Michigan's no-fault system provides you and your family with unlimited lifetime coverage for medical expenses resulting from an auto accident, regardless of fault. Personal injury protection (PIP) benefits also include coverage for rehabilitation, lost wages and replacement services ($20 a day for up to three years).
You also must also purchase $1 million of property protection insurance (PPI), which pays for damage your vehicle does to other people's property, such as a fence or building. It doesn't, however, pay for damage you to do to another vehicle, except legally parked cars.
Low limits of bodily injury liability and property damage liability – 20/40/10 -- must also be purchased but are referred to as residual coverage since the no-fault law protects insured drivers from being sued except in specific situations, which include:
- If you cause an accident (in Michigan) in which someone is killed, seriously injured or permanently disfigured.
- If you're involved in an accident (in Michigan) with a nonresident who is an occupant of a vehicle registered outside of Michigan.
- If you're involved in an auto accident in another state.
Mini-tort: The "mini-tort" portion of the Michigan no-fault law establishes another situation in which you can sue or be sued. Under this provision, if you're 50 percent or more at fault in an accident and caused damage to another person's car and that vehicle is not completely covered by the owner's insurance policy, then you may have to pay up to $1,000 in damages.
This law also allows you to sue, or claim against, another driver who is 50 percent or more at fault for damage to your car if it isn't fully covered by your own insurance policy. You can receive up to $1,000 from the other party. If you have collision coverage, you're able to sue for your deductible amount (up to $1,000) from the other party.
A basic liability policy doesn't cover this $1,000 mini-tort liability, but you can obtain optional "limited property damage liability" coverage, for an extra cost, to cover this potential liability.
Protect your car: Since Michigan's no-fault PPI insurance only pays for damages to properly parked vehicles and the mini-tort law only allows you to sue an at-fault driver for up to $1,000 for other types of damage, it's important to carry collision coverage on your vehicle if it's newer or not easily replaced.