State of Michigan Auto Insurance Requirements Explained

Just like many other states in the USA, auto insurance is also legally mandatory in Michigan. Whether it comes to owning a vehicle or driving it on the streets of Michigan, you must have auto insurance.

While there are a multitude of options for acquiring auto insurance in Michigan, it can get confusing when you’ve too many options to consider. So, that’s why it is crucial to first know and understand which auto insurance policies are legally mandated, and what’s the minimum coverage limit for those auto insurance policies.

What is the Minimum Auto Insurance Coverage in Michigan?

When it comes to auto insurance requirements in Michigan, it’s particularly important to know the mandatory auto insurance policies, and the minimum coverage limit that you must purchase.

According to the auto insurance laws in Michigan, having auto insurance is only mandatory for owning a vehicle and to legally drive. There are three auto insurance policies that are mandated by the state. Each of these auto insurance policies have a minimum coverage limit as follows.

Personal Liability and Property Damage (PLPD) Insurance Coverage

Personal liability and property damage insurance is commonly known as PLPD insurance in short. In other states, PLPD insurance is called liability insurance or residual liability insurance. The interesting thing about the unique term PLPD is this auto insurance policy covers two essential components; bodily injury, and property damage.

As the PLPD insurance is a liability auto insurance policy it only covers financial compensation to the other driver, their passengers, and pedestrians harmed in a car accident in which you’re partially or totally at-fault.

Simply put, it only protects you financially by covering the medical costs, and property damage of the third parties who were harmed by an accident that you’ve caused. It does not cover the medical bills of you and your passengers, nor does it cover any of your vehicle and property damage.

Based on the requirements outlined by the State Government of Michigan, you will have to purchase the minimum auto PLPD insurance which includes the following below.

• Bodily Injury per Person: Up to $50,000 for one person hurt or killed in an accident
• Bodily Injury Per Accident: Up to $100,000 for several people hurt or killed in an accident
• Property Damage: Up to $10,000 for property damage, this includes vehicles, buildings, trees, fences, mailboxes and other tangible assets
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Well, that’s the bare minimum PLPD insurance that’s mandated in Michigan, here's the standard PLPD insurance coverage that is highly recommended by the State Government.

• Bodily Injury per Person: Up to $250,000 for one person hurt or killed in an accident
• Bodily Injury Per Accident: Up to $500,000 for several people hurt or killed in an accident
• Property Damage: Up to $10,000 for property damage

According to the official regulations, if you can’t afford the standard coverage only then it is advised to go for the minimum PLPD coverage. This is mainly because the minimum PLPD coverage may be inadequate depending on the severity of the accident.

When it comes to auto insurance requirements in Michigan, it’s crucial to know how does PLPD insurance work in Michigan.

Personal Injury Protection (PIP) Insurance Coverage

Personal Injury Protection, PIP is a mandatory auto insurance policy in Michigan that covers you and your passengers’ medical bills, loss of income, caregiving services, childcare, and funeral expenses after sustaining injuries in an auto accident regardless of whoever is at-fault.

According to DIFS, the legal auto insurance amendments since 1st July 2020 have enabled drivers to choose among 6 different options for the PIP insurance coverage. Before it was mandatory to purchase unlimited PIP coverage, but that led to excessively high premiums, so the State Government has changed the requirements with more options for the mandatory PIP coverage limits.

Here are the PIP Insurance Coverage limits that you can purchase based on your requirements, feasibility and budget.

• Unlimited Coverage: This is the safest coverage option, if you want to stay financially secure from hefty medical bills, and other associated costs such as loss of income, childcare services etc.
• Up to $500,000 Coverage: This option will cover all the medical expenses, and the other associated costs up to a maximum coverage limit of $500,000.
• Up to $250,000 Coverage: Similarly, this option will cover your medical bills and other associated expenses up to $250,000.
• Up to $250,000 with Medical Exclusion: With this option, you choose to cover the medical expenses with Non-Medicare Health Insurance for you, and your household members. By choosing this option, the medical expenses will be covered only from the specified health insurance. You won’t get any PIP coverage for the medical bills for yourself, household members, or anyone excluded. Apart from the medical expenses your PIP insurance will still cover other associated costs such as loss of income and essential services for up to $250,000.
• Up to $50,000 Coverage: You can go for this option if you and your household members have Medicaid with another auto insurance and health insurance policy to cover the damages after an accident. By choosing this option, you will get a maximum PIP insurance coverage of up to $50,000.
• PIP Opt-Out: If you (the name insurer) and your household members have Medicaid both part A and B, along with another auto, and health insurance policy then you can opt out of the PIP coverage entirely.

Property Protection Insurance (PPI)

ver property damages to another person regardless of whoever is at-fault.

