Michigan No-Fault: Required Coverages and Personal Protection Insurance
Michigan’s no-fault law is chapter 31 of the Insurance Code, MCL 500.3101 to 500.3179. It makes a trade. Your own auto insurer pays for your injuries after an accident regardless of who caused it, and in exchange the law takes away much of the right to sue over auto accidents. This page covers who must insure, what the policy must contain, what personal protection insurance pays, the choices a client makes about it, and which insurer pays. The next page covers property protection, residual liability and the limits on lawsuits.
Who Must Insure
Apart from the PIP medical choices described below, the owner or registrant of a motor vehicle required to be registered in Michigan must maintain security for personal protection insurance (PIP), property protection insurance (PPI) and residual liability insurance (MCL 500.3101(1)).
Security is only required while the vehicle is driven or moved on a highway (MCL 500.3101(1)). A client storing a car for the winter can have the insurer delete coverage and keep the comprehensive portion, and the insurer must send documentary evidence of the deletion (MCL 500.3101(2), 500.3009(4)). Remind that client that coverage must be back in place before the car returns to the road.
Security usually means a policy from an authorized insurer (MCL 500.3101(4)), though the Secretary of State may approve an equivalent method (MCL 500.3101(5)). A person with more than 25 registered motor vehicles may instead qualify as a self-insurer by certificate from the Director (MCL 500.3101d(1)). The insurer gives the insured a certificate of insurance for each vehicle (MCL 500.3101a(1)). The vehicle identification number an insurer sends the Secretary of State is proof of insurance for registration purposes only, and isn’t evidence that a policy actually exists (MCL 500.3101a(4)). Supplying false information to the Secretary of State under that section, or issuing or using an altered, fraudulent or counterfeit certificate, is a misdemeanor punishable by up to 1 year of imprisonment, a fine of up to $1,000, or both (MCL 500.3101a(5)).
A nonresident’s vehicle not registered in Michigan needs security if operated here for an aggregate of more than 30 days in a calendar year (MCL 500.3102(1)).
An owner or registrant who drives, or lets someone drive, without required security is guilty of a misdemeanor, and so is a driver who knows the security isn’t in effect. The penalty is a fine of $200 to $500, imprisonment for up to 1 year, or both (MCL 500.3102(2)). In a prosecution under subsection (2), failing to produce evidence that security was in effect on the date the citation was issued creates a rebuttable presumption that it wasn’t in effect on that date (MCL 500.3102(3)).
Motorcycles
A motorcycle isn’t a motor vehicle under chapter 31, so PIP isn’t required on it. Its owner or registrant must instead carry liability security (MCL 500.3103(1)). An insurer that covers the motorcycle must also offer first-party medical benefits in increments of $5,000 (MCL 500.3103(2)).
The Required Coverages
Every automobile insurance policy offered in Michigan must include all three coverages, apart from the PIP medical choices described below (MCL 500.3101(2)).
| Coverage | What it pays | Who receives it |
|---|---|---|
| Personal protection (PIP) | Medical and related expenses, work loss, replacement services and survivors’ loss | The injured person or dependents, regardless of fault |
| Property protection (PPI) | Damage to tangible property such as buildings and properly parked cars, in Michigan | The property owner, regardless of fault |
| Residual liability | Legal liability for bodily injury and property damage that remains after no-fault limits on lawsuits | The injured third party, on the insured’s behalf |
Two optional exclusions can reach all three. An insurer may exclude all coverage on a personal vehicle while a transportation network company driver is logged on or providing a prearranged ride (MCL 500.3101(6), 500.3017(1)). It may also exclude all coverage on a shared vehicle during a peer-to-peer car sharing period (MCL 500.3018(1)). If your client drives for a ride-hailing service or lists a car on a sharing platform, read the policy and raise the exclusion before a loss. The owner or operator of a vehicle excluded this way isn’t entitled to PIP for that accident (MCL 500.3113(e)).
