Automobile Insurance 15% Flashcards
1
Q
Michigan Minimum Insurance Requirements
A
● Personal Injury Protection (PIP)
● Property Protection (PPI)
● Residual Bodily Injury and Property Damage Liability (BI/PD) coverage
2
Q
Minimum liability limits
A
Split limits of 50/100/10
● $50,000 per accident for one person injured or killed
● $100,000 per accident for two or more people injured or killed
● $10,000 per accident for property damage to others
3
Q
limits differ for drivers who work for a transportation network company (TNC)
A
● Single limit of $1,000,000 while picking up and transporting passenger
● Split limits of 50/100/25 while waiting for passenger’s ride request
4
Q
Proof of Insurance
A
● Must include the names of people on the policy
● Must be kept in car or on a device, available to be viewed upon request
5
Q
Presenting false information for proof of insurance is a
A
misdemeanor
○ up to 1 year in prison, and/or
○ $1,000 fine
6
Q
Failing to provide proof of insurance is a
A
civil infraction
○ appear before court, and/or
○ license suspension
7
Q
Michigan Automobile Insurance Placement Facility (500.3301)
A
● Residual market for MI auto insurance
● Provides insurance for high-risk individuals
● Encourages private insurance for policyholders who can qualify for it
8
Q
No-Fault Automobile Coverage (500.3101)
Michigan law requires all owners of motor vehicles registered in the state to carry
A
no-fault insurance. This includes three primary coverages:
- Personal Injury Protection (PIP)
- Property protection insurance (PPI)
- Residual Liability Insurance (Bodily injury and property damage - BI/PD)
9
Q
(PIP)
A
Personal Injury Protection
10
Q
(PPI)
A
Property Protection Insurance
11
Q
(Bodily Injury and Property Damage - BI/PD)
A
Residual Liability Insurance
12
Q
Personal Injury Protection (PIP)
A
Covers medical expenses and certain other costs related to injuries sustained in an accident.
13
Q
Before:
PIP coverage was unlimited in Michigan. PIP also paid for:
A
● Funeral expenses between $1,750 and $5,000 (depending on the policy)
● 85%of lost income for up to 3 years
○ these benefits expire if the injured person dies before the 3 years are up
○ note: if the insured is over 60, and would not be eligible for work loss benefits, he may waive this coverage in exchange for a lower premium
● Up to $20 per day (for up to 3 years) for the reasonable cost of miscellaneous services that the injured person would have done himself, for no pay, but which he can no longer perform because of the injury (e.g. cooking meals, cleaning,
running errands, etc.
14
Q
After:
Michigan policyholders can choose from the following coverage options:
A
● Unlimited PIP coverage (this is the default option, and provides the same coverage that a policy issued before July 2020 would have provided; but policyholders can choose a lower limit)
● $500,000 limit
● $250,000 limit
● $50,000 limit (only available for drivers who are on Medicaid)
● Opt-out of PIP coverage (only for people who have qualified health insurance
for themselves and all relatives who live with them)
Funeral benefits remain the same, except for those who opt out of PIP.
15
Q
Property Protection Insurance (PPI)
A
is a mandatory component of Michigan’s no-fault auto insurance system. It provides coverage for property damage caused by a motor vehicle, with specific limitations and conditions.
16
Q
PPI covers up to
A
$1 million per accident for damages your vehicle causes to another person’s stationary property.
Examples include:
Buildings (e.g., homes, garages).
Fences.
Poles.
Parked vehicles.
Government Property:
Includes damages to public property such as roads, bridges, traffic signs, and other infrastructure.
17
Q
PPI does not cover
A
damage to other moving vehicles. For example:
In a collision between two moving vehicles, your PPI coverage does not apply.
Damage to your own vehicle is covered under optional collision/comprehensive coverage, not PPI.
18
Q
Residual Liability Coverage
In general, no-fault insurance protects the policyholder from being sued when he causes damage. However, there are certain cases where an injured person is allowed to sue the insured. This can happen if the insured:
A
● Causes an accident in which someone is killed or seriously injured
● Is involved in an accident in a different state or with someone who lives in a different state
19
Q
Before:
A driver’s residual liability coverage must have limits of at least
A
20/40/10:
● $20,000 for bodily injury or death to one person per accident
● $40,000 for bodily injury or death to two or more persons in one accident
● $10,000 for damage or destruction of property of others per accident
20
Q
After:
Drivers must have coverage of at least
A
50/100/10:
● $50,000 for bodily injury or death to one person per accident
● $100,000 for bodily injury or death to two or more persons in one accident
● $10,000 for damage or destruction of property of others per accident
Drivers will automatically be offered coverage of $250,000/$500,000, but can choose
lower limits if they sign a form.
