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Understanding Auto Insurance

Michigan’s auto insurance system is one of a kind. Michigan drivers enjoy unparalleled benefits,
but also pay some of the highest rates in the nation. While Michigan’s No-Fault system offers
generous benefits after an accident, it can be complex, expensive, and difficult to understand at times.

We can help you learn more about No-Fault auto insurance in the following pages:

What No-Fault Insurance Means

When a car accident occurs, who pays?

If you are in a car accident, your auto insurance provider pays for your insured costs, no matter who is at fault. The general intent of No-Fault insurance is to provide prompt and certain payment for accident victims rather than going to court to determine who caused the accident and who should compensate the victim for their injuries.

Mandatory coverage in Michigan

Michigan’s No-Fault system remains the broadest form of protection of any auto insurance system in the country, and Michigan law requires that all motor vehicle owners carry No-Fault insurance. This unique mandatory coverage includes:

Personal Injury Protection

Michigan requires the purchase of unlimited Personal Injury Protection (PIP), providing for unlimited lifetime medical benefits regardless of fault.

Residual Bodily
Injury

Residual Bodily Injury provides coverage for injuries caused to another person or persons for whom you are liable.

Property Damage Liability

Property Damage Liability covers damages to property that you cause with your vehicle outside of Michigan.

Property Protection Insurance

Property Protection Insurance pays for damage your car does to another person’s property or parked car in Michigan.


Learn more about Michigan’s required auto insurance coverage

Optional Physical Damage Coverage

Collision and comprehensive coverage protects your vehicle up to its market value in case of an accident or other risks, such as animal strikes, fire, theft, vandalism, flood, hail, and wind. Generally, there are multiple types of coverage and deductibles for this protection.

How Michigan Operates Differently Than Other States

Michigan is a No-Fault state

No-Fault is a form of insurance where individuals who are injured in an auto-related accident receive benefits from their own auto insurer regardless of who is at fault. Most states require an injured person to seek recovery from an at-fault driver, while Michigan auto insurance provides prompt payment for injured parties by allowing those parties to recover directly from their own insurance company.

Michigan provides unlimited, lifetime benefits

For individuals injured in auto accidents, Michigan provides unlimited, lifetime medical benefits. No other state provides unlimited benefits.

Learn how we can work together to strengthen Michigan’s insurance system

One way to lower your auto insurance premium is to let AAA help you optimize your coverage based on your specific needs.

Insurance underwritten by one of the following companies: Auto Club Insurance Association, MemberSelect Insurance Company, Auto Club Group Insurance Company, Auto Club Property and Casualty Insurance Company, AAA Insurance Company, Auto Club Insurance Company of Florida, and non-affiliated insurance companies.

How AAA Can Help

AAA is dedicated to putting our members and insurance customers first.

Our legacy of advocating for drivers

For more than 100 years, we’ve been advocating for America’s drivers in numerous ways, from sponsoring bills to improve roads in the early 1900s to making grants to communities for lifesaving equipment such as the Jaws of Life.

Insurance that does more: Accident Assist®

If you’re involved in an accident and have comprehensive and collision coverage, one call to AAA takes care of every step of the process, including dispatching roadside assistance, scheduling your repairs, and reserving a rental vehicle. That’s just one more way we go above and beyond for our insurance customers.

Learn more about Accident Assist®

Maximizing your savings with Triple Check

AAA Triple Check is a quick, three-step review of your current auto insurance policy with your agent to check for any life changes or discounts. Triple Check can help you maximize your savings.

Learn more about Triple Check

Controlling costs by identifying fraud

AAA is committed to identifying and addressing all types of fraud in an effort to reduce costs. Our agents are trained to recognize questionable behaviors, responses, and motives. Sometimes, customers can be an unwitting party to fraud. If you suspect fraud, you can report it online or email us at ClaimFraud@AAAMichigan.com.

Learn more about how you can alert AAA to fraud online

We’re doing our part to reduce insurance costs in Michigan – but there are things you can do as well. Read on to learn how you can maximize your savings and benefits.

Insurance underwritten by one of the following companies: Auto Club Insurance Association, MemberSelect Insurance Company, Auto Club Group Insurance Company, Auto Club Property and Casualty Insurance Company, AAA Insurance Company, Auto Club Insurance Company of Florida, and non-affiliated insurance companies.

What You Can Do

There are simple steps you can take to optimize your coverage and your costs. Read on
for advice and tips on how to manage your auto insurance effectively.

How can I optimize my coverage?

Understand your risks and needs

Every driver is different; what you need from your auto insurance policy may be different than what your neighbor requires. It’s important to talk to your AAA agent to properly weigh all of the factors that affect the policy you buy.


And if you make any major life changes, give us a call. Moving, a change in marital status, or a child leaving the household – these are all opportunities to reevaluate your coverage to see if we can potentially save you even more on your insurance.

