Auto Insurance

Driving should not be something new to you as you go away to college, but how you pay for auto insurance may be. In high school, chances are you were covered under your parents’ auto insurance policy, and if you drive a car owned by them at college, you likely will still be covered under their policy. But if you own your own vehicle, you’ll need an individual auto insurance policy. 


Do I need Auto Insurance?

Michigan Drivers make choices about what types of coverage they will purchase. However, the State of Michigan required that all drivers have no-fault insurance. Every registered vehicle must be insured. If you own a car and you drive it, or allow someone else to drive it without basic no-fault insurance, you can be sued and held personally liable. You may also be convicted of a misdemeanor and fined from $200 to $500, or put in jail for up to one year, or both. The court may also order your license suspended for 30 days or until you are able to provide such proof. In addition, if you are uninsured you may be held liable for all damages that result from an accident while uninsured, including your own.

What auto insurance coverage must I have?

There are three basic parts to a no-fault policy that must be purchased and carried on every vehicle. They are:

  • Personal Injury Protection (PIP) - Personal injury protection (PIP) pays all necessary medical costs if you are hurt in an auto accident.
  • Property Protection (PPI) - Property protection (PPI) pays up to $1 million for damage your car does in Michigan to other people's property, such as buildings and fences.
  • Residual Bodily Injury and Property Damage Liability Insurance (BI/PD) - Residual bodily injury and property damage liability (BI/PD) pays your defense costs and any damages you are found liable for as the result of an auto accident, up to the limits of the policy. The minimum limits of coverage that everyone must purchase are $20,000 for a person who is hurt or killed in an accident, $40,000 for each accident if several people are hurt or killed, and up to $10,000 for property damage in another state. These minimum limits are often referred to as 20/40/10. You can also purchase additional limits of BI/PD coverage, which will be explained in the next section.

You can learn more about each of these mandatory no-fault coverages in our publication Brief Explanation of Michigan No-Fault Insurance. You can also obtain additional information by reviewing A Consumers Guide to No-Fault Automobile Insurance in Michigan and our Buyers' Guide to Auto Insurance in Michigan*.


Going beyond the Minimum

Your basic no-fault policy does not pay to repair or replace your car if it is damaged. Therefore, if you want to have your vehicle covered if it is damaged or stolen you must purchase collision and comprehensive coverage. 

  • Collision Coverage: pays to repair or replace your vehicle if it is damaged in an accident and is available with our without a deductible.
  • Comprehensive Coverage: pays if your car is stolen, collides with an animal or is accidentally damaged by falling objects, fire, flood, or vandalism.

You can purchase both of these coverages with deductibles in an effort to reduce the cost of your insurance.


How much will I pay?

There are many factors that go into determining how much auto insurance costs including the following:

  • Your driving record. Insurance companies may charge an  extra fee, a surcharge, if you are involved in a chargeable accident or were ticketed for a serious traffic violation.
  • Your age. Young drivers are often considered to be a bigger insurance risk than older, more experienced drivers.
  • Where you live. Insuring a vehicle in bigger cities, where more traffic and crime exist is more expensive.
  • Age and type of car. Newer, sportier vehicles cost more to insure. The less it costs to repair or replace your vehicle, the lower the cost of your premium.



Can I lower my rate?

There are ways that you can lower your auto insurance premium:
  • Ask your agent about discounts. Many insurers offer discounts for good performance in school, often for maintaining a grade of B or better. Taking an approved driver safety class can also result in a discount.
  • Increase your deductibles. You can significantly lower your premium by choosing a higher deductible, which is the amount of money you pay out of pocket before insurance kicks in on a claim.
  • Don’t drive drunk. Not only is it illegal and unwise, but a conviction for drunk driving can wreak havoc on your insurance premiums. The legal blood alcohol concentration (BAC) limit is .08 percent.  And remember, Michigan's Zero Tolerance law means there cannot be any open containers in the vehicle (even if you have not been drinking).
  • If buying other types of insurance ask about a multi-policy discount.





Page last modified March 4, 2014