if you are involved in an accident in another state; or

(d) for up to $500 if you are 50% or more at fault in an accident which causes damages to another person’s car which are not covered by insurance.

Your required minimum coverage no-fault policy will pay up to certain amounts if you are found legally responsible. The minimum coverage offers 20/40/10 which stands for:

• Up to $20,000 for a person who is hurt or killed in an accident,
• Up to $40,000 for each accident if several people are hurt or killed.
• Up to $10,000 for property damage in another state.

Courts sometimes award more than these amounts. If this happens, you would be responsible for paying the amount not covered by your policy. To protect themselves, many people buy extra liability insurance. For a quote on at least the state required auto insurance limits for Michigan click here.