Is Out of State Car Insurance Legal in Michigan?
Legally Reviewed and Edited by: Terry Cochran
If you are a tourist to the State of Michigan, passing through or on vacation, a college student, a snowbird, or a commuter, it is a good idea to consult an auto accident attorney at Cochran, Kroll & Associates, P.C. if you have out-of-state car insurance. A new Michigan law passed on June 11, 2019, has spelled out some changes that could have severe consequences for out-of-state drivers not aware of the provisions of the new regulations and requirements.
It is possible that your insurance agent may not be aware of these new changes in Michigan since they are just being implemented. This is a dangerous situation for the innocent driver who has no idea that out-of-state drivers could be treated differently in Michigan than in their state of residence.
What is the Law?
The State of Michigan is a no-fault car insurance state and has been since 1973. Under the no-fault law, every car owner must have certain basic coverage to get a license plate, and no car can be driven without no-fault car insurance.
If there is an accident, no-fault insurance pays for your medical expenses, wage loss benefits, replacement services, and damage you do to another person’s property. It does not matter who caused the accident.
The basic no-fault insurance does not pay for the damages to your car. Other insurance coverage that a driver might want to have are Collision and Comprehensive, Limited Liability Property Insurance, and Towing and Rental Car coverage.
How did the Law Evolve?
In the 1960s, there was a great deal of dissatisfaction with the traditional form of auto insurance coverage. The primary concern was determining who was at fault and who was liable whenever there was an accident. The solution in the 70s was to allow accident victims to recover medical expenses and lost wages from their own insurance companies.
In 1973, Michigan passed the no-fault insurance law that was designed to lower the cost of car insurance and speed up the payment to doctors and hospitals for medical claims. They wanted to eliminate the need for a victim of a car accident to sue the other driver for the cost of medical bills associated with the crash. Unfortunately, this litigation was driving up costs and backlogging the courts.
No-fault auto insurance was a trend in the 1970s with about 19 states instituting this idea with the hope that insurance premiums would go down. Unfortunately, the opposite turned out to be true, and premiums skyrocketed.
The Michigan Supreme Court in 1978, upheld the mandatory law for no-fault insurance but specified that the state must work to maintain lower rates for consumers and keep the rates “fair and equitable.” The state then passed laws that placed a cap on the cost of insurance. Insurers argued that the system was unfair to non-city dwellers because the high costs associated with thefts in Detroit caused an inequity.
The Michigan Catastrophic Claims Division (MCCA) was also started in 1978 to handle some of the more serious accidents, but even with this effort the laws and practices seemed to pit the insurance companies against the trial-lawyers. Nearly every effort to improve the no-fault system had come up empty. This provision of the law allowed the state to place a yearly fee on drivers, and over the years, this “fee” has also increased substantially.
The New Law
The new law for Michigan’s no-fault auto insurance program was 46 years in the making. Since 1978, the rates for auto insurance continued to rise no matter what the legislature tried, and there was no relief for consumers. However, with the new law, the lawmakers predict a savings of from 10% to 100% for the people of Michigan.
Here is What you Need to Know
In the past, all people who were insured had to pay for unlimited no-fault PIP (Personal Injury Protection). Now there are different levels of protection that a driver can purchase to save money: $50,000 if a person has Medicaid, $250,000, $500,000, and “no limit.”
Drivers with Medicare Coverage may elect to opt out of PIP coverage as of July 1, 2020. Consult with an auto accident attorney at our law firm to make sure you understand how this affects your situation.
For car insurance policies that go into effect after July 1, 2020, the law hopes to reduce premiums for drivers by 45% for those who opt for the $50,000 cap on PIP benefits, 35% savings for those who opt for the $250,000 cap, 20% savings for those who opt for the $500,000 cap, and 10%savings for those who opt for the “no-limit.” For those drivers who are enrolled in Medicare and opt out of the PIP benefit, there will be a 100% savings.
Under the new law, the Michigan Catastrophic Claim Commission (MCCA) would still be liable to pay for injuries if a person elected the “no-limit” program. In addition, all drivers would be required to pay the annual assessment for this benefit, but the fees should be reduced.
After July 21, 2021, the state will establish a no-fault fee schedule which will govern charges from doctors, hospitals, rehabilitation clinics, and any other provider associated with the care for individuals who were involved in an auto accident. This reimbursement will align with the current Medicare payment and will range from 195% to 250% of the Medicare program.
The savings that insurance companies realize from the new regulations in the law must be passed to insurance customers in the form of lower premiums. Up to this point, it has been challenging to determine the profit assumed by insurance companies as premiums increased, so it is imperative that there be a follow through on sending these savings to consumers.
