Michigan operates under a no-fault auto insurance system that is unique among U.S. states. Understanding how the system works — and how the 2019 reform law changed it — is essential for every Michigan driver.

Michigan's No-Fault Auto Insurance System

Under Michigan's no-fault law, each driver's own insurance company pays for their medical expenses and certain other losses after an accident, regardless of who caused the crash. This is different from traditional tort-based systems where the at-fault driver's insurance pays the injured party's expenses.

Michigan's no-fault system requires drivers to carry:

• Personal Injury Protection (PIP) — Covers medical expenses, lost wages, and replacement services for you and your household members after an accident
• Property Protection Insurance (PPI) — Covers damage your vehicle causes to other people's property in Michigan (up to $1 million)
• Residual Bodily Injury and Property Damage Liability — Covers claims from out-of-state residents injured in Michigan and certain serious injury claims

The 2019 Michigan Auto Insurance Reform Law

Public Act 21 of 2019 significantly changed Michigan's auto insurance system, effective July 2, 2020. The most significant change was the introduction of PIP medical coverage tiers, allowing Michigan drivers to choose their level of no-fault medical coverage for the first time.

Prior to the reform, Michigan required unlimited lifetime PIP medical coverage — the most comprehensive (and most expensive) requirement in the country.

The Six PIP Medical Coverage Tiers

Michigan drivers may now choose from six PIP medical coverage options:

1. Unlimited PIP — Provides unlimited lifetime medical benefits. This remains the broadest coverage available and is the default if no selection is made.

2. $500,000 PIP — Provides up to $500,000 in lifetime medical benefits per person per accident.

3. $250,000 PIP — Provides up to $250,000 in lifetime medical benefits per person per accident.

4. $250,000 PIP with Medicaid exclusion — Available to named insureds and household members who are enrolled in Medicaid. Provides $250,000 for those not covered by Medicaid.

5. $50,000 PIP — Available only to named insureds enrolled in Medicaid. Provides up to $50,000 in medical benefits.

6. PIP opt-out — Available only to named insureds who are enrolled in Medicare Parts A and B. Allows the named insured to opt out of PIP medical coverage entirely.

Selecting a lower PIP tier may reduce your premium but also reduces the medical benefits available to you after an accident. Consider your health insurance coverage, Medicare or Medicaid enrollment status, and risk tolerance carefully before selecting a tier.

Residual Liability Coverage

Michigan's minimum residual liability limits are $250,000 per person and $500,000 per accident for bodily injury, and $10,000 for property damage. These minimums were increased by the 2019 reform law.

Higher liability limits are available and worth considering, particularly given the potential for serious injury claims.

Uninsured and Underinsured Motorist Coverage

Uninsured motorist (UM) and underinsured motorist (UIM) coverage protects you if you are injured by a driver who has no insurance or insufficient insurance. Michigan does not require UM/UIM coverage, but it is an important optional protection.

Collision and Comprehensive Coverage

Collision coverage pays for damage to your vehicle from a collision with another vehicle or object. Comprehensive coverage pays for damage from non-collision causes — theft, fire, hail, flooding, and animal strikes.

If you have a loan or lease on your vehicle, your lender will typically require both collision and comprehensive coverage.

Michigan DIFS Resources

The Michigan Department of Insurance and Financial Services (DIFS) provides consumer resources on auto insurance, including information on the no-fault system and the 2019 reform law. Visit the DIFS website at michigan.gov/difs for current guidance.

Frequently Asked Questions

Can I choose any PIP tier I want? No. Eligibility for lower PIP tiers depends on your health insurance, Medicare, or Medicaid enrollment status. Review the eligibility requirements for each tier carefully before making a selection.

What happens if I select a lower PIP tier and have a serious accident? If your medical expenses exceed your PIP limit, you would need to rely on your health insurance or other resources for expenses above the limit. This is an important consideration when selecting a tier.

Does Michigan's no-fault system mean I can never sue the other driver? No. Michigan's no-fault law allows lawsuits for serious injuries that meet a defined threshold, including death, serious impairment of body function, or permanent serious disfigurement.

Is uninsured motorist coverage required in Michigan? No, but it is an important optional coverage given the number of uninsured drivers on Michigan roads.

Where can I find more information about Michigan's auto insurance reform? The Michigan Department of Insurance and Financial Services (DIFS) publishes consumer guidance on the no-fault system and the 2019 reform law at michigan.gov/difs.

Reviewing Your Michigan Auto Insurance

Michigan's auto insurance system is complex, and the right coverage depends on your individual circumstances — your health insurance, household members, vehicle value, and risk tolerance all play a role.

Harborstone Insurance & Risk Solutions works with Michigan drivers to review their auto insurance options. Contact us or request a personal insurance quote to get started.

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This article is provided for general educational purposes only and does not constitute insurance, legal, or financial advice. Michigan auto insurance law and regulations are subject to change. Verify current requirements with the Michigan Department of Insurance and Financial Services (DIFS) at michigan.gov/difs or consult a licensed insurance professional.