21
Q
What is Uninsured/Underinsured Motorist (Reg 500.1502) in Michigan?
A
optional insurance coverages that protect you if you are involved in an accident with a driver who either lacks adequate insurance or has no insurance at all.
22
Q
Uninsured/Underinsured Motorist – pays for
A
injuries to an insured person caused by someone who does not have the liability coverage to pay for them
23
Q
Collision – pays for
A
damages to your vehicle after a collision with another vehicle or an inanimate object
24
Q
Comprehensive – pays for
A
damages to your vehicle that are caused by
something other than a car accident, such as fire, vandalism, animals, theft,
etc.
25
Note: since most injuries in MI fall under no-fault coverage,
UM/UIM would only kick in
in extreme cases, when a person’s no-fault coverage is not enough
26
Stacking
if you have UM/UIM coverage for more than one car, or on
more than one policy, stacking would allow you to combine those available coverages to cover losses, if needed.
Policy holders may NOT stack UM/UIM coverage in MI.
27
After market Parts
On a repair estimate, the insurer must clearly list any replacement parts not made by original manufacturer
28
Cancellation
Insurer must notify insured of cancellation:
● 10 days in advance for nonpayment of
premiums
● 30 days in advance for any other reason
29
(PAP)
Personal Auto Policy
30
The Personal Auto Policy (PAP)
A policy that combines liability insurance with other optional coverages
31
PAP policies can cover:
● Individuals and residing family members
● People driving car with owner’s permission
● Four-wheeled vehicles under 10,000 lb
Remember: insurable interest is required (i.e. auto owners, lessors, or lenders).
32
What is covered? (PAP)
● Property damage
● Bodily injury
● Legal defense
Insurer must defend policyholder against liability claims, in or out of court.
33
PAPs will not pay
punitive damages.
34
PAP Example
If Junior takes the family car out for a joyride, hits the mayor’s car, and is sued, your PAP will cover the car repairs and any injuries the mayor may have, but it will not pay any punitive damages a judge might assign to teach him a lesson.
35
PAP Sections
● Declarations Page
● Six Sections:
1.Part A Liability
2.Part B Medical Payments
3. Part C Uninsured Motorist
4. Part D Coverage for Damage to Your Auto
5. Part E Duties After an Accident or Loss
6. Part F General Provisions
● Endorsements
36
1. Part A
Liability
37
2. Part B
Medical Payments
38
3. Part C
Uninsured Motorist
39
4. Part D
Coverage for Damage to Your Auto
40
5. Part E
Duties After an Accident or Loss
41
6. Part F
General Provisions
42
Declarations Page
● Named insured’s name and address
● Policy period
● Applicable insurance coverages and their limits
● Deductible
● “Loss payees” (all parties to be indemnified when losses occur)
● Make, model, and VIN of insured automobiles
● Endorsements added to the policy
43
If Eduardo buys a car with the help of an auto loan, the bank that financed his loan
may require that he add it as a loss payee on his auto policy. This ensures that the
bank can recover its investment in the vehicle if Eduardo wrecks it
44
Auto Insurance Deductibles:
● Fixed: one specific, predetermined amount
● Per Claim Basis: insured is responsible for paying this amount on every claim
Note: Deductibles typically only apply to Collision and Comprehensive coverages, not Liability.
45
Owned
A car that the insured owns or has leased for 6 months
46
The Use Of
Any activity involving the car
47
Occupying
Being in or on a vehicle, getting in or out, getting on or off, sitting on, or leaning
against the vehicle
48
Bodily Injury
Bodily harm, sickness, or disease, or the resulting death
● Does not include mental distress or psychological trauma
49
Property Damage
Destruction of, or physical damage to, tangible property
● Includes the loss of use of damaged property
50
Your Covered Auto:
1. The car specified on declarations page
2. A newly acquired auto
3. A trailer that the insured owns
4. A temporary substitute for car or trailer listed on dec page, due to:
a. breakdown
b. repair
c. servicing
d. loss
e. destruction
51
Newly Acquired Auto
Any new or used vehicle that the insured gets during the current policy period
● Must weigh less than 10,000 lbs
● May not be covered under another insurance policy.
