3.1 Michigan Auto Insurance Requirements
Key Takeaways
- Michigan is a no-fault state where every registered vehicle must carry liability, Personal Injury Protection (PIP), and Property Protection Insurance (PPI)
- The June 2019 No-Fault Reform created six PIP medical choices: unlimited, $500,000, $250,000, $50,000 (Medicare only), and an opt-out for Qualified Health Coverage households
- Minimum bodily injury and property damage liability is 50/100/10, though the policy default rose to 250/500/10 unless the insured selects lower
- The Michigan Catastrophic Claims Association (MCCA) reimburses insurers for PIP medical losses above the retention, which is $675,000 for policies in force July 1, 2025 through June 30, 2027
- Mini-tort lets an injured driver who is 50% or less at fault recover up to $3,000 for uninsured vehicle damage
Michigan's No-Fault Framework
Michigan operates under the Michigan No-Fault Act (MCL 500.3101 et seq.), meaning each driver's own insurer pays the driver's medical and wage-loss claims regardless of who caused the crash. In exchange, the right to sue the at-fault driver is sharply limited. The 2019 No-Fault Reform (Public Acts 21 and 22 of 2019), effective for policies issued or renewed on or after July 2, 2020, ended the old rule that forced everyone to buy unlimited medical and replaced it with tiered choices.
Three coverages are mandatory on every registered vehicle: bodily injury and property damage (BI/PD) liability, Personal Injury Protection (PIP), and Property Protection Insurance (PPI).
Minimum Liability Limits (50/100/10)
| Coverage | Statutory Minimum | Policy Default* |
|---|---|---|
| Bodily injury per person | $50,000 | $250,000 |
| Bodily injury per accident | $100,000 | $500,000 |
| Property damage (out of state) | $10,000 | $10,000 |
*The reform sets the default at 250/500 but lets the named insured drop to 50/100 in writing. Tell candidates: the statutory floor is 50/100/10, expressed as "residual bodily injury liability" because no-fault already covers in-state medical.
PIP Choices After the 2019 Reform
| PIP Option | Medical Cap | Who May Elect |
|---|---|---|
| Unlimited | No dollar cap | Any insured |
| $500,000 | $500,000 | Any insured |
| $250,000 | $250,000 | Any insured |
| $50,000 | $50,000 | Insured on Medicaid; other household members must have Medicare or other Qualified Health Coverage |
| Opt-out (no PIP medical) | $0 | Insured and spouse/resident relatives all have Medicare, or Qualified Health Coverage that pays auto-related injuries |
Exam trap: The $50,000 PIP tier is for a named insured enrolled in Medicaid (not Medicare alone). Full PIP opt-out requires every resident relative to hold Medicare or Qualified Health Coverage. Mixing these up is a classic distractor.
Why the Tiers Matter for a Producer
The PIP election is the single biggest premium driver on a Michigan auto policy, so producers must document the choice carefully. Qualified Health Coverage (QHC) is health insurance that (1) does not exclude or limit coverage for auto-accident injuries and (2) carries a deductible under a set annual threshold that adjusts yearly. Medicare Parts A and B count as QHC for the insured personally, which is why a Medicare household can opt out. A common producer error is letting a customer opt out when a resident spouse lacks QHC — that gap can leave the household paying medical bills out of pocket after a crash.
Always confirm coverage for every resident relative, not just the named insured, before recommending the opt-out or the $50,000 Medicaid tier.
PIP Benefits, PPI, and the MCCA
When PIP medical is elected, the policy still pays the same non-medical benefits regardless of the tier chosen:
- Wage loss — 85% of lost income, paid up to 3 years, subject to a state monthly maximum that adjusts each October.
- Replacement services — up to $20 per day for household chores the injured person can no longer do, for up to 3 years.
- Survivor's loss and funeral benefits to dependents.
- Attendant (in-home) care — family-provided attendant care is now capped at 56 hours per week unless the insurer agrees to more.
Property Protection Insurance (PPI)
| Feature | Detail |
|---|---|
| Limit | $1,000,000 per accident |
| Pays for | Damage your vehicle does to buildings and properly parked vehicles |
| Basis | No-fault — pays regardless of fault |
| Excludes | Damage to other moving vehicles (that is the mini-tort/collision lane) |
Michigan Catastrophic Claims Association (MCCA)
The MCCA is a private nonprofit that reimburses insurers for PIP medical costs above an annually set retention. Insurers handle the claim; the MCCA refunds the excess.
| Policy Period | MCCA Retention |
|---|---|
| July 1, 2023 – June 30, 2025 | $635,000 |
| July 1, 2025 – June 30, 2027 | $675,000 |
Only drivers who keep unlimited PIP are protected by the MCCA. The per-vehicle MCCA assessment for unlimited PIP for July 1, 2026 – June 30, 2027 is $84 ($65 pure premium + $19 deficit recoupment).
Worked example: A driver with unlimited PIP incurs $2,300,000 in lifetime medical care after a 2026 crash. The insurer pays all of it but is reimbursed by the MCCA for everything above the $675,000 retention — about $1,625,000. A driver who chose the $250,000 tier would have stopped at $250,000 with no MCCA backstop, leaving the balance to Medicaid or the patient.
Mini-Tort and Uninsured/Underinsured Motorist
Because no-fault bars most lawsuits, mini-tort is the narrow exception for vehicle damage. A driver 50% or less at fault can recover up to $3,000 (raised from $1,000 effective July 1, 2020) from the at-fault driver for uninsured repair costs or the collision deductible.
Insurers must offer Uninsured/Underinsured Motorist (UM/UIM) coverage, but the insured may reject it in writing — it is not mandatory. Driving without required insurance is a misdemeanor: a first offense carries a fine up to $500, possible jail up to one year, and license/plate consequences.
Rating Rules After the Reform
The 2019 reform also limited certain non-driving rating factors. Insurers may not set rates primarily on sex, marital status, home ownership, education level, occupation, ZIP code as a sole territory proxy, or credit score in the way they once did. Permitted factors still include the driving record (accidents and violations), years of driving experience, annual mileage, vehicle make and safety features, and actuarially supported territory. DIFS reviews auto rate filings and can disapprove rates that are excessive, inadequate, or unfairly discriminatory.
Worked example: A driver rear-ends a properly parked car and damages a storefront. PPI (up to $1,000,000) pays for the parked car and the building, regardless of fault. It does not pay for the at-fault driver's own vehicle or for any moving vehicle struck — those losses go to collision coverage or, for the innocent driver's deductible, to mini-tort. Keeping PPI, mini-tort, and collision in separate mental buckets prevents the most common exam mistake on Michigan property damage.
What are Michigan's statutory minimum auto liability insurance limits?
For policies in force from July 1, 2025 through June 30, 2027, at what dollar amount does the MCCA begin reimbursing an insurer for a catastrophic PIP medical claim?
Under Michigan's mini-tort provision, the most an injured driver who is 50% or less at fault may recover from the at-fault driver for vehicle damage is:
Which entity is protected by the Michigan Catastrophic Claims Association's reimbursement of PIP medical losses above the retention?