This is Part 2 in our discussion of what to know when purchasing auto insurance in Michigan. In Part 1, we explored the mandatory coverages under Michigan auto insurance law. This part explores optional auto insurance coverages.
A no-fault policy does not pay to repair or replace your car if is damaged. In addition, the owner of the at-fault vehicle is only required to pay up to $1,000 for vehicle damage he or she has caused. Therefore, if you want your vehicle repaired after a collision, you must purchase collision coverage.
Collision coverage pays to fix or replace your vehicle if its damaged or totaled out in a car accident. Most collision coverage options have a deductible, but a deductible is not required.
Comprehensive insurance is another type of coverage for vehicle damage, but it is different. This optional coverage pays if your car is stolen, strikes an animal, or is damaged due to an act of God (hail, fire, flood). It also covers damage to due to vandalism. Comprehensive insurance also usually has a deductible.
Although collision and comprehensive coverage are optional, most car finance companies will require you to carry this insurance if you financed your vehicle.
There are also two very important types of optional coverage – uninsured motorist and underinsured motorist. Uninsured motorist (UM) compensates you for pain and suffering and excess wage loss if the at-fault vehicle was uninsured. The typical UM claim is a hit-and-run accident. In Michigan, it is estimated that over 20% of drivers are uninsured. Therefore, it is essential you purchase this coverage. It’s usually very inexpensive and well worth the small-added expense.
Underinsured motorist (UIM) coverage compensates you if are injured in a car accident and the person who caused the accident has coverage that is less than what your injuries are worth. In this scenario, your own insurance company steps in and pays the difference.
For example, if you are hit by a person who only has the state minimum $20,000 in bodily injury coverage, but your injuries are worth $100,000, if you have UIM coverage of $100,000 you can obtain an additional $80,000 ($100,000 – $20,000) in compensation for your injuries.
Both uninsured motorist and underinsured motorist coverage are creatures of contract. This means the insurance policy controls how and when each type of coverage kicks in.
Many car insurance carriers have specific notice provisions and tricky exceptions. State Farm Insurance and Farm Bureau Insurance are notorious for denying coverage for uninsured and underinsured motorist coverage to their own policyholders by hiding behind the strict parameters of their own insurance policies.
It is essential you read your insurance policy carefully or call a lawyer to get further information.
Another important optional insurance coverage is Limited Property Damage Liability Insurance, or mini-tort. Under Michigan law, if you are 50% or more at-fault for causing a car accident, you can be sued for up to $1,000 in damages to another person’s vehicle that is not covered by collision coverage. To guard against a lawsuit, most car owners purchase “mini-tort” coverage. It is very inexpensive.
This was a brief synopsis of the various optional car insurance coverages out there. We hope you found this article useful.
The Lee Steinberg Law Firm, P.C. has been handling Michigan car wrecks for over 40 years. We have recovered tens of millions of dollars for our clients. Call our experienced and hard working team of Michigan car accident attorneys with any questions you have.
Please call us at 1-800-LEE-FREE (1-800-533-3733).