What Personal Protection Insurance Pays
PIP pays benefits for accidental bodily injury arising out of the ownership, operation, maintenance or use of a motor vehicle as a motor vehicle, without regard to fault (MCL 500.3105(1), (2)). Bodily injury includes death and damage to or loss of prosthetic devices (MCL 500.3105(3)). An injury is accidental unless the injured person suffered it intentionally or the claimant caused it intentionally (MCL 500.3105(4)).
A parked vehicle generally isn’t being used as a motor vehicle. PIP still applies if the vehicle was parked so as to cause unreasonable risk of the injury, if the injury came from direct contact with permanently mounted equipment in use or with property being loaded or unloaded, or if the person was occupying, entering or alighting from the vehicle (MCL 500.3106(1)). A worker hurt on the job while loading, unloading, repairing, entering or leaving a parked vehicle generally doesn’t get PIP if workers’ compensation benefits are available (MCL 500.3106(2)).
PIP has four benefits:
| Benefit | What it covers | Limits |
|---|---|---|
| Allowable expenses | Reasonable charges for reasonably necessary products, services and accommodations for care, recovery or rehabilitation (MCL 500.3107(1)(a)) | The level selected under MCL 500.3107c; funeral and burial as stated in the policy, from $1,750 to $5,000 |
| Work loss | Income the person would have earned in the first 3 years after the accident (MCL 500.3107(1)(b)) | Reduced 15% for the tax advantage unless the claimant proves a lower value; a 30-day maximum adjusted annually |
| Replacement services | Ordinary and necessary services the person would have performed in the first 3 years (MCL 500.3107(1)(c)) | $20 per day |
| Survivors’ loss | Contributions dependents would have received, plus replacement services (MCL 500.3108(1)) | $20 per day for services; a 30-day maximum adjusted annually; the first 3 years |
A hospital room above a reasonable and customary semiprivate charge isn’t an allowable expense unless the person needs special or intensive care (MCL 500.3107(1)(a)(i)). Work loss for a temporarily unemployed person is based on earned income for the last month employed full time before the accident (MCL 500.3107a). A person 60 or older who wouldn’t be eligible for work loss may sign a waiver, which reduces the premium and applies only to the person who signs (MCL 500.3107(2)(a)). An insurer isn’t required to cover the medical use of marihuana (MCL 500.3107(2)(b)). A spouse living with the deceased, and a child under 18 or unable to earn who lived with or was regularly supported by the deceased parent, are conclusively presumed dependents (MCL 500.3110(1)).
Two provisions limit what providers receive, and clients with serious injuries will ask about them. Most providers can receive no more than 190% of the amount Medicare would pay for the treatment, with higher percentages for certain facilities such as trauma centers treating emergencies (MCL 500.3157(2)(c), (3), (6)). For attendant care in the injured person’s home, provided directly or through another person by a relative, a member of the household or someone with a prior business or social relationship with the person, an insurer need only pay up to the workers’ compensation hourly limit, which is 56 hours per week (MCL 500.3157(10), 418.315(1)). An insurer may contract to pay more (MCL 500.3157(11)).
Choosing a Coverage Level
For a policy issued or renewed after July 1, 2020, the applicant or named insured selects one level for allowable expenses (MCL 500.3107c(1)). The choice doesn’t change work loss, replacement services or survivors’ loss.
| Level | Who may select it |
|---|---|
| $50,000 per individual per loss occurrence | An applicant or named insured enrolled in Medicaid, whose spouse and resident relatives each have qualified health coverage, Medicaid or auto PIP medical coverage (MCL 500.3107c(1)(a)) |
| $250,000 per individual per loss occurrence | Anyone (MCL 500.3107c(1)(b)) |
| $500,000 per individual per loss occurrence | Anyone (MCL 500.3107c(1)(c)) |
| No limit | Anyone (MCL 500.3107c(1)(d)) |
The selection is made on a form approved by the Director. It must state conspicuously the benefits and risks of each option, let the person mark that they’ve read and understood it, record the choice and be signed (MCL 500.3107c(2)).
