If you’re new to Michigan you may be aware that the state has a reputation for expensive auto insurance due in part to the state’s “no-fault” auto insurance law. Parsing the legal language about what no-fault auto insurance is and how it affects you as a driver can be challenging. The law itself is actually quite easy to understand when you understand its basic parts.
No-fault auto insurance is a policy that everyone in the state is required to have. In fact, Michigan is one of only 12 states to require no-fault auto insurance for all citizens of the state. In an effort to end runaway lawsuits and clogged court dockets, Michigan passed the no fault auto insurance mandate. This means that when you are involved in an accident, no one is considered at-fault. Usually whoever is at-fault would be stuck footing the bill for repairs and medical bills, but the no-fault auto insurance covers medical expenses, wage loss benefits, replacement services, and the damage you do to other people’s property. This does not pay for repairs to your car.
The policy is broken down into 3 parts: Personal injury protection (PIP), property protection (PPI), and liability insurance. PIP pays medical expenses. PPI pays for any damage done to someone’s property. Liability insurance protects you from being sued in many cases.
The easiest way to understand this insurance is to think about it like comprehensive and collision insurance. Both are optional policy add-ons that cover you in case of natural disasters, theft, or collisions. No-fault auto insurance is the exact same thing, except that it is required by law where the other two are optional.