● May not be used for the transport of goods and materials (with some
exceptions)
● Automatically gets the broadest coverage provided to any one car listed in
policy
52
Adding Newly Acquired Autos
Insured has 14 days to report newly acquired auto
53
However: most states and insurers actually require that you report any new auto
within
10 to 30 days.
Comprehensive and Collision coverage:
● Can be added within 4 days of getting new car
● Automatically applies for first 4 days with $500 deductible
Note: These grace periods can vary by insurer
54
Part A– Liability Coverage
● Not for insured’s own injuries or damages
● Covers the insured’s liability for the injuries or property damage of others
● Defense in court is included, if necessary
55
Insuring Agreement
Establishes what the insurer will do for the insured if the insured becomes liable for losses
56
Insuring Agreement, If the insured becomes liable will cover:
● Pay liability costs, up to policy limits
● Covers injury or damage caused by “your covered auto” or any car the insured drives with permission
● Settle or defend liability lawsuits
● Insurer reserves the right to settle liability cases out of court
57
Covered Person:
1. The named insured and family members living in the same household
2. Someone using covered auto with permission
58
Most auto mobile insurance policies describe the amount of liability coverage in a series of three numbers called
Split Limits
59
Combined Single Limit
● Maximum per-occurrence limit
● Includes bodily injury AND property damage
60
Coverage is “primary” if it involves a car
the insured owns
61
Coverage is “secondary” if it involves a car
the insured does not own
62
For example…
Say Nancy borrows Micah’s car and then gets into an accident with it. Micah’s insurance will pay first, not Nancy’s.
Since it was Micah’s car, his coverage is primary, and Nancy’s coverage is secondary.
Nancy’s insurance will pay any damages that Micah’s policy does not pay.
63
Out of State Provision
If you meet your home state’s requirements, it is assumed you meet the requirements of any other state.
64
Part A (liability) – Supplementary Payments
● Assist policyholder with a variety of accident-related expenses
● Not subject to liability limits
65
Part A– Supplementary Payments May include:
● Lost wages (due to court hearings): up to $250/day
● Expenses due to insurer’s request such as retrieving accident reports or
records, copy fees
● Bail bonds: up to $250
● Accrued interest after a judgment is entered
● Premiums on appeal bonds and attachment bonds
Assist policy holder with a variety of accident-related expenses
66
Auto Liability coverage does NOT include:
● Intentional damage or injuries (e.g. vehicular assault)
● Property owned or being transported by the insured
● Damages incurred under the scope of employment, except domestic employees ineligible for workers’ comp
67
For example…
Imagine Emily gets into an accident while returning her friend’s laptop, and the laptop is destroyed in the collision. Emily’s liability coverage will
not cover the laptop, even
though someone else owns it.
68
Auto Liability coverage also excludes:
● Properties rented to or used by the insured (not including rented dwellings or
private garages)
● Hired vehicles transporting people or goods (i.e. taxis)
● Company-owned business vehicles
● Damagesor injuries caused while repairing, servicing, parking, or storing
vehicles (i.e. mechanics, valets, vehicles released to storage facility)
● Vehicles taken without permission
69
No-Fault Insurance
● Designed to indemnify the insured for his own injuries, regardless of fault
● Covers bodily injury only (usually not property damage)
● Mandatory in some states
70
For example...
So, if Megan rear-ends Bob and causes him a severe neck injury, Bob will have to file a claim with his
own insurer for his injury, even though it was Megan’s fault!
71
Part B- Medical Payments
● Provides coverage for the insured
● Pays medical expenses of the insured et al, no matter who caused them
● Applies when anyone considered an insured under the policy is occupying or
struck by auto or trailer designed for public roads
● Includes vehicle-pedestrian accidents
is a form of no-fault insurance
72
The Part B insuring agreement:
● Says the insurer will pay for medical and funeral costs when an insured (i.e.
anyone considered insured under the policy) is injured in an auto accident
● Covers eligible medical payments for up to three years
● Applies a single limit for each person per incident
Common limits: $500, 1,000, $2,000, $5,000, etc.
