WHAT COVERAGE SHOULD I BUY?
Michigan requires three mandatory coverages: Personal Injury Protection, Property Protection and Residual Liability coverage.
Michigan No-Fault Insurance Personal Injury Protection (PIP) - These benefits are typically paid
by the injured person’s auto insurance company or from an auto insurance company that issued
a policy to a relative living in the injured person’s home. These benefits include:
Allowable expenses for life – “All reasonable charges incurred for necessary products, services and accommodations for an injured person’s care, recovery or rehabilitation.” These benefits are payable for life and have no dollar limits (they are very broad and can include: medical expenses; in-home patient care; home accommodations; vocational rehabilitation; special transportation and medical mileage guardianship/conservatorship expenses; and services of an independent case manager).
Work loss, payable for up to 3 years, capped at approx. $5,400 for loss of income from work an injured person would have performed if he or she had not been injured.
Replacement services, payable for up to 3 years, capped at $20/day for services that the injured person would have performed had the injury not occurred. It is primarily meant to cover household services such as housekeeping, yard work, snow removal etc.
Survivor’s loss in cases of death, payable up to 3 years, to the insured’s dependents for the decedent insured’s economic contributions to those dependents.
Importantly, consumer have a choice of which type of no-fault coverage they want to buy. Consumers can either purchase uncoordinated no-fault insurance coverage or they can choose to purchase coordinated no-fault insurance coverage. Premium costs for this coverage can be reduced by choosing a deductible for medical benefits also called coordinated policy (your health insurer pays medical claims and whatever is not covered, then is paid by the no-fault insurer).
Note: It should be noted that in insurance policies and declaration pages, coordinated coverage is described with words such as “excess”, “secondary” or “coordinated.” And uncoordinated coverage is described with words such as “full”, “primary” or uncoordinated.
Uncoordinated medical coverage and uncoordinated wage loss
Coordinated medical coverage and uncoordinated wage loss
Coordinated medical coverage and coordinated wage loss
Recommendation: It is recommended that people purchase uncoordinated coverage. This is because uncoordinated coverage allows injured people to simply submit their auto-related medical bills directly to their no-fault insurance company without first having to submit those bills to their health insurance company. This results in fewer hassles for injured people in pursing payment of their medical expenses. Uncoordinated coverage also protects an injured person from problems with health insurance companies attempting to claim a lien against any pain and suffering damages an injured person may recover from an at-fault driver.
This mandatory coverage is to insure you if you cause a crash that injures someone and that person attempts to bring a claim against you or sue you for your negligence. Notably, under Michigan law, an at-fault driver can be sued for the injured person’s pain and suffering damages and the person’s long-term income loss sustained as a result of his or her injuries.
Michigan law only requires drivers to have liability coverage in the amount $20,000 of coverage for each individual who is injured in a crash and a total of $40,000 for the crash overall. However, people can elect to buy liability coverage with much greater limits of up to a $1,000,000.
Recommendation: purchase at least $300,000 single limit liability insurance coverage.
Provides coverage for damage caused by your car to property of others (except moving vehicles), regardless of fault. Coverage is provided up to a $1,000,000 maximum. Vehicles are excluded from coverage, unless properly parked. Property Protection does not apply to accidents occurring outside the state of Michigan.
Collision insurance is optional unless you are leasing or financing your vehicle. There are three forms:
Standard: Pays for damage to your vehicle regardless of who is at fault for an accident, minus the deductible.
Broad: Pays for damage to your vehicle, regardless of who is at fault for an accident. But only if you were more than 50% at fault and the deductible is your responsibility.
Limited: Pays for damage to your vehicle, less the deductible, if you were not more than 50% at fault in an accident.
Comprehensive: Pays for damage to your car resulting from causes other than collision, such as fire and theft.
Older vehicle? Should I Buy Collision Coverage?
Check the value of your vehicle on a website like Kelly Blue Book or ask an auto dealer or bank. If your annual insurance premiums for collision and comprehensive insurance are more than 10% of your car’s value, then it’s time to talk to your agent about possibly dropping coverage.
Uninsured Motorist: Pays what you would be legally entitled to collect for injuries caused by an uninsured driver.
Recommendation: Purchase at least $300,000
Underinsured Motorist: Pays what you would be legally entitled to collect for injuries caused by an underinsured driver.
Recommendation: Purchase at least $300,000
Road Service: Pays for assistance when your car is disabled, such as a flat tire.
BEWARE OF STEP-DOWN CLAUSES
Some companies are including Step-Down clauses in the contract portion policies. BEWARE of policies that include a step-down. In general, step-down clauses (also called “intra-family exclusionary” clauses) apply when a driver’s family member is injured in a collision and then brings a liability claim against the driver. If the driver’s insurance policy includes a step-down clause, then the amount of liability coverage is reduced to the state-mandated minimum of $20,000 per person/$40,000 per accident.