The form reaches the client by personal delivery, first-class mail or electronic means (MCL 500.3107e(1)). The client may mark and sign a paper form, mark it and sign electronically, or give verbal instructions, in person or by phone, that the form be marked and signed. Verbal instructions count only if they are recorded and the person who received them keeps the recording. In a dispute over a verbal selection, it is presumed ineffective, and the insurer must rebut that with the recording (MCL 500.3107e(2)). If a client gives you verbal instructions, record them and keep the recording.
If no effective selection was made but a premium was paid, there is a rebuttable presumption that the premium paid reflects the coverage level. If that presumption doesn’t apply, the policy has no limit (MCL 500.3107c(3), (4)).
The level binds more people than the signer. It applies to the named insured, the spouse, a relative of either domiciled in the household, and anyone else with a right to claim under the policy (MCL 500.3107c(5)). Limits don’t stack: if two policies apply, benefits are payable only up to the highest limit under any one of them (MCL 500.3107c(6)). For any limited policy, the insurer must offer a rider covering attendant care above the limit (MCL 500.3107c(8)). A transportation network company insuring its vehicle can’t select the $50,000 level (MCL 500.3107c(7)).
Qualified Health Coverage
Three choices depend on this term: the $50,000 level, the opt-out and the $250,000 exclusion. Qualified health coverage means either coverage under Medicare parts A and B, or other health or accident coverage that doesn’t exclude or limit injuries from motor vehicle accidents and has an annual deductible per individual at or below an amount the Director adjusts (MCL 500.3107d(7)(b)).
Opting Out
An applicant or named insured who has both Medicare parts A and B may elect not to maintain PIP coverage for allowable expenses. The spouse and resident relatives must each have qualified health coverage or PIP medical coverage from an auto insurer (MCL 500.3107d(1)). The client must give the insurer a document from the coverage provider naming everyone covered (MCL 500.3107d(2)).
The election is made on its own Director-approved form, delivered and completed in the ways described above (MCL 500.3107d(1), 500.3107e). The form has the person certify whether everyone required is covered, and it must disclose that qualified persons may still buy the coverage, state the coverage levels and the risks of going without, and warn of the 30-day rule below. It is marked and signed (MCL 500.3107d(3)).
No effective election means the policy has no limit (MCL 500.3107d(4)). The election binds the same group of people as a coverage level (MCL 500.3107d(5)).
The $250,000 Exclusion
When a client selects the $250,000 level, the insurer must offer an exclusion related to qualified health coverage. Subject to the 30-day rule below, a person subject to it isn’t eligible for PIP benefits under the policy (MCL 500.3109a(2)(c)). If the named insured has such coverage other than Medicare, the spouse and resident relatives have qualified health coverage, and all of it covers auto injuries, the premium for allowable expense coverage is reduced by 100% (MCL 500.3109a(2)(a)). If only some household members have it, the insurer must offer a reduced premium that reflects the anticipated savings. That reduction comes on top of the one MCL 500.2111f requires, and the share of it attributable to a person with the coverage must be 100% (MCL 500.3109a(2)(b)).
Deductibles and Other Benefits
An insurer may offer a PIP deductible at reduced rates (MCL 500.3109(3)), and may offer deductibles and exclusions reasonably related to the insured’s other health and accident coverage (MCL 500.3109a(1)). These apply only to the named person, the spouse and resident relatives. They need the Director’s prior approval when they relate to other coverage, and the premium reduction must appear in the declarations (MCL 500.3109a(1), (4)).
Whatever the client selects, benefits provided or required under state or federal law are subtracted from PIP (MCL 500.3109(1)).