73
“Insured” covered person
1. The named insured or a family member
2. Any person occupying “your covered auto”
74
Common Exclusions to Medical Payments:
● Accidents where an insured is occupying a vehicle with fewer than four wheels
● Autos rented or leased for hire
● Autos used without permission (or reasonable belief of permission)
● Commercial vehicles covered by a Business Auto Policy (BAP)
● Vehicles located for use as a residence
● Injuries sustained under scope of employment (if covered by Workers’ Comp)
Medical payments begin only after Personal Injury Protection (PIP) coverage is fully exhausted.
75
Medical payments begin only after ________ ______ __________ (___) coverage is fully exhausted.
Personal Injury Protection (PIP)
76
Part C– Uninsured/Underinsured Motorist Coverage
● Covers bodily injuries caused by people with insufficient or no insurance
● Coverage for physical damage can be added by endorsement
77
Uninsured Motorist (UM):
1. Driver with no liability insurance
2. Driver whose insurer won’t pay
3. Hit-and-run driver
78
Underinsured Motorist (UIM):
Driver who does not have enough insurance to pay for all damages
79
Part C Insuring Agreement:
Insurer agrees to pay for an “insured’s” injuries or damages caused by driver of an
uninsured vehicle.
“Insured”:
● The named insured or a family member
● Anyone in a “covered auto” with permission
80
Exclusions to UM/UIM Coverage:
● The insured’s own auto that is not listed in the policy
● Government vehicles
● Off-road vehicles (but only while not on public roads)
● Vehicles used as a premises
● Covered autos that are rented or used for hire (although the interpretation of
this phrase varies)
● Cars used without reasonable belief that permission was granted
81
Part D– Physical Damage, Damage to your Auto
● Protects the insured’s financial interest in her car
● Two types: Collision and Other Than Collision
● Often required by finance companies
82
Part D– Collision Coverage
● Pays for damage to insured’s vehicle caused by collision or rollover
○ a car that has been tipped or rolled over is known as an “upset vehicle”
● Applies even when insured is at-fault
● Includes “your covered auto” and any “non-owned” car the insured is driving
(unless the insured borrows it frequently: then it is not covered)
83
Payment After a Collision Total damage: insurer pays
ACV of the car at the time of collision
84
Payment After a Collision Partial damage: insurer pays
to repair the car with similar materials
85
Payment After a Collision Transportation (car rental) expenses:
$30/day, up to $900 (previous versions of
the policy offered lower amounts: $20/day, up to $600)
86
Part D– Other Than Collision also called
Comprehensive Coverage
87
Part D– Other Than Collision (comprehensive coverage)
● Covers damages not caused by collision or overturn
● Essentially “open-peril” coverage, minus exclusions
88
Comprehensive Coverage Covered perils:
● Theft
● Hail, water, or flood
● Windstorm
● Fire
● Vandalism
● Explosion
● Earthquake
● Riot/Civil unrest
● Missiles or falling objects
● Contact with birds or animals
89
Payment After a Loss Same as Collision Coverage:
● Total damage: insurer pays ACV of the car at the time of collision
● Partial damage: insurer pays to repair the car with similar materials
● Transportation (car rental) expenses: $30/day, up to $900
90
Exclusions for Damage to Your Auto
● Normal wear and tear
● Freezing
● Mechanical or electrical breakdown
● Tire damage
● Government or civil confiscation
● Losses to non-owned autos taken without permission
● Losses involving any racing or speed event or facility
● Stereo equipment and electronics (unless permanently installed, then subject
to limits)
● War and nuclear events
91
Personal Injury Protection (PIP)
Covers injuries to the insured et al. caused by an accident, no matter who was at
fault.
