Robert B. June
How to Use this Guide
We all have different lifestyles and different driving habits. Consequently, we all have different insurance needs, and your insurance coverage should be tailored to suit your lifestyle. Although every motor vehicle owner in Michigan is required to carry Michigan No-Fault Automobile Insurance, many people don't know that there are a variety of options available for them to choose from. This guide is intended to help you ask for the information you need to make your insurance coverage right for you.
Every Michigan automobile insurance policy is issued through a licensed insurance agent who can tell you about the terms and conditions contained in your own policy. When you purchase or renew your Michigan No-Fault Automobile Insurance policy this year, I suggest that you ask your agent these questions to open up discussion of your policy. You may have more questions of your own, and your agent may have more features and options to discuss with you. Write down the coverage choices you make. When you receive your policy, double-check it to see that your coverage choices are included properly.
Naturally, I hope that you never need to make an insurance claim, but I also want you to have the comfort of knowing that you are properly protected. I hope this information will enable you to choose the automobile insurance coverage that best suits you and your family.
Sincerely,
Robert B. June
About Michigan No-Fault Insurance
Every registered owner of a motor vehicle in Michigan is required to carry no-fault automobile insurance. It is illegal to drive or allow your vehicle to be driven without no-fault insurance. This requirement applies to all types of cars, trucks, vans, and sport utility vehicles. Some types of vehicles such as off-road vehicles and farm implements are excluded from the requirement, and motorcycles are treated differently than other types of vehicles.
We call it "no-fault" insurance because your own insurer is required to pay some types of your claims even if another driver is at fault for the accident. This includes collision damage, wage loss, medical bills, and compensation for needed services and accommodations. Your policy is also required to cover you for liability if another person sues you for causing property damage, serious injury, or death. At a minimum, your policy is required to cover:
- All bills for medical care, rehabilitation services, assistant care, prescriptions, and accommodations needed as a result of an accident.
- Wage loss up to a monthly maximum for the first three years after an accident.
- Up to $20 per day for household replacement services for the first three years after an accident.
- If a death occurs, coverage for burial expenses and loss of financial support to relatives up to a monthly maximum for three years.
- Coverage for property damage caused in Michigan by your vehicle up to $1 million.
- Liability coverage for death or serious injuries caused by the driver of your vehicle. The minimum liability coverage required is $20,000 per person and $40,000 per accident.
Most insurance companies offer a variety of important coverage options in addition to these minimum requirements, including several types of collision coverage and coverage for serious injuries caused by another driver who does not have adequate insurance.
If you are in an accident, you should notify your insurer promptly. Your insurance company will have claim representatives who can inform you about all of your available benefits and the procedures required to document your claims for processing. It is important that you submit documentation of a claim as early as possible because there are time limits on the availability of certain benefits. Once sufficient documentation is submitted, your insurance company is generally required to approve or deny your claim within 30 days, and the insurance company should inform you of any further documentation that is required to process a claim. Many insurance claims can be processed without legal assistance, but many people prefer to have the help of an attorney. If your claim is denied or not paid promptly, you should consult with an attorney who handles automobile insurance cases to determine whether you need legal representation.
1. How much liability coverage do I need to protect my family's assets if someone causes an accident while driving my vehicle?
You may be sued for damages if the driver of your vehicle causes an accident that results in the death or serious injury of another person in Michigan. Under Michigan law, the registered owner of a vehicle is typically held liable for any damages caused by the negligence of the driver, even if the driver is someone else such as a friend, employee, or family member. If the driver of your vehicle causes an accident in another state, you may be liable for other damages under the laws of that state as well.
The liability coverage contained in your insurance policy requires your insurer to defend you and to pay any amount for which you are legally responsible up to the limits of your policy coverage. Every vehicle owner in Michigan is required to carry liability coverage of at least $20,000 for each person who is hurt or killed in an accident, and $40,000 for each accident if several people are hurt or killed. As you can imagine, $20,000 is often not enough to compensate someone who is seriously injured or the family of someone who is killed, and if a court awards damages greater than the liability limits of your insurance coverage, you could be required to pay the excess amount out of your own assets. For this reason, many people purchase liability coverage substantially greater than the required minimum.
