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Michigan Auto Insurance Basics

The scope of and the functions of the different forms of insurance available to a motorist can be confusing. In order to select what forms of coverage you need, you should be familiar with Michigan's state requirements for automobile insurance. In this case, Michigan requires a motorist to maintain minimum Bodily Injury Liability limits of $20,000 per injured person up to a total of $40,000 per accident, and Property Damage Liability coverage with a minimum limit of $10,000 . These are referred to as the 20/40/10 insurance limits for the state. After understanding these, you should take stock of your own assets in order to determine if you need additional monetary amounts of coverage. Before you can take any of these steps, you must have thorough understanding of how the available forms of coverage can work for you.

Michigan is a state that follows a no fault system when it comes to dealing with automobile collisions. This means that in the event of an accident, there is no one party deemed at fault. Each driver shares an equal amount of blame. Each motorist and their insurance company are financially responsible for the medical expenses and property damage repair costs that they incur. Under the tenements of this system, a motorist will be required to maintain personal injury protection insurance and property protection insurance in addition to liability insurance. The primary components of automobile insurance are separated into different sub sections of liability insurance and personal injury protection insurance.

The monetary amounts of coverage you are required to maintain vary among states. However, you should be concerned with educating yourself about Michigan's requirements. It should be noted that if you opt to purchase only the required monetary amounts of insurance and they do not suffice to meet the financial responsibilities incurred in an accident, you will be held legally responsible for the remainder of the balance. Therefore, you may want to purchase additional amounts of coverage to protect yourself from a lot of out of pocket expenses later on.

There are six common types of insurance that most motorists are required to maintain today. Liability insurance is the most common form. This form of coverage is divided into two sections: bodily injury liability and property damage liability. With the bodily portion of the coverage, you are assisted in paying for the medical expenses or funeral expenses that other motorists may incur in the accident. The claims that are allowed under this form of coverage include claims of pain and suffering, medical expenses, and losses of income. The monetary amount that your insurance company will put towards these bills is specified in the maximums of your policy. The scenarios it will cover are specified in the terms and conditions of the policy as well. This form of insurance is limited to covering bodily injury, not damage to a vehicle. In addition, this form of coverage will only pay for other parties' medical expenses, not your own. You will also want to ensure that you have enough coverage to pay for any monetary judgments that may be rendered against you in court. Therefore, it is wise to keep the same amount of liability coverage on all of your vehicles. The rules of a no fault policy are designed to discourage motorists from suing one another in court. However, if the financial losses incurred in an accident are severe enough, an exception may be granted.

The secondary portion of liability insurance (property damage protection) works in a similar manner as bodily injury liability. It assists the motorist in paying for the repairs costs to another motorist's vehicle. However, the claims that can be filed under this form of insurance are not limited to vehicles only. They can include claims of damage to a house, a fence, a mailbox, or even the family dog. It is important to take into consideration whether your monetary coverage limits that you will want to purchase are enough insurance to cover the amount of damage your car could potentially cause another vehicle.

Personal injury protection insurance (or PIP) assists in covering you and your passengers, within the specified limits of your policy, for any medical expenses or funeral expenses you may incur in an automobile accident. This form of coverage is not partial to fault in the accident. It is generally only available in states that operate under the no fault system. Minus your deductible, the insurance will pay up to 80% of your medical costs and 60% of your lost wages. Because most motorists in Michigan are covered by comprehensive health insurance policies, they do not elect to purchase more than the required amounts of insurance. In Michigan, a motorist must maintain to separate sub sections of general personal injury protection: Medpay and Work Losses.

Medpay, or medical payments, will cover the medical bills that you or your passengers receive from an accident. According to the specifics of your policy, you may also be covered if you are struck by another vehicle while you are walking on foot. Again, this form of coverage is not affected by who may or may not be at fault in the accident. This form of insurance applies to you, your passengers, and your listed family members who may be traveling in your or someone else's vehicle. Similarly, Work Loss, which is also referred to as Optional Basic Economical Loss, assists you and the other motorists listed on your policy by paying for lost wages if you are unable to work due to an automobile collision.

If you own a newly financed car or any vehicle with an outstanding loan on it, you will be required by law in Michigan to maintain collision insurance. Minus your deductible, collision insurance will pay to repair you car in the event of an accident. The amount of money that your insurance company will provide towards fixing your car will not exceed the maximums listed on your policy or the current market value of the vehicle, whichever comes first. Comprehensive insurance is an optional form of coverage that acts as a supplement to collision insurance. This form of coverage will pay to repair your car in the event that your car is damaged by a crime (i.e. theft) or an act of nature (i.e. a tornado or earthquake).

Another optional but popular form of coverage this is available to motorists is uninsured motorist protection. This is not required by law in Michigan, but it is highly encouraged by Michigan's Department of Insurance. This form of insurance provides protection in the event that you are struck by a motorist who is uninsured or underinsured.

Since you now have a brief overview of how each form of coverage works for you, you will be able to understand the benefits of each form of coverage. By taking stock of your assets, you will be able to surmise which forms of coverage will be necessary to protect your vehicles. You do not want to purchase unnecessary forms of coverage. For example, an older vehicle may not need collision coverage. Because a car depreciates in value over time, it may not be the most financially feasible decision. However, the choices of what coverage you would like to purchase are entirely at your discretion. A thorough education will get you started in the right direction.

 

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