Making your policies work together

If you have health insurance, you may be eligible for a Coordinated auto insurance policy that is less expensive than a traditional auto insurance policy. This means that if you’re injured in an accident, your health insurance will pay first, instead of your auto insurance.

What affects my rates?

Vehicle type, vehicle use

The safety record and overall value of the car you drive can impact your rates. For more affordable insurance, think safety first. The safety technology on your vehicle can keep your insurance costs down – for example, rear-view cameras or automatic braking systems can significantly improve your chances of avoiding an accident.

Driving behavior and record

Your driving record is one of the most important influences on your insurance costs. Drive responsibly and defensively to avoid accidents and violations.

Credit history

Your credit history also impacts your rate because insurance companies use Insurance Scores that are based on credit history. Insurance Scores are highly predictive of future claims experience. Maintain a good credit history to keep the cost of your insurance down.

Additional factors

Other factors that affect your premiums include how and where you garage your car, how much you drive, as well as your claiming behavior. AAA insurance agents can help you understand these insurance rating factors and more.

What do I do in case of an accident?

Anytime you are in an automobile accident, your safety is the most important consideration. Pull over to a safe area immediately. If anyone is injured, call 911. Then, call us to report the accident and arrange for assistance. Capture accurate information of the accident, including photos with your smartphone if you have one. Write down what happened and names, addresses, and phone numbers of those involved. Get names of any witnesses and be alert to fraud schemes.


AAA recommends that you never provide your personal information to anyone other than the other driver, police, and ambulance attendants. If someone else contacts you at the scene or hospital to ask you about potential injuries, contact your insurance agent immediately. Never provide information to anyone showing up at your home or calling you, unless you are aware of his or her identity.

Michigan’s unique No-Fault benefits also affect your cost. Find out how we can work together to make auto insurance in Michigan more affordable while preserving benefits.

Insurance underwritten by one of the following companies: Auto Club Insurance Association, MemberSelect Insurance Company, Auto Club Group Insurance Company, Auto Club Property and Casualty Insurance Company, AAA Insurance Company, Auto Club Insurance Company of Florida, and non-affiliated insurance companies.

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No-Fault Insurance Is Making Driving More Expensive

Michigan drivers are feeling the pinch — especially seniors and new drivers.

Michigan auto insurance rates are forcing drivers off the road

With premiums among the highest in the nation and continuing to go up, a growing number of drivers are not purchasing state-mandated auto insurance. Over one million Michigan drivers are driving uninsured.

Medical costs are driving the increase

On behalf of drivers, auto insurers pay significantly more than health insurers, Medicare, and workers’ compensation insurers pay for the exact same procedures. These high costs result in high auto premiums for drivers.

“I’m a senior citizen. It pains me to give up almost
half of my monthly benefits for my car payment and insurance.”

– E. Thomas, Native Detroiter

No-Fault Should Change with the Times

The growth of medical costs associated with auto accidents is outpacing drivers’ ability to pay.

Healthcare costs have increased dramatically

The average cost of an auto accident claim with injuries has risen dramatically in Michigan¹ – more than overall medical care inflation² and almost 30 times faster than growth in the average Michigan household income.³

Auto accident victims must be protected

Michigan’s Personal Injury Protection benefits have helped many accident victims. To preserve this care, costs must be managed equitably. A thoughtful new plan could help maintain care while managing costs.

“We make a modest income, so nearly 7% of our income goes to
auto insurance. We have basically cut out everything fun in our lives.”

– P. Hayes, AAA Michigan Member

AAA Supports Action on No-Fault Insurance

AAA is committed to making auto insurance more affordable for more drivers while providing
needed care to those injured in automobile accidents. We believe it is possible if drivers, insurers, the medical
community, and our elected officials work together to solve this societal problem.

Learn more about current legislative proposals.

News About No-Fault Insurance

People are talking about issues regarding Michigan’s No-Fault insurance.
Here’s where you can read related news stories.

Where it costs the most to own a car

By Jim Gorzelany | March 2016 | From Forbes



What to do when you get in a crash with an uninsured driver

By Credit.com | February 2016 | From WXYZ-TV (ABC)

Car insurance injury claims down, cost up

By NerdWallet | October 2015 | From Huffington Post



Our editorial: Legislature should move on
D-Insurance

By The Detroit News Staff | March 2016 | From The Detroit News

What You Can Do to Help

Get involved. Make your voice heard. Here are easy ways to contact your elected officials.

Use the lookup tools below to find your Michigan House and Senate officials.


Find your Representative: http://house.michigan.gov/mhrpublic/

Find your Senator: http://www.senate.michigan.gov/fysbyaddress.html


Your elected officials have the power to solve Michigan’s No-Fault problem. Urge them to take action on this issue.