Failing to carry the right level of liability insurance can make a tragedy even worse, so take time to talk with your insurance agent about the right amount of liability insurance for your situation.
2. Do I have uninsured motorist coverage and underinsured motorist coverage adequate to protect my family in the event of a serious accident?
Unfortunately, a significant number of vehicle owners break the law by failing to purchase no-fault insurance for the vehicles they own, and many others carry only the bare minimum liability insurance. These may be the riskiest drivers on the road.
To protect you in this situation, many insurers offer "uninsured motorist coverage" and "underinsured motorist coverage," which work somewhat like life or disability insurance. "Uninsured motorist coverage" provides a source of coverage if you or a family member suffers serious injuries in an accident caused by another driver who has no insurance at all. "Underinsured motorist coverage" provides the same type of coverage if the driver causing the accident has minimum insurance that is inadequate to cover the loss resulting from a severe injury. Some insurers combine these two types of optional coverage while others sell them separately, so it is important to make sure you have both "uninsured" and "underinsured" coverage.
Many insurers offer "uninsured" and "underinsured" coverage at very reasonable prices, and it is a bargain considering the security this coverage can afford you and your family. Consequently, many vehicle owners purchase "uninsured" and "underinsured" coverage with the same policy limits as their liability coverage, thereby protecting their own families to the same degree they protect others who may be injured by a negligent driver. So talk with your insurance agent about the "uninsured" and "underinsured" coverage options available to you.
3. What different types of collision and damage coverage are available for my vehicle and how do they work?
Collision coverage is optional in Michigan, although many vehicle owners are required to carry this insurance to comply with the terms of their vehicle lease or loan. In typical situations, the most you can recover from another driver in Michigan for collision damage is $500. The cost of repairing any other collision damage to your vehicle is your responsibility unless you purchase the optional collision coverage.
Michigan insurers typically offer three types of collision damage insurance with different types of deductibles that you agree to pay toward any needed repairs. "Limited collision" typically covers damages only if you are not substantially at fault for the accident, and it may have a deductible. "Standard collision" typically covers damages regardless of fault and with a standard deductible amount. "Broad form collision" usually covers damages regardless of fault with a deductible that may be waived if the accident is not substantially your fault.
In addition to collision damage, you may have "comprehensive" or "non-collision" coverage for vehicle damage or loss as a result of theft, fire, flood, vandalism falling objects, stone chips, and deer or other animal collisions. The terms and conditions of these provisions vary, and your options may depend on the type of vehicle you drive and the area where you live. With the escalating cost of vehicles today, it is a good idea to discuss this coverage carefully with your insurance agent.
4. If I am in an accident, what procedures will I have to follow before getting coverage for medical treatment under my policy?
Your no-fault insurance is required to cover all of the bills for your medical care, recovery, and rehabilitation resulting from a motor vehicle accident. This broad coverage continues for as long as you need treatment, and it has no limit in amount or duration. For the most severely injured persons, this coverage lasts a lifetime. Even so, the procedures you have to follow to get your bills paid can be complicated and may depend on the type of coverage options you select when you purchase your insurance.
If you have separate health insurance, your insurer may offer you a reduced premium on your automobile insurance if you agree to let them "coordinate" your coverage. This "coordinated coverage" means that your health insurance will be asked to pay any covered amount of your medical bills before the automobile insurer pays the remainder, resulting in a substantial discount for the automobile insurer. However, particularly with bigger employers, many of the health insurance plans now require that the automobile insurer pay first. Medicare, Medicaid, and some health plans simply do not cover treatment for injuries suffered in accidents where no-fault insurance is available. This conflict can produce substantial red tape and bureaucratic difficulty at a difficult time when you need to focus on recovering from your injuries.
Consequently, many people now choose uncoordinated coverage, requiring the automobile insurer to pay first in all circumstances. You should ask your agent how this issue is covered under your no-fault insurance policy.
