Michigan Auto Liability Insurance: Coverage & Requirements

Michigan requires drivers to carry no-fault auto insurance, which includes Personal Injury Protection (PIP), Property Protection Insurance (PPI), and Residual Bodily Injury and Property Damage Liability (BI/PD). If you cause an accident, the coverage that applies under your Michigan auto policy can help pay for certain damages or injuries you are legally responsible for, depending on the circumstances and your policy limits. Residual BI/PD coverage can also help cover legal defense costs and certain damages when you are held legally responsible. 

Michigan’s no-fault system works differently from traditional liability-based insurance systems in many other states. While certain coverages are required, drivers can choose their BI/PD liability limits from the options permitted under Michigan law. 

So, let’s understand liability car insurance in detail in this article.

Main Components of Liability Car Insurance Coverage 

Auto liability coverage has two major parts. Both work together. However, each component protects against different risks. 

1. Bodily Injury (BI) Liability

Bodily injury liability coverage pays when someone else is hurt in an accident you caused. It covers certain damages related to injuries, including compensation for pain and suffering and medical care that exceeds the injured party’s applicable policy limits, when you are legally responsible and the circumstances meet Michigan’s requirements. If the injured party takes you to court, it can also help cover legal defense costs, subject to the terms and limits of your policy. Residual BI coverage is required under Michigan’s no-fault system, with coverage limits that drivers can select within the options allowed by state law.

2. Property Damage (PD) Liability

In Michigan, property damage protection works differently because Property Protection Insurance (PPI) is a separate mandatory coverage. PPI pays up to $1 million for damage your vehicle causes in Michigan to other people’s property, such as buildings, fences, and properly parked vehicles. Residual Property Damage (PD) liability coverage may apply in certain situations, including qualifying accidents outside Michigan, and is subject to your policy limits.

What Does Liability Insurance Cover?

If you have read this far, we hope you already understand what liability insurance covers for you. However, in this part, we’ll make it easier and skimmable for you.  So, liability coverage is designed to protect you when you are legally responsible for certain injuries or property damage resulting from an auto accident. It doesn’t repair your own car, but it may help pay for covered damages owed to others, subject to Michigan law and your policy limits. 

Here’s what Michigan liability coverage can typically cover: 

• Certain bodily injury damages, including pain and suffering when the requirements for a residual BI claim are met.
• Legal defense costs if you are sued and the claim is covered by your policy. 
• Certain property damage for which you are legally responsible, subject to the coverage and circumstances involved.  Damage to property in another state, subject to your applicable BI/PD coverage limits. 
• Damage to buildings, fences, and properly parked vehicles in Michigan may be covered by Property Protection Insurance (PPI), which is a separate mandatory coverage.

Need liability auto insurance for your newly purchased vehicle? Contact USA Auto Insurance today for affordable car insurance coverage, or call us at (866) 855-1872 to insure your vehicle with same-day coverage.

What Does Liability Insurance Not Cover?

It’s just as important to know what your auto liability coverage won’t handle. Many drivers assume it covers everything, but that’s not true. This protection generally applies to certain damages for which you are legally responsible, rather than losses to your own vehicle or injuries covered by other types of coverage. Your own losses fall under different types of car insurance coverage.

Here's what liability does not cover:   

• Repairs to your own vehicle after an accident.
• Your own medical bills or personal injuries, which may be addressed by Personal Injury Protection (PIP) or other applicable coverage  Non-accident risks such as theft, vandalism, or fire (Comprehensive coverage)  
• Certain losses involving an uninsured driver may require other applicable coverage, such as uninsured motorist coverage. 
• Medical costs for your passengers that are addressed through applicable PIP or other coverage rather than your liability coverage.

What Are Liability Coverage Limits

Every insurance policy has limits, and liability coverage is no exception. These limits decide the maximum amount your insurer will pay after an accident. And if the amount goes above that limit, you’re responsible for it.

In Michigan, residual bodily injury and property damage liability coverage limits are generally shown as three numbers, such as 250/500/10. Each number represents a different limit:

• Bodily injury liability coverage per person: The most your insurer pays for one person who is hurt or killed in an accident (up to $250,000 under the default limit). 
• Bodily injury liability coverage per accident: The most paid for all people who are hurt or killed in a single accident (up to $500,000 under the default limit). 
• Property damage liability: The maximum for covered property damage in another state (up to $10,000 under the default limit).

If you’re a high-risk driver, choosing the right liability limit is very important. USA Auto Insurance always recommends carrying more than the minimum coverage limit for drivers with a bad driving history.

How Much Is Liability Car Insurance?

