I often get complaints from my clients about the way vehicle damage is handled in Michigan. I couldn’t agree more. Basically, because Michigan is a no-fault state, you are responsible for insuring your own vehicle for collision damage. So even if another person is more than 50% responsible for causing an accident, it is up to you to insure your own vehicle so the damage paid for by an insurance company.
In fact, the most you can typically get from the at-fault person’s insurance company for your vehicle’s damage is $500. This is from the “mini-tort” provision of the Michigan no-fault law.
This small amount can obviously leave a car accident victim very unhappy. As we all know, the repair bills for cars now-a-days are much higher than $500. The $500 amount is a relic of the past, yet we are struck with it in Michigan. What can be done about it? Well, short of a change in the law, the only way is to purchase collision coverage for your own car.
Collision coverage is a voluntary coverage you can purchase from your insurance company. It covers repairs or replacement of your vehicle after an accident. There is usually a deductible that must be paid before your insurance company will pay for the collision damage.
There are three types of collision coverage: broad, standard and limited.
Broad Collision Coverage – If you are 50% or less responsible for the car accident, your insurance company pays and you don’t pay a deductible. If you are more than 50% at fault, your insurance company still pays for the vehicle damage, but you must pay the deductible.
Standard Collision Coverage – If you are 50% or less responsible for the car accident, your insurance company pays for the vehicle damage, but you must pay the deductible. If you are more than 50% at fault, it’s the same – your insurance company pays everything except the deductible.
Limited Collision Coverage – If you are 50% or less responsible for the car accident, your insurance company pays for everything, but you have to cover the deductible. If you are more than 50% at fault, your insurance company pays for nothing.
Obviously, Limited Collision Coverage is the least expensive form of collision coverage. The risk though is obvious. If you cause the accident, you pay everything.
Collision coverage is a great way to have peace of mind when it comes to vehicle damage in a car accident. Although it can be cost-prohibitive, I highly recommend it if you can afford the coverage.
Just remember, collision coverage usually only covers damage to your vehicle when it strikes another moving vehicle. Damage to your car from vandalism, theft or a weather event like hail is covered by another optional insurance coverage called comprehensive insurance. Comprehensive insurance is a completely separate coverage than collision coverage, and like everything in this world, you must pay for it to get it.
Either way, contact an independent insurance agent or call me if you have questions about collision coverage and other optional forms of insurance coverage.