5. If a family member moves into or out of my household, how will that affect insurance coverage under my policy?
A no-fault insurance policy is generally required to provide coverage for all of the relatives residing in the household of the "named insured" covered in the policy. Even if your spouse or children are riding in some other car when they are injured in an accident, your policy will typically cover their medical needs and other benefits. However, your relatives may lose this coverage when they move out of your household.
There are special legal rules for determining whether children who go to college or join the military nevertheless remain "residents" of your household for purposes of insurance coverage. When children move into their own apartments or houses, move in with other relatives for a short duration, or when parents divorce, the question of insurance coverage can become even more complicated. There have been lengthy court cases regarding whether a child intended to move somewhere permanently or only temporarily, and other cases have bogged down over the issue of which parent had custody for insurance purposes.
If you expect a relative to move into or out of your home for even a short period, it is important for you to confirm with your insurance agent how this will affect coverage under your policy. By talking with your agent, you may learn of ways to make sure coverage remains intact without any legal obstacles. Similarly, if you have non-relatives living with you who should be covered under your policy, talk with your agent to make sure the coverage details are worked out in your insurance policy.
6. What coverage does my policy provide for vehicles that are rented by a family member or myself?
Particularly if you have family members who are traveling to another state where they will be renting vehicles, or sharing rental vehicles with others, you should ask your insurance agent to clarify the extent of coverage provided under your policy. This can be one of the most confusing features of automobile insurance coverage, and it is common for people standing at the car rental booth of an airport to have no clue as to whether they need the optional insurance available through the rental agency or whether their own insurance already covers them. The easy answer is to ask your agent before you travel.
If have optional coverage for collision damage to your own vehicle, for example, this coverage will often extend to any vehicle that you rent or borrow, subject to the deductible contained in your policy. But if you do not have collision coverage for your own vehicle, your policy typically will not provide collision coverage for a rental. Although each state has different laws regarding driver liability and insurance coverage, your Michigan no-fault insurance should cover any injuries your family member suffers or causes in an accident. However, coverage issues can be complicated when the person renting the vehicle permits someone else to drive it and the driver causes an accident. Many rental agencies place limits on who is authorized to drive the rental vehicle, and failure to abide by these limits can undercut your insurance coverage.
As a general rule, it is a good idea to ask your agent coverage confirmation whenever a family member is traveling out of state or renting a vehicle.
7. How does my insurance company compare with others when it comes to claims handling and customer satisfaction?
Claims handling procedures vary from company to company, but you should be able to expect prompt and satisfying claims service so that you can recover from an accident and return to your normal life quickly. Various insurance industry organizations rate customer satisfaction, and you should ask how your insurer rates.
When it comes to collision claims, some companies accept estimates from the collision repair shop of your choice and pre-authorize repairs, some send private adjusters to evaluate damage, and others may require you to bring the vehicle to the insurance claim center before getting it repaired. Some insurers require arbitration for some claims while others do not, and some insurers are more aggressive than others in quickly resolving claims against you. Some insurers have online claim procedures while others emphasize a personal approach. All of these procedures can be fair, but you may prefer one way of doing business over another. Similarly, if you or a family member is injured, your insurer is entitled to challenge the amount charged for a medical service if they believe it is excessive, so long as they protect you from being charged for the disputed amount, and different insurers handle this differently. You may want to ask how your insurer handles these disputes so that you do not find yourself in a conflict with your doctors at a time when you need medical care.
When shopping for auto insurance, ask your agent about your company's track record and procedures for handling claims and satisfying customers before you buy.
8. Is "excess" or "umbrella" coverage available, and if so, what would it cover?
Many insurance companies offer optional "excess" or "umbrella" insurance policies that can provide you with extra liability protection at a relatively low cost. An excess policy provides liability insurance in the event that a claim against you results in damages exceeding the limits provided by your primary insurance such as your automobile or homeowners insurance.