Unlike PLPD insurance, the PPI insurance policy does not apply for car accident-related cases. Based on Michigan’s Auto Insurance Laws, when it comes to compensation for vehicle damage the PPI coverage is only applicable for safely parked vehicles.

Apart from vehicle damage to the other person, PPI insurance also covers the following.

• Buildings
• Fences
• Trees
• Streetlights
• Trashcans
• Any tangible asset

In Michigan, you need to purchase a minimum PPI coverage of $1 million. While it may seem like a hefty coverage limit, property damage costs can quickly escalate, sometimes reaching hundreds of thousands or even a million dollars. So, based on the risk factors, and the possibility of severe property damage, the high PPI coverage is essential to ensure adequate financial protection.

What is the Average Cost of Minimum Auto Insurance in Michigan?

Based on recent market trends, as of November 2024 the average cost of minimum auto insurance ranges from $654 to $1,491 per year. Typically, the cost of auto insurance is determined based on various demographic factors such as age, location (city), driving records, insurance history etc.

The average price range has been acquired based on thorough research from multiple sources, which includes Bankrate, Forbes, NerdWallet, insurance.com and more.

So, even the minimum average cost of auto insurance significantly varies from one company to another. Also, the PIP insurance policy has 6 different options to choose from, so that also plays a crucial role in altering the average minimum insurance rate.

If you need auto insurance solutions at an affordable rate, consider checking PLPD Insurance Agency in Michigan.

Penalties for Failing to Meet Minimum Insurance Requirements

If you’re caught driving on the streets of Michigan without being insured, you can face legal penalties such as a fine of $500 or more, or jailtime of up to 1 year or both. As it was mentioned before it is mandatory to have auto insurance in Michigan for owning and driving a vehicle.

Even if you’re driving someone else’s car, it is mandatory for you to have the state mandated minimum auto insurance coverage. You will also have to deal with court proceedings which adds the cost of hiring a lawyer. On top of that, if you’re sued for being involved in or responsible for a traffic accident, then it can quadruple your out-of-pocket expenses.

So, that’s why it is essential for you to have at least the minimum auto insurance coverage. In this way, you will be financially and legally secure, and you will also have some form of protection from legal penalties, especially if you’re sued.

The auto insurance laws have changed in recent years, ever since the last amendment in July 2020, and that’s why it crucial to stay up to date with the new auto insurance laws in Michigan.

Last Piece of Advice: Make Sure to Stay Insured

You can’t legally drive in Michigan without the minimum auto insurance. So, you’re legally obligated to ensure having mandatory auto insurance policies with minimum coverage limits.

Although minimum auto insurance coverage may not be adequate to cover the expenses after an auto accident, it will still protect you financially to an extent. If it’s a minor accident with minimal damage and injuries, then the minimum auto insurance coverage may be enough.

So, that’s why it’s always recommended to get adequate coverage within your budget. Yet again, ultimately, it’s your decision whether you opt for the minimum coverage or full coverage auto insurance.

It’s always best to consult with an auto insurance agent to determine how much coverage do you actually need within your budget. If you need help figuring out which coverage works best for you, you can contact us and get a free quotation.

FAQ

What auto insurance is required by law in Michigan?

It is legally mandatory for every car owner and driver to have Personal Liability and Property Damage (PLPD) Insurance, Personal Injury Protection (PIP) Insurance, and Property Protection (PPI) Insurance in Michigan. y

Can someone drive my car if they are not on my insurance in Michigan?

No, as auto insurance is a mandatory requirement to drive in Michigan, so if you allow someone to drive your car, they must have an active auto insurance policy.

Is Michigan still a no-fault state in 2024?

Yes, Michigan is officially still a no-fault state as of 2024, but similar to at-fault states you will be held liable for auto accidents in which you’re partially or totally at-fault. So, despite being a no-fault auto insurance state, its auto insurance laws have regulations that apply in at-fault states, which makes Michigan a hybrid state.

What happens if someone wrecks your car and they aren't on your insurance in Michigan?

If you let your friend drive your car, and if they get involved in an auto accident in which the other driver is partially or totally at-fault then the other driver’s auto liability insurance policy will pay for your friend’s medical bills, and your vehicle repair expenses. According to the mini tort law in Michigan if the other driver is partially at-fault let’s say it’s 50% the fault of the other driver in that case they will have to compensate up to $3,000 for maximum 3 years. On the other hand, if your friend is at-fault for the auto accident then your friend will have to cover their own medical expenses, and your vehicle repair costs from their auto insurance policy.

Is comprehensive and collision required in Michigan?

No, comprehensive and collision insurance are optional policies, so they’re not a mandatory requirement in Michigan. But for better financial protection, it is recommended to have a collision and comprehensive auto insurance.