Michigan Auto Insurance Requirements Explained

If you intend to own or drive a car in Michigan, it is legally mandatory to have the minimum state-mandated auto insurance coverage in Michigan. Without having the minimum mandatory car insurance, you can’t register a car in your name at the DMV, nor transfer its ownership. Plus, there are minor to severe legal consequences for not having mandatory car insurance in Michigan.

So, to stay legally compliant and avoid legal penalties, it is essential to know and understand the car insurance requirements in Michigan for both residents and visitors.

Mandatory Car Insurance Requirements in Michigan

There are three mandatory car insurance coverages that you must have in Michigan. You need to ensure purchasing the minimum limits for each mandatory car insurance coverage. Although you have the flexibility to purchase any coverage limit beyond the minimum requirement, it is essential to ensure that you have the minimum coverage limit to stay legally compliant.  

Here’s a breakdown of each of the mandatory auto insurance coverages to help you learn and understand the auto insurance requirements in Michigan.  

Keep in mind that, when it comes to exploring mandatory car insurance coverage in Michigan, it is essential to explore a reliable Michigan car insurance provider that offers extensive auto insurance coverage at an affordable rate.

Personal Liability and Property Damage (PLPD) Coverage

Just like almost every other state in the U.S., liability coverage is also mandatory for car insurance in Michigan, despite being a no-fault state. Here in Michigan, auto liability insurance is commonly known as Personal Liability and Property Damage (PLPD) coverage.  Typically, the PLPD coverage includes two liability coverage components such as:

• Personal Liability: The personal liability coverage pays for bodily injuries to the other driver, their passengers, any pedestrians, or third parties for a car accident in which you’re at fault. This includes their medical bills, lost wages, and caregiver expenses. In other words, the personal liability part is also known as bodily injury coverage.
• Property Damage: The property damage part covers damage to another person’s property caused by your vehicle. It includes repairs or replacements for vehicles, buildings, fences, trees, or other structures you damage in an at-fault car accident.

According to Michigan Car Insurance Law, it is mandatory to have the following PLPD coverage.  

• $50,000 bodily injury liability per person 
• $100,000 bodily injury liability per accident 
• $10,000 for property damage per accident outside of Michigan 

Typically, you will find the PLPD coverage limits often underwritten as 50/100/10. To ensure adequate financial protection against liability damage, the State of Michigan recommends a PLPD coverage limit of 250/500/10. Based on your requirements, you can choose higher limits for better financial protection.

Property Protection Insurance (PPI)

Property Protection Injury (PPI) is another mandatory car insurance coverage in Michigan that’s mainly designed to cover stationary objects, such as buildings, fences, mailboxes, and other tangible assets that belong to another person.   PPI applies only to at-fault accidents that occur within Michigan and has a mandatory coverage limit of up to $1 million. This coverage does not typically apply to vehicles. However, if a legally parked vehicle is damaged in an accident you cause, your PPI coverage will pay for its repair or replacement costs.

Personal Injury Protection (PIP) Coverage  

Personal injury protection (PIP) is mandatory medical coverage for car insurance in every no-fault state, including Michigan. PIP covers the medical bills, loss of income, caregiver expenses, childcare costs, and even funeral expenses for you and your passengers, regardless of who is at fault for the car accident.  

Until 2nd July 2020, it was mandatory to have unlimited PIP coverage, but ever since the amendment, you now have 6 different options based on your needs and budget. Here are the following PIP coverage options. 

• Unlimited coverage: Provides full medical protection for all accident-related expenses. 
• Up to $500,000 coverage: Offers substantial medical coverage for serious injuries. 
• Up to $250,000 coverage: A mid-range option for balanced cost and protection. 
• Up to $250,000 coverage with PIP medical exclusion: You can select this if you or a household member has qualified health insurance that covers auto-related injuries. 
• Up to $50,000 coverage: Available only if you’re enrolled in Medicaid and other household members have separate auto insurance. 
• Opt-out of PIP coverage: Allowed if you and all household members have Medicare Parts A and B.

Legal Consequences of Not Having Mandatory Car Insurance in Michigan

Based on Michigan’s auto insurance law, it is strictly mandatory for you to have car insurance to legally drive, register your car, and transfer its ownership. Without car insurance, you can’t do any of these. More importantly, if you’re caught driving without car insurance, it can lead to various legal consequences as listed below. 

• Fine: You can get legally penalized with a fine of $200 to $500 for driving on public streets without car insurance. (MCL - Section 500.3102) 
• Driving License Suspension: If you’re caught multiple times driving without auto insurance, your driver’s license may be suspended. Repeat offenses can even get it revoked. (MCL - Section 257.328)
• Court Order to Purchase SR-22 Certificate: You may get a court sentence to purchase the SR-22 certificate, which typically includes state-mandated liability coverage but at a much higher premium because the SR-22 certificate is especially designed to cover high-risk drivers.
• Arrest, and Jail: Police can arrest drivers for uninsured driving without a warrant. Repeat offenses may result in up to one year in jail.   
• Limits Your Legal Rights to Sue: If you’re suffering due to accidental injuries in which the other driver is at fault, while you’re completely innocent, you cannot sue the other driver, as you’ve broken the law by not having mandatory car insurance. (MCL - Section 500.3135)   
• Financial Consequences: You may need to cover court costs, legal fees, and any damages out of pocket, which can be financially overwhelming.