Who Can’t Collect PIP
A person isn’t entitled to PIP if, at the time of the accident, any of these applied (MCL 500.3113):
- The person was willingly using a vehicle taken unlawfully and knew or should have known it
- The person was the owner or registrant of a vehicle involved in the accident and the required security wasn’t in effect
- The person wasn’t a Michigan resident, unless the person owned a vehicle registered and insured in Michigan
- The person was operating a vehicle as a named excluded operator
- The person was the owner or operator of a vehicle under a transportation network or car sharing exclusion
The second item is the costliest for clients who let coverage lapse. An owner hurt in their own uninsured car has no PIP from any policy, and a person disqualified this way is also shut out of the assigned claims plan (MCL 500.3173).
A related rule protects insurers. For an accident in Michigan, an authorized insurer doesn’t have to pay PIP or PPI for an out-of-state resident it insures under a liability policy, unless that person owns a vehicle registered and insured in Michigan (MCL 500.3163).
Which Insurer Pays
The general rule follows the injured person’s own coverage, not the car the person was in. A PIP policy applies to the person named in it, the spouse and a relative of either domiciled in the same household. If the person’s own policy and a relative’s policy both apply, the injured person’s own insurer pays all benefits up to its coverage level, with no recoupment from the other insurer (MCL 500.3114(1)).
Three situations come ahead of that rule:
- Passenger transport. An operator or passenger of a vehicle operated in the business of transporting passengers claims from that vehicle’s insurer. Passengers on school buses, certain other buses, taxicabs and transportation network vehicles, among others, are excepted unless they have no other PIP (MCL 500.3114(2)).
- Employer vehicle. An employee, spouse or resident relative hurt while occupying a vehicle owned or registered by the employer claims from the insurer of that vehicle (MCL 500.3114(3)).
- Motorcycle accidents. An operator or passenger of a motorcycle hurt in an accident involving a motor vehicle follows the order of priority described below (MCL 500.3114(5)).
Without one of the first two, and without a policy under the general rule, an occupant claims through the assigned claims plan (MCL 500.3114(4)). So does a pedestrian or cyclist with no such policy (MCL 500.3115). The occupant route doesn’t apply to a person insured under an opt-out or excluded policy (MCL 500.3114(4)).
Nadia, 17, lives with her parents, who have a Michigan auto policy, and she is hurt riding in a friend’s car. Her parents’ insurer pays, because she is a resident relative. Now take Jonah, who has no auto policy and lives alone. If he is hurt riding in that same car, or is hit crossing the street, he doesn’t claim against the driver’s insurer. He goes to the assigned claims plan.
Motorcycle accidents have their own order. A motorcyclist hurt in an accident involving a motor vehicle claims first from the insurer of the motor vehicle’s owner or registrant, then the insurer of its operator, then the motor vehicle insurer of the motorcycle’s operator, then the motor vehicle insurer of the motorcycle’s owner or registrant (MCL 500.3114(5)). A policy with an opt-out or a $250,000 exclusion is skipped in that order (MCL 500.3114(6)).
PIP also follows the insured out of state. Benefits are payable for an accident in the United States, its territories and possessions, or Canada if the injured person was a named insured, spouse or resident relative, among others (MCL 500.3111).
Lesson summary
- Apart from the PIP medical choices, the owner or registrant of a Michigan motor vehicle must maintain PIP, PPI and residual liability security while the vehicle is driven or moved on a highway.
- A motorcycle needs liability security only, and the insurer must offer first-party medical benefits.
- PIP pays allowable expenses, work loss, replacement services and survivors’ loss without regard to fault.
- The applicant or named insured selects a limit of $50,000 (Medicaid enrollees who meet its conditions only), $250,000 or $500,000, or no limit, on an approved form, and the limit applies only to allowable expenses.
- If no effective selection exists and no premium presumption applies, the policy has no limit, and a verbal selection counts only if recorded.
- An opt-out requires Medicare parts A and B for the applicant or named insured, and qualified health coverage or PIP medical coverage for the spouse and resident relatives.
- Losing qualified health coverage starts a 30-day period to obtain the coverage opted out of or excluded.
- PIP is generally claimed from the person’s own or household policy; occupants and pedestrians with neither go to the assigned claims plan.