¹ Average PIP Claim, ISS FastTrack, 2000-2014
² Medical Care Inflation, Bureau of Labor Statistics, U.S. City Average (not seasonally adjusted), 2000-2014
³ Factfinder.census.gov, 1999-2013 (most recent data)



Insurance underwritten by one of the following companies: Auto Club Insurance Association, MemberSelect Insurance Company, Auto Club Group Insurance Company, Auto Club Property and Casualty Insurance Company, AAA Insurance Company, Auto Club Insurance Company of Florida, and non-affiliated insurance companies.

Back to Understanding Auto Insurance

Michigan’s Mandatory Coverage

Personal Injury Protection

Under No-Fault law, individuals who are injured in an auto accident receive unlimited lifetime medical benefits regardless of fault. This benefit is referred to as Personal Injury Protection (PIP). Several other states offer No-Fault insurance, but Michigan is the only state that requires the purchase of unlimited PIP. It can provide prompt payment for a broad range of medical, work loss, and survivor’s claims. This means that if you’re injured in a car crash, your auto insurance company will pay all reasonable and necessary medical treatment associated with the accident for the rest of your life.

Residual Bodily Injury

The minimum Residual Bodily Injury coverage required by Michigan law is $20,000 per person and $40,000 per accident and provides coverage for injuries caused to another person or persons.

Property Damage Liability

The $10,000 minimum Property Damage Liability coverage required provides coverage for damages you cause outside the state of Michigan.

Property Protection Insurance

Property Protection Insurance pays up to $1 million for damage your car does to another person’s property (such as buildings and fences) in Michigan. It will also pay for damage your car does to another vehicle, but only if the vehicle was properly parked. If an accident involves another moving vehicle, the owner of each vehicle must seek recovery from their insurance company under collision coverage.

Back to Understanding Auto Insurance

Insurance underwritten by one of the following companies: Auto Club Insurance Association, MemberSelect Insurance Company, Auto Club Group Insurance Company, Auto Club Property and Casualty Insurance Company, AAA Insurance Company, Auto Club Insurance Company of Florida, and non-affiliated insurance companies.

Back to No-Fault Debate

Current Legislative Activity

The state Legislature is working toward improving auto insurance in Michigan. Check here for the most recent proposals.

Senate Bill 248

The current piece of legislation under consideration is Senate Bill 248 (SB 248). SB 248 was introduced on March 26, 2015, and passed by the Michigan Senate on April 16, 2015. It was reported by the Michigan House Insurance Committee on April 23, 2015, and is currently pending on the floor of the Michigan House.

SB 248 would cap the reimbursement rate that auto insurers pay medical providers for services at 150% of Medicare. With this change, auto insurers will still pay higher rates than health insurers, Medicare, and Workers’ Compensation for the same procedures, but the 150% limit will begin to close the gap between what auto insurers and health insurers pay for the same services. AAA will pass on the savings from this bill to our customers in the form of lower premiums. SB 248 requires a $100 reduction in auto insurance premiums per vehicle for each of the first two years it is in effect.

SB 248 would phase out the Michigan Catastrophic Claims Association (MCCA) and replace it with a new, more transparent association. This new association would assume the liability for and management of medical claims in excess of $545,000 attributable to any insured motor vehicle accident.

In its current form, SB 248 will allow reimbursement for family-provided attendant care services up to 24 hours per day. It would cap the rate for attendant care at $15 per hour. If the injuries require care beyond those limits, a medical exam would provide additional consideration.

A new state fraud authority would be established to help prevent and combat auto insurance fraud.

AAA supports SB 248 as an essential component of insurance reform.

Learn more about SB 248 on the Michigan Legislature’s website

Senate Bill 288 — “D-Insurance”

The Legislature is considering a bill that would provide a lower-cost policy option for residents of communities that have large numbers of uninsured drivers, specifically in Detroit.

Senate Bill 288 (SB 288) offers an alternative to unlimited lifetime medical benefits by introducing an auto insurance option that would provide medical coverage up to $275,000 for an insured person seriously injured in an auto accident.

This plan would provide drivers in the markets that are most affected by high auto insurance premiums with a more affordable alternative to unlimited lifetime medical benefits. AAA supports SB 288 as an important and complementary component of insurance reform.

SB 288 passed out of the Insurance Committee and is being reviewed by all Michigan State Senators.


Learn more about SB 288 on the Michigan Legislature’s website
Learn more about SB 288 on the D-Insurance website

Last updated: May 2016

Back to No-Fault Debate

Insurance underwritten by one of the following companies: Auto Club Insurance Association, MemberSelect Insurance Company, Auto Club Group Insurance Company, Auto Club Property and Casualty Insurance Company, AAA Insurance Company, Auto Club Insurance Company of Florida, and non-affiliated insurance companies.