Is Car Insurance Required for Non-Residents/Visitors in Michigan?

Yes, car insurance is required for non-residents/visitors in Michigan for driving a rented car, or your own, for more than 30 days. Whether you’re a tourist, student, or work commuter, if you’re staying in Michigan for over 30 days and need to drive a car, you must get insured. 

Keep in mind that the same legal consequences will apply if you’re caught driving without car insurance, whether you’re a visitor or a permanent Michigan resident. Also, if you’re from another state, and if your out-of-state policy does not cover Michigan’s mandatory auto insurance requirements, you will be considered uninsured.  

If you need to drive for more than 30 days, you should obtain car insurance from a Michigan-based insurer. For rental cars, most rental companies can provide a short-term insurance policy that complies with Michigan’s requirements.

Is the Mandatory Car Insurance Coverage Enough for Adequate Financial Protection?

Unfortunately, the mandatory car insurance coverage is not enough for adequate financial protection. While the minimum mandatory liability and personal injury protection may suffice, it may not be enough, especially if you need to cover more than the coverage limit.  

More importantly, none of Michigan’s mandatory car insurance coverage protects your car’s repair or replacement costs. So, if your car gets damaged in an accident, you will have to cover its repair expenses out of pocket, which can be financially overwhelming. 

If you’re getting just the mandatory car insurance coverage with minimum coverage, it will help you stay legally compliant, but it does not provide the balanced financial protection that you may need after a car accident.

Optional Car Insurance Coverage to Consider in Michigan

If you’re shopping for car insurance in Michigan, there’s a high chance that you’ve come across the term ‘full coverage’. Just to make things clear, there’s no car insurance policy called ‘full auto insurance coverage’.  

Full insurance coverage is generally used to refer to a balanced combination of mandatory car insurance coverage with essential optional coverages such as collision, comprehensive, and uninsured/underinsured motorist (UI/UM) coverage.  

So, if you want to ensure adequate financial protection, it is crucial to consider adding collision coverage, comprehensive coverage, and UI/UM coverage to your car insurance policy.  

For additional protection, you can consider adding gap insurance coverage, medical payments coverage, original parts replacement coverage, road assistance coverage, rideshare coverage, rental car reimbursement coverage, and more.

The Bottom Line: Stay Legally Compliant and Financially Protected in Michigan with Car Insurance

Legally, you can’t drive a car, nor get one registered in your name, without having car insurance. Apart from the legal aspect, it is mainly necessary to ensure adequate financial protection against accidents. So, to stay legally compliant and financially protected, it is important to carry mandatory coverage along with essential optional coverage such as collision and comprehensive insurance. 

If you need help to further understand car insurance requirements in Michigan and purchase car insurance at affordable rates, please contact us to book a free quote today.

Frequently Asked Questions (FAQ)

What are the requirements for auto insurance in Michigan?

If you’re driving in Michigan, you’re required to carry minimum auto insurance. This includes PLPD ($50,000 per person / $100,000 per accident for bodily injury and $10,000 for property damage outside Michigan), PPI ($1 million for damage to stationary property), and PIP (medical bills, lost wages, and more, from $50,000 up to unlimited). 

These coverages meet the state’s legal requirements, but many drivers also add optional coverage like collision, comprehensive, or uninsured/underinsured motorist insurance to protect their own car and avoid paying out of pocket.

What is the new law for car insurance in Michigan?

Michigan recently updated its car insurance rules with the no-fault reform law, which took effect on July 2, 2020. Under the new law, drivers can now choose from different levels of Personal Injury Protection (PIP) coverage instead of being required to carry unlimited PIP.  

What is the 50/100/50 rule for liability insurance?

The 50/100/50 rule is Michigan’s minimum liability coverage requirement for car insurance. It means $50,000 for bodily injury per person, $100,000 for total bodily injury per accident, and $10,000 for property damage per accident outside Michigan. This coverage helps pay for injuries to others and damage to their property if you’re at fault, but many drivers choose higher limits for extra financial protection. 

Is comprehensive and collision required in Michigan?

No, comprehensive and collision coverage are optional car insurance coverages in Michigan and are not legally required. However, these coverages are highly recommended for adequate financial protection.  

Collision coverage pays for damage to your vehicle if it is involved in an accident or collides with another vehicle or object, regardless of who is at fault. Comprehensive coverage protects against non-collision events such as theft, fire, or natural disasters. Adding these coverages can help you avoid costly out-of-pocket repairs and provide peace of mind, especially if your car is new or valuable.