Bodily Injury Liability in Michigan: What Drivers Need to Know

What Does Bodily Injury Liability Insurance Cover?

In Michigan, bodily injury liability coverage helps pay for certain damages when you are legally responsible for an accident that results in another person’s death or serious injury. Because Michigan is a no-fault state, BI liability does not work the same way as bodily injury coverage in a traditional fault-based insurance system.

Michigan’s residual bodily injury liability coverage may help pay for:

• Damages for another person’s covered bodily injury or death when you are legally responsible. 
• Pain and suffering damages in situations where Michigan law allows a person to pursue a liability claim. 
• Medical and other care costs that are part of a covered claim against you. 
• Legal defense costs, subject to the terms of your policy. 
• Covered damages up to your selected BI liability limits.

Michigan’s no-fault system generally limits when an injured person can sue another driver for noneconomic damages. Residual BI liability coverage applies in specific situations, including certain accidents involving death or serious impairment of body function.

What It Doesn’t Cover?

Bodily injury liability coverage is designed to protect you when you are legally responsible for covered claims made by others. It does not replace Michigan’s Personal Injury Protection (PIP) coverage or pay for damage to your own vehicle. 

Bodily injury liability generally does not cover: 

• Your own medical expenses after an accident. Your PIP coverage is generally designed to address your own covered medical expenses and other benefits. 
• Damage to your own vehicle. Collision or other applicable coverage may be needed for vehicle damage. 
• Every injury claim after an accident. Michigan’s no-fault system limits when someone can pursue certain claims against another driver. 
• Damages that exceed your policy’s BI liability limits. You may be personally responsible for covered amounts above your selected limits. 
• Losses or circumstances excluded by the terms of your policy. 

Michigan drivers should also understand that PIP, Property Protection Insurance (PPI), and residual BI/PD liability serve different purposes. PIP generally addresses covered injuries to people under the no-fault system, while BI/PD liability applies to certain claims for which the insured is legally responsible.

How Much Bodily Injury Liability Do I Need in Michigan?

The right bodily injury liability coverage depends on what you could lose in a lawsuit. A common rule of thumb is to consider your assets and financial situation when choosing your liability limits. In other words, protect the assets you could risk if you are held financially responsible for a covered claim. 

According to the Michigan Department of Insurance and Financial Services (DIFS), Michigan’s default bodily injury liability limits are $250,000 per person and $500,000 per accident. Drivers can choose lower limits of $50,000 per person and $100,000 per accident by completing the required Michigan bodily injury coverage selection form. Higher limits are also available. 

DIFS also warns that choosing lower BI liability limits can have significant financial consequences. If damages exceed the selected policy limit, the driver may be required to pay the amount above the limit. This could result in consequences such as asset seizure, a lien on a home, or wage garnishment. 

For this reason, Michigan drivers should consider their assets, income, and overall financial situation when choosing their BI liability limits. Higher limits can provide more protection if you are held responsible for a covered claim that exceeds a lower policy limit.

What Is the Difference Between BI and PIP?

Many drivers and policyholders get confused about these two different types of insurance. As you know, BI is part of liability auto insurance and provides coverage for certain claims involving another person’s death or serious injury when you are legally responsible.  

PIP, on the other hand, is a mandatory coverage under Michigan’s no-fault auto insurance system that covers your own eligible medical expenses and other covered benefits after an accident. The main difference is that BI liability coverage applies to certain claims made against you, while PIP generally helps cover your own eligible accident-related expenses regardless of fault. 

BI Vs. MedPay

The bodily injury portion of your liability coverage provides coverage for certain covered damages claimed by other people when you are legally responsible for an accident. On the flip side, if you have MedPay coverage, as its name suggests, it may cover certain medical expenses for you or your passengers, depending on the policy.  

For Michigan drivers, PIP is the required coverage that addresses their own eligible accident-related medical expenses and other covered benefits under the state’s no-fault auto insurance system. BI liability coverage and PIP therefore serve different purposes: BI applies to certain liability claims against you, while PIP generally addresses your own eligible benefits after an accident.

What Happens If You Don’t Have Bodily Injury Liability Insurance?

Bodily injury is part of residual BI/PD liability coverage, which is one of the three basic coverages required under Michigan’s no-fault auto insurance system. If you drive or allow someone to drive your vehicle without basic no-fault insurance in Michigan, you can be sued and held personally liable for injuries and damages resulting from an accident. 

You may also face a misdemeanor, a fine of $200 to $500, jail for up to one year, or both. Your driver’s license may also be suspended for 30 days or until you provide proof of valid insurance. 

Michigan drivers can choose lower BI liability limits, but they cannot simply remove the required coverage. If you are responsible for injuries or physical damages and the costs exceed your policy limits, you may be personally responsible for the amount above your coverage limit. This could lead to significant financial consequences, such as a lien on your home or wage garnishment.

The Bottom Line

Bodily injury liability coverage is an important part of Michigan auto insurance because it provides protection against certain liability claims following an accident. Michigan drivers can choose different liability limits based on their financial situation and coverage needs. Choosing a higher limit may provide more protection if a covered claim exceeds a lower policy limit. 

If you’re unsure which bodily injury liability limits are appropriate for your situation, consider speaking with a local USA Auto agent. They can help you review your coverage options, understand the limits available in Michigan, and compare choices based on your needs and budget.