Michigan car insurance policies can be confusing. The declaration page that accompanies the policy can be equally confusing. Each policyholder who purchases Michigan car insurance receives both an insurance policy and a declaration page. Understanding what a declaration page means is important because it describes the financial protections and coverage you have purchased with your policy.
This article explains the contents found in a declaration page and what they mean.
Address and Policy Period:
At the top of most declaration pages on a car insurance policy is the name of the policyholder(s), or “named insured”, as well as the address of the named insured. The named insured refers to the person entitled to coverage under the policy. However, it is important to note that family members and other individuals may also be entitled to coverage and protection under the policy even though they are not a named insured.
It is very important to ensure the address listed on the insurance policy is accurate because car insurance companies base the price of insurance in part on the location of where a covered motor vehicle is “garaged”, or located. If the address on the policy is different than the actual location of the insured vehicles, the insurance company can deny payment at a later date if a car accident occurs.
In fact, this act of rescinding car insurance policies – or refusing to pay insurance claims based on inaccurate address – is becoming a more popular tactic by Michigan car insurance companies to deny payment of claims.
Near the address of the insured, the policy period for the insurance will also be listed. Many policy periods in Michigan are six (6) months. The policy number is also included near the policy period, as well as the name and address of the insurance agent who sold the insurance policy.
After the address of the named insured(s) and the policy period information, a list of the motor vehicles covered by the policy is usually found next. The make, model and year of the car is listed, as well as the VIN. Sometimes an estimated value of the car is included as well as the number of drivers for the particular car.
Check to make sure the vehicles you want listed are included in this section. If a vehicle is not included, then it won’t be covered if a car accident occurs.
In addition, excluded drivers for a particular vehicle will be listed in this section. Excluded drivers, or drivers not permitted to drive a car, is an important detail because if an excluded driver is listed on a policy and that specific driver is injured while operated a vehicle he or she is excluded from driving, that person is not eligible for Michigan no-fault benefits under MCL 500.3113.
Liability Coverages and Premiums:
The next section is probably the most important because it lists the actual coverages the insurance policy provides. The entire point of purchasing auto insurance is to provide coverage, or financial protection, in case an accident or loss occurs.
Usually, the first coverage listed refers to “Bodily Injury” or BI coverage. Bodily injury coverage is the amount of money your car insurance company is obligated to pay to another person if you cause a car crash that results in personal injury. Most BI coverage has a single limit for each person and then a limit “per occurrence” or per crash. For example, if the coverage is 20/40, this means the most the car insurance carrier must pay each person for personal injury is $20,000 and the most it must pay for the entire crash is $40,000.
The state minimum an insurance carrier must offer in BI coverage in Michigan is $20,000. This minimum amount has not changed in decades. Because $20,000 certainty does not get you what it used to, I would recommend that every policyholder purchase more Bodily Injury coverage than the state minimum.
After the Bodily Injury (BI) coverage, the next coverage typically listed is the uninsured and/or underinsured motorist benefit. This coverage is not mandatory, so not everybody will see it listed on their declaration page. Uninsured motorist (UM) coverage is money paid by your own insurance company for pain and suffering from a car accident caused by an uninsured vehicle.
Underinsured motorist (UIM) coverage refers to money your own car insurance company will pay for pain and suffering due to a car accident caused by a vehicle whose bodily injury (BI) limit is less than what the personal injuries are worth.
Because of the large number of Michigan drivers operating cars and trucks on our state roadways without car insurance or just the $20,000 state minimum, I would highly recommended everybody purchases UM and UIM coverage. Furthermore, it is inexpensive. Often for less than $30.00, you can usually buy lots of UM/UIM coverage.
Property damage or residual property damage refers to the amount of money your insurance carrier will pay for property damage caused to property or buildings due to a car accident. This coverage does not include damage caused to other motor vehicles.
Personal Injury Protection:
Personal injury protection (PIP) refers to the generous no-fault benefits each person is entitled to receive if they are involved in a motor vehicle accident. All Michigan policies automatically include PIP coverage. This coverage provides wage loss benefits and the payment of all medical expenses not covered by health insurance that is related to car accident treatment. It also includes payment to family members for providing assistance, medical mileage, reimbursement for prescriptions and other benefits.
Most PIP coverage includes a deductible. The deductible amount will be listed in this section. In addition, whether medical and wage loss is primary (full) or excess will also be found here. If medical or wage loss is primary, this means your auto insurance is primary for the payment of medical expenses and wage loss. This is called uncoordinated coverage.
Uncoordinated coverage makes payment easier to your doctor and hospital, which will in turn make it more likely they will continue to treat you. In addition, you are not bound or restricted by the coverages afforded by your health plan. For example, if your health plan is an HMO, you must follow the guidelines of the HMO. But if auto is primary, you can see any doctor you want, even if they are out-of-network from your health insurance HMO plan.
Primary or full coverage for wage loss is beneficial because you don’t have to wait for short-term disability (STD) or long-term disability (LTD) to kick in before the auto insurance starts paying wage loss.
Physical Damage Coverage:
This section describes the coverage you have for any physical damage that occurs to your listed vehicles. The most important coverage in this section is whether collision coverage is listed or not. If collision coverage is listed, then it has been purchased. Collision coverage is important because this means your car insurance company will pay for any car damage that occurs to your own car due to a car wreck.
If you don’t have collision coverage, then your own car insurance carrier does not have to pay for auto collision damage. This is important because if another person causes an accident, the most that person must pay for the physical damage to the car he or she caused is $1,000. That’s the most the at-fault vehicle has to pay for the auto damage he caused. This is called mini-tort.
PLPD, or Public Liability and Property Damage, refers to the minimum state required liability limits of auto insurance on a vehicle. In Michigan it is $20,000. This coverage offers third party coverage for bodily injury but offers no coverage for vehicle damage if you are in an accident. If you only have PLPD, and no other coverages like collision or comprehensive, then insurance will not pay for the vehicle damage to your car.
Programs Required by State Law:
Under Michigan law, each policyholder must pay a MCCA assessment. The MCCA refers to the Michigan Catastrophic Claims Association, which is the association that pays for catastrophic claims for individuals seriously injured in a car or truck accident who require medical care that exceeds a certain amount. The state of Michigan changes the MCCA assessment each year and it is the same for everybody.
I hope you found this article helpful. Although there are other potential coverages available to Michigan car policyholders, this list includes the main ones. Should you have any questions following a Michigan car accident, please contact us toll free at 1-800-LEE-FREE (1-800-533-3733). One of our representatives is standing by to answer your questions.