Liability auto insurance costs vary based on several factors. According to The Zebra's 2026 data, the average cost of state-minimum liability-only car insurance in Michigan is $1,368 per year. For higher liability limits, the average annual cost is $1,432 for 50/100/50 liability-only coverage and $1,488 for 100/300/100 liability-only coverage.
However, please keep in mind that the exact rate could vary by the following factors: 

• Driving record: Violations and accidents can affect your premium. 
• Claims history: Your previous claims history can affect the rate an insurer charges.  Vehicle type: The vehicle you drive can affect your premium. 
• Coverage limits: Higher liability coverage limits can increase premiums but provide more financial protection. 
• Coverage selected: The types and levels of coverage you choose can affect your total premium. 
• Driving location: Factors related to where you drive and the risks associated with that area can affect insurance costs.

Michigan also restricts the factors insurers can use when setting auto insurance rates. Credit history, gender, marital status, home ownership, education, occupation, and ZIP code are among the factors that cannot be used to determine an auto insurance rate.

Is Liability Car Insurance Required in All Michigan Cities?

Yes. Liability car insurance requirements apply across all Michigan cities because they are set by state law, not by individual cities. Michigan drivers must carry the required auto insurance coverage to legally operate a vehicle, including residual bodily injury and property damage liability coverage. Michigan also requires other coverages, such as personal injury protection (PIP), as part of its no-fault auto insurance system. 

The liability coverage limits you choose can vary within the options permitted under Michigan law, but the requirements do not change based on whether you live in Detroit, Grand Rapids, Lansing, or another Michigan city.

How Does My Driving Record Affect My Liability Coverage?

Your driving record can have a significant effect on your car insurance costs. Whether it’s liability or any other type of coverage, it directly affects your insurance costs. In Michigan, insurers may consider your driving record and claims history when determining your premium. A driver with a clean record typically enjoys lower rates for liability or other coverage. 

Conversely, a high-risk driver, someone with a history of accidents, speeding tickets, DUIs, or past claims, may face higher insurance costs or have more difficulty qualifying for coverage. Michigan DIFS notes that insurance companies use underwriting and rating rules to determine whether they will insure a driver and how much they will charge. These rules can vary by insurer but must be filed with and approved by DIFS.

How Much Liability Car Insurance Coverage Do I Need? 

Michigan allows drivers to choose different residual bodily injury and property damage (BI/PD) liability coverage limits within the options permitted by state law. While the default BI/PD limits are $250,000 per person, $500,000 per accident, and $10,000 for property damage in another state, lower limits are also available if properly selected. 

The coverage you choose should take into account your personal circumstances and the level of financial protection you want. If you are held legally responsible for damages that exceed your policy limits, you may have to pay the amount above those limits yourself. Michigan DIFS notes that choosing lower BI coverage limits can have financial consequences, including the potential for assets to be seized, wages to be garnished, or a driver's license to be suspended. 

Some drivers may choose higher liability limits to provide more financial protection, even if higher limits increase the cost of their insurance.

Bottom Line: Choosing the Right Liability Coverage in Michigan

Michigan's liability requirements are different from those in traditional fault-based insurance systems. When selecting your BI/PD limits, consider your financial situation, driving history, and the level of protection you want. Comparing quotes using the same coverage limits can also make it easier to compare costs. 

If you are comparing Michigan auto insurance options, a licensed insurance agent can help you understand the available coverage and limits. To discuss your options, connect with a USA Auto agent or call (866) 855-1872 for a quote.

Frequently Asked Questions (FAQs)

What is the difference between full coverage and liability-only car insurance? 

Liability coverage helps cover certain injuries or property damage you cause to others, while collision and comprehensive coverage can protect your own vehicle. Michigan also requires PIP and PPI coverage.

Can I drive with just liability insurance in Michigan? 

No. Michigan requires PIP, PPI, and Residual Bodily Injury and Property Damage (BI/PD) liability coverage.

Does liability cover my car if someone hits me?

Generally, no. Damage to your own vehicle may be covered by collision coverage or other applicable coverage, depending on the circumstances.

Can I raise my liability coverage later?

You may be able to increase your BI/PD liability limits by contacting your insurance company or agent. Available limits must follow Michigan requirements.

What isn't covered by liability insurance?

Liability coverage does not generally cover your own vehicle repairs or other losses such as theft and vandalism. These may require collision, comprehensive, or other applicable coverage.

What does liability insurance cover if you're not at fault?

Liability coverage generally applies when you are legally responsible for covered damages. Michigan's no-fault system means other coverages may apply when another driver is at fault.