Insurers providing optional excess coverage generally require that you carry primary insurance on your automobile and home with certain specified liability limits. The excess policy then provides additional liability coverage for both your automobile and your home up to the limits contained in your excess policy. This arrangement can be much more economical than simply carrying high liability limits in your automobile and homeowners insurance. Along with this additional automobile and homeowners liability coverage, an excess or umbrella policy can also provide you with basic personal liability protection for any type of injury or damage caused by any person covered under your policy, anywhere in the world, subject to certain exceptions specified in the policy.
By purchasing excess or umbrella insurance coverage, you may be able to increase the liability protection for your automobile and home while also obtaining broad protection against personal liability claims, all at an economical rate. Be sure to ask your agent whether this option is available to you, and because these policies can vary from one insurer to the next, be sure to ask what your excess or umbrella policy covers and what is excluded from coverage.
9. What difference does it make if I drive a company-owned vehicle for my personal use?
If you or a family member drives a company-owned vehicle for personal use, you need to carefully determine the extent of the insurance coverage on the vehicle. Many small business owners prefer to purchase or lease cars in the name of their companies for financial reasons, and you should consult your insurance agent before doing this. Most importantly, you will need to know who is the registered owner of the vehicle and who is the named insured in the no-fault insurance policy. In Michigan, the registered owner of a motor vehicle is liable for the negligent acts of anyone who has permission to drive the vehicle. Your company's assets may be exposed to liability for an accident committed by anyone driving the vehicle if the company is listed as the registered owner, even if the vehicle is not being used for company business at the time of the accident. Naturally, you will want to make sure that the liability coverage in your company's insurance policy adequately protects the company in this situation.
A different set of problems can occur if the insurance policy covering the vehicle is taken out in the name of the company rather than listing you as the "named insured." The policy will still provide coverage for anyone driving or occupying the vehicle in most circumstances, but the policy may not provide coverage for you or your family members when you are driving or riding in another vehicle. In contrast, a policy issued in your name typically covers your family members when they are injured in another vehicle or even while crossing the street as a pedestrian. Be sure to avoid confusion regarding this type of coverage: discuss it with your insurance agent.
10. What can I do to reduce my premiums without reducing the scope of my insurance coverage?
When looking for ways to cut the cost of insurance, be sure to ask your agent about available discounts that do not reduce the amount of coverage you have for your family.
The amount of your insurance premium is affected by a standard set of rating factors in addition to any insurance coverage options you may choose. These factors include the ages and driving records of your covered family members, where you live, how much you drive, your insurance claim history, and the types of vehicles you own. Your insurance company uses these factors to evaluate the likelihood that you may suffer some type of insured loss, such as an accident or a theft, and to evaluate the likely cost of claims that may follow that loss. Your insurer may also consider a number of other factors in setting your premium.
Two somewhat similar vehicles may have different insurance rates, so take time to check with your insurance agent when you are shopping for a new car or truck. Some insurers also offer discounts if you equip your vehicle with features such as an anti-theft system, a vehicle recovery or tracking system, anti-lock brakes, or automatic seat or shoulder restraints. Additional discounts may be available for people with safe driving records, car pool users, families with children away at college, and people with good credit histories. You may also qualify for a discounted premium if you insure more than one vehicle with the same insurer or if you place your homeowners insurance with the same company that insures your car or truck. Ask your insurance agent about these and any other discounts that may reduce your insurance premium.
Robert B. June
Robert June is an Ann Arbor trial lawyer who handles all types of civil litigation in Michigan and federal courts, including truck and automobile liability and insurance claims. If you have comments about this pamphlet or would like to contact Mr. June, please reach him at:
124 Pearl Street, Suite 201
Ypsilanti, MI 48197
866-959-3621
734-217-4678
Important Note
Although this pamphlet has been written by an attorney to help you learn more about Michigan no-fault automobile insurance, it should not be regarded as containing any legal advice or any insurance advice particular to your situation. Rather, you are encouraged to contact your insurance agent for advice about your insurance coverage. If you have a disputed insurance claim or need legal advice after an accident, you should consult with an attorney of your choice immediately.