The new law also includes provisions for the Independent Medical Examinations by insurance companies, and this list is lengthy. Again, this is an excellent opportunity to seek advice from an auto accident attorney with our law firm, to have a clear discussion on the procedures and coverages. A medical attorney may also be a good resource if you have a particular question.
Another aspect of the medical coverage is the right for a person injured in a car accident to sue for excess medical costs and economic expenses. This portion of the law brings Michigan in line with most other no-fault states.
How are Out-of-State Drivers Treated?
Whether or not out-of-state coverage covers an accident in Michigan depends on how long the driver has been in the state. If a driver has been in the state 30 days or less, then the out-of-state coverage will be honored. If a driver has been in the state for more than 30 days in a calendar year, not consecutive, then Michigan will consider the driver as uninsured. An uninsured driver is illegal, and the possible consequences can be very serious.
Consequences of Being an Uninsured Driver in Michigan
A driver with out-of-state insurance who violates the Michigan law could face a year in jail and fines between $200 and $500. In addition, he could be denied no-fault benefits to cover medical expenses and lost wages and no benefits for pain and suffering.
More importantly, even if the uninsured driver was 100% innocent, and the accident was caused by texting, drunk driving, or speeding, the uninsured driver could be financially liable for all of the at-fault driver’s accident-related medical and lost wages. This could end up costing millions of dollars.
Other Time Requirements
Another time requirement for Michigan is that if a driver is in the state for more than 90 days, then the driver must register the vehicle and obtain Michigan no-fault insurance. In this case, the driver is considered a non-resident, and the chances of obtaining any benefits from the state’s no-fault coverage are limited.
Hints for Tourists
If you are on a vacation and driving through Michigan on your way to another destination not in the state, then your out-of-state car insurance would cover you in the event of an accident. However, if you are on vacation in Michigan, and you stay for beyond the 30-day limitation for auto coverage, then you may have a problem. In Michigan, no law prevents you from having two insurance policies, and it might be in your best interest to check with an auto accident attorney at our law firm, make sure you are protected.
This group of temporary residents in Michigan may be very vulnerable. In any given year of college, a student may be, in and out of the state several times, and never in the state for 30 days at a time. However, the law indicates that the 30-day limit, for no-fault coverage is not focused on consecutive days in the state. It is 30 days during the year, and they do not have to be consecutive. An accident with a college age driver may be financially devastating if there is no coverage. It is best to consult with an auto accident attorney at Cochran, Kroll & Associates, P.C. to look at all the options when attending college in Michigan.
If you are a Snowbird, you are probably a resident of Michigan, but that also may not be the case. Many people move to a warmer state for the winter months, and because of the tax treatment or family obligations, they actually become residents of that state. Regardless of your situation, if you travel one or two times a year to or from Michigan, you may fall under the out-of-state driver’s insurance regulations. This becomes very important, especially if you are retired and on a fixed income. The penalties for not having no-fault protection can ruin your comfort while in retirement. A car accident attorney at our firm may be a good resource to discuss your yearly travel plans in Michigan just to be sure that you have coverage in case of an accident.
Some commuters travel from the suburbs of a city and stay in the state, and then there are those who travel from one state to another if they happen to live close to the border. This situation seems to open up more questions than it answers. For instance, is a commuter who drives into Michigan from another state, works for 8 -10 hours in Michigan, and then drives out of the state, actually in Michigan for a day? Does the person have to add up the total hours and then divide by 24 to determine the number of days in Michigan?
If you commute to work into the State of Michigan, it is advisable that you contact an auto accident attorney at Cochran, Kroll & Associates, P.C. to make sure you are carrying the right coverage for an out-of-state driver, and whether you need additional coverage in Michigan.
Summary and Final Note
The new law in Michigan concerning modification of the no-fault car insurance law was passed to provide a way for the government to ensure the protection of the residents of Michigan and at the same time address the rising premiums for drivers. This law has overwhelming support in the state, and it has come about after over 40 years of debate and tinkering. The out-of-state driver, who is not a resident of Michigan has to take note of these changes since no-fault coverage for an out-of-state driver can lead to personal and financial difficulty if there is a lapse in the coverage. Some of the provisions under the new law do not actually go into effect until July of 2020 or after, but it is the wise traveler who looks into the changes before they are faced with a claim.
The law offices of Cochran, Kroll, and Associates P.C. has all of the latest changes and interpretations that might affect you if you are an out-of-state driver. There is no consultation fee, and it is always good to have a friend that you can call in an emergency. If you are involved in an accident in Michigan, please call our law firm on 866-MICH-LAW for a no obligation consultation. We never charge a fee unless a recovery is made.
Disclaimer : The information provided is general and not for legal advice. The blogs are not intended to provide legal counsel and no attorney-client relationship is created nor intended.