Michigan is a no-fault state for car insurance purposes, which means that people who have been injured in a car accident receive compensation from their own insurance company instead of suing the other driver for damages. This system of dealing with injury claims was adopted to make the process more streamlined and to resolve them more quickly.
Simply because Michigan has adopted a no-fault system for car insurance, it doesn’t mean that all claims for damages are settled outside of the judicial system. If a claim for damages is serious enough to meet the threshold set by the state, the injured person has the right to sue for damages. As a result, all vehicles in the state must have liability coverage.
Bodily injury liability insurance pays for medical bills and lost wages incurred by an injured person in the other vehicle. It also pays for funeral expenses when a fatality results from the incident. Another form of liability coverage, property damage liability insurance, pays for the cost of repairing the injured person’s vehicle.
All drivers are required to have Personal Injury Protection (PIP) coverage in place as well. This pays for medical expenses and lost wages for the occupants of a driver’s own vehicle. A person who has a good level of coverage from his or her own health insurance plan may choose to buy only the minimum level of PIP required by law.