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Trevor Tarpinian, CEPA®, CIC                                                                                    
Licensed Insurance Counselor                                                                             
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trevor@tfi4insurance.com

Limited Property Damage Coverage

Experiencing an automobile accident in Michigan can get a little tricky with its no-fault laws. This blog post is intended to survey the features of the limited property damage (mini-tort) coverage that can be added to a personal auto insurance policy. 

First, let’s get a few assumptions set on the table. In Michigan, we're going to divide up an auto accident into 3 general parts when it comes to insurance: 1st-party medical bills, physical damage to the vehicles, and 3rd-party bodily/personal injury. This blog post is only going to focus on physical damage to the vehicles involved in an auto accident (in Michigan!).
 
No-Fault!?! (But Somebody Hit MY Car!)

Welcome to the Mitten, where everyone pays for their own vehicles. Let's assume there are 2 cars in a collision in this example, both of which have collision coverage on their insurance policies. Regardless of who is at-fault, you need to go back to your insurance company to make a claim on your insurance policy to repair your vehicle, and I need to go back to my insurance company to make a claim on my insurance policy to repair my vehicle. Someone will probably walk away from the accident with a ticket from the police officer, but both vehicle owners go back to their own respective insurance policies to make a claim to repair their vehicles.

Mini-Tort Law
 

Now let's add another layer to our example above. What if you don't have collision coverage on your car's insurance policy. You drive an older car, that's paid off and you just didn't see the need to pay extra money on your insurance for the coverage. Let's also say that the other person in this example hit you and was deemed at-fault by a member of law enforcement (who wrote them a ticket). They go to their policy to make a claim to repair the damages done to their vehicle. But where do you go? You didn't have collision coverage on your car. 
Michigan Law allows for you to claim up to $1,000 for damages to your car if you didn't have coverage and you aren't at-fault (MCL 500.3135.3.[e]). The code reads as follows:

 Notwithstanding any other provision of law, tort liability arising from the ownership, maintenance, or use within this state of a motor vehicle with respect to which the security required by section 3101 was in effect is abolished except as to:...

(e) Damages up to $1,000.00 to a motor vehicle, to the extent that the damages are not covered by insurance. An action for damages under this subdivision shall be conducted as provided in subsection (4)." 

In sum, if you didn't have physical coverage on your auto insurance and were not at-fault in the accident, you could claim up to $1,000 in damages against the other driver or vehicle owner.

Limited Property Damage Coverage

Now let's spin the example around: You are at-fault in this scenario, the other person does not have collision insurance. You've done $2,100 of damage to their car when you rear-ended them. This is the golden trifecta of insurance claims: you're going to get 1) a ticket, 2) to make a claim on your insurance for the damage to your front bumper and radiator, and 3) a mini-tort action of a $1,000 against you from the other vehicle's owner.

Michigan allows the other vehicle owner to come after you for up to $1,000 of damage to their vehicle. This would normally be settled in small claims court, however, there is an optional coverage you can add to your personal auto insurance policy that covers this. Rather than going to small claims court, the other vehicle owner would make a claim for up to $1,000 against your auto insurance policy. There would be no deductible, and the purpose of the coverage is to prevent you from having any cost out of pocket for this occurrence. 

This additional coverage on your insurance tends to run about $8-10 per year per car.

The costs for the additional coverage are minimal. The coverage does allow someone else to make a small claim of up to $1,000 on your insurance policy, but it does save you the time and headache of going to small claims court.

Addendum 

If you carry collision coverage on your personal auto insurance policy but not a broad form of collision coverage (meaning, you currently carry either a basic or standard form collision coverage), and you experience damage to your vehicle in a collision, you'll be responsible for paying your deductible if you make a claim on your insurance for the damage to your car. However, if you were not considered at-fault in the collision, MCL 500.3135.3.(e) above allows you to make claim against the at-fault party for damages to your car, up to $1,000.

 Remember, you have collision coverage in this example. And MCL 500.3135.3.(e) states this allowance is for "damages not covered by insurance."

You have the car physically insured but since you didn't carry broad form collision, your still have a deductible. That is an out-of-pocket cost to you that is not covered by insurance. Your cost to pay your deductible (up to $1,000) can be claimed against the at-fault party.  If you have basic or standard form collision coverage, and are not at-fault, you can submit a limited property damage claim against the at-fault party's personal auto insurance policy (assuming they have limited property damage coverage). If they do not carry the coverage, you could take them to small claims court.

As stated above, the limited property damage endorsement on a personal auto insurance policy had merit simply on the basis that is saves everyone the time of preparing for and appearing in small claims court.

 
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