Although the precise laws vary from state to state, all licensed drivers are required to have some form of auto insurance to be on the road.  In Michigan, the driver does not have to purchase insurance, but the vehicle he is driving must be insured by the owner.  If a driver gets into an accident with someone else’s car, the car owner’s insurance pays for the damage, not the driver’s insurance. 

Under Michigan law, all vehicles on the road must carry No-Fault insurance which covers the cost of personal injury to the driver and any uninsured passengers of the driver’s vehicle in the case of an accident.  No-Fault insurance also covers damage done to other property by your vehicle, no matter who is at fault in the incident.

While insurance coverage to pay for auto body damage is not required, this optional insurance coverage is also available through your auto insurance company, in addition to the No-Fault requirement.  The forms of Collision Coverage insurance vary in expense and protection levels and are universally defined as follows:

Limited Collision is the least expensive form of collision insurance and will only pay for damage to your vehicle if you are not deemed to be at fault in the incident.  It is very important to understand that, with this form of collision coverage, if it is determined by police report, or post-incident investigation by the insurance company that you or the driver of your vehicle is at fault, the insurance company will not pay for any auto body damage. The insurance premium will also be effected by the amount of deductible you choose on your policy.  The lower the deductible, the higher the monthly insurance payment will be.  The vehicle owner will need to assess the driving record of those using the vehicle to determine if it will be more economical, in the long run, to carry a low or a high deductible.  If all drivers have a long-standing and clean driving record, a high deductible will provide a lower insurance payment, and it is relatively safe to assume that any accident will likely not be the fault of the driver of your vehicle, and thereby will be covered by the insurance company.

Basic Collision is the next level of protection.  While more expensive than Limited Collision, the insurance company will pay for damages to your vehicle no matter who is at fault in the incident, but you will have to pay the deductible on the policy for each incident, whether you are at fault or not.  The guidelines for insurance premium cost and its relation to amount of deductible are the same for all forms of collision insurance.

The most comprehensive form of collision insurance is called Broad Collision.  Under this policy all body damage and repairs to vehicle are covered by the insurance carrier, no matter who is at fault – but if you are not at fault in the accident, your deductible amount will be waived.  Again the policy premium will be lower if you choose a high deductible, and this decision, again, should be based on driving record to determine risk.

While it is tempting to select the least expensive form of insurance available, understanding the options and costs associated will ensure proper coverage and the most economical insurance rate as it relates to the drivers of your vehicle.