Navigating your auto insurance policy can be confusing, especially with unique requirements like Michigan's no-fault system. This guide explains common car insurance terms in plain language, helping you understand your coverage options, including deductibles, liability, and Personal Injury Protection (PIP) in Michigan.
Deductible: Your Share of the Cost
A deductible is the amount you pay out-of-pocket on a claim before your insurance company starts to pay. For example, if you have a $1,000 deductible for collision repairs and the total damage is $2,500, you pay the first $1,000, and your insurance covers the remaining $1,500.
Bodily Injury Liability Coverage in Michigan
In Michigan, Bodily Injury (BI) liability insurance is also known as "residual liability" coverage. It covers the costs of injuries you cause to other people in an accident. While Michigan is a no-fault state, this coverage is essential because you can still be sued in certain situations.
Michigan's No-Fault System and BI Liability
- No-Fault vs. At-Fault: Under Michigan's no-fault law, your own insurance's PIP typically pays for your medical bills and lost wages, regardless of who caused the accident.
- When You Can Be Sued: Your BI liability coverage kicks in when someone files a lawsuit against you after an accident involving serious injuries.
- BI Coverage Pays For:
- Pain and suffering compensation
- Excess medical bills exceeding the at-fault driver's PIP coverage
- Excess lost wages for the injured party
Understanding BI Coverage Limits
Your policy will show BI limits as two numbers, such as $250,000/$500,000:
- $250,000 per person: The maximum amount your insurance will pay for one person's injuries.
- $500,000 per accident: The maximum total amount your insurance will pay for all injuries in a single accident.
- Michigan Law Changes (2020): Drivers can select their BI limits, with $250,000/$500,000 being the default. We recommend higher coverage for better financial protection.
Uninsured/Underinsured Motorist (UM/UIM) Coverage
This vital coverage protects you and your passengers if you're in an accident with a driver who is either uninsured or underinsured. Your UM/UIM coverage can help pay for medical expenses, lost wages, and pain and suffering.
Personal Injury Protection (PIP) in Michigan
As part of Michigan's no-fault system, PIP coverage pays for your medical expenses and lost wages if you are injured in a car accident, regardless of who was at fault.
- PIP Covers:
- Medical care (doctor visits, hospital stays, physical therapy)
- Lost wages (up to 85% of your income for up to three years)
- Household replacement services
- Funeral expenses
- PIP Medical Coverage Options (since 2020):
- Unlimited coverage
- $500,000 per person
- $250,000 per person
- $50,000 per person (Medicaid)
- Opt-out (if you have qualifying health insurance)
Comprehensive Coverage
Comprehensive coverage protects your vehicle from damage caused by events other than collisions — theft, vandalism, hail or weather damage, hitting an animal (like a deer), damage from falling objects, and glass damage.
Collision Coverage Types
- Broadform Collision: Your deductible is waived if you are not at fault. If at fault, you pay the deductible.
- Standard Collision: You pay your deductible regardless of who is at fault.
- Liability Only: Minimum required insurance. No coverage for damage to your own vehicle.
Understanding these coverage types helps you make smarter decisions when reviewing your policy. Michigan auto insurance has unique rules — especially around No-Fault PIP — that most online guides miss. Our local agents explain every option in plain English. Learn more about Michigan auto insurance or get a free comparison quote from 20+ carriers.