92
Advantages of No-Fault PIP:
● Fewer lawsuits
● Helps contain rising automobile insurance costs
● First party rather than third party claims
● Quicker reimbursements
● Pays up to the policy limit without recourse
93
PIP pays for the bodily injuries of:
● The insured and members of household, whether in the insured’s or another
vehicle
● Children of the insured while on a school bus
● Certain passengers without their own PIP
● Licensed drivers who drive the insured’s vehicle with permission
94
After a covered accident, PIP will pay:
● Medical costs, sometimes up to a set percentage
● Lost wages (percentage of wages before injury)
● Medical transportation expenses
● In-home caregivers
● Death benefits
95
PIP is _______ coverage
primary
96
Medical Payments is _________ it pays after PIP is exhausted
secondary
97
PIP ________ insured’s right to go to court
restricts
98
Part E: Duties After an Accident or Loss
● Report all accidents
● Cooperate with insurer’s investigation, settlement, and any court proceedings
● Promptly send the insurer copies of all pertinent legal papers
● Submit to a physical examination if insurer requests
● Submit to examination under oath (EUO) and verify that your statements are
true and accurate
● Authorize the insurer to obtain medical reports
● Authorize the insurer to obtain other pertinent records
● Provide proof of loss if insurer requests
99
The insured has additional duties if policy includes:
● Part C–Uninsured/Underinsured Motorist
● Part D–Damage to Your Auto
100
Additional Duties for UM/UIM Claims
1. Notify the police in the event of hit-and-run
2. If filing a lawsuit, forward legal documents to the insurer
101
Additional Duties for Collision or Comprehensive Claims
1. Protect covered vehicles from further loss
2. Promptly notify the police in the event of theft
3. Allow insurer to inspect and appraise damaged vehicles
102
PAP coverage only applies to accidents and losses that occur:
● During the policy period
● Within the United States, its territories and possessions, and Canada
○ Territories and possessions include Guam, Puerto Rico, military bases,
embassies, etc.
○ Mexico is not part of the policy territory
● During shipment between ports in the policy territory
103
Policy cannot be changed or waived without a
written and signed endorsement.
104
Insurer may increase premiums immediately for:
● Changes to the number, type, or use of automobiles
● Changes in coverage, deductibles, or limits
● Address changes
● Changes in covered persons
For policies spanning more than one year, insurers may annually review the premium
rate for the following year.
105
Insurer’s Rights to Recover Payment
● Enforces subrogation
● If insured is paid by both the insurer and at-fault party, excess funds must be
paid back to the insurer
Subrogation does not apply to Part D Physical Damage.
106
Popular PAP Endorsements
Suspension of Insurance
Lets the insured suspend coverage and premium payments for a specified period of
time.
107
Towing and Labor
● Pays for towing expenses, plus labor charges from the scene of the damage
● Per occurrence limit
108
Extended Non-Owned Coverage
● Liability and medical payments coverage for non-owned vehicles
● Covers non-owned vehicles carrying people or property for a fee
● Coverage only applies to the named insured
109
Customized Equipment
Provides extra coverage for valuable equipment that is not covered in standard policy
110
Miscellaneous Vehicle Coverage
Lets the policyholder add specialized vehicles to the policy, such as motorcycles,
motorhomes, mopeds, etc
111
Non-Owner Coverage
Provides liability, medical payments, and UM/UIM insurance for people who have no car, but who often borrow other people's vehicles
112
Personal Injury Protection Coverage - Michigan (500.3108)
Survivors' Benefits
113
Eligibility for Survivors’ Benefits:
If a person is killed in a motor vehicle accident, their dependents (such as spouse, children, or others who were financially dependent on the deceased) can receive benefits.
114
Survivors’ Benefits, Types of Benefits Provided:
Income Replacement:
Survivors are eligible for 85% of the deceased person’s lost income from the time of the accident. This is the same as the income replacement benefit provided to injured persons under PIP.
This benefit is paid for up to 3 years following the accident.
Replacement Services:
If the deceased was providing household services (e.g., childcare, cleaning, maintenance), survivors are entitled to replacement services of up to $20 per day.
This benefit is also available for up to 3 years following the accident.
No Fault Requirement:
As with other PIP benefits, the survivor’s claim is not dependent on who was at fault in the accident. If the individual was injured or killed in a motor vehicle accident, survivors are entitled to the benefits regardless of fault.
115
Lessor– Additional Insured and Loss Payee (endorsements)
This endorsement adds a lessor to the definition of “insured” on the schedule of the endorsement, allowing the lessor to receive benefits under
the Business Auto Policy.
116
Extended Non-owned Coverage– Vehicles Furnished or
Available for Regular Use– Michigan
This endorsement adds residual liability coverage for a car the insured drives regularly but does not own, such as a company car. Note that it does not include the other required coverages in Michigan—PIP and PPI—but only residual liability. Coverage only applies to the insured and his or her spouse.
117
Amendment of Policy Provisions– Michigan
applies the state’s laws and regulations that may be slightly different from what is on the standard ISO auto policy form. This endorsement is typically attached to every personal auto policy sold in Michigan, so make sure you read the policy carefully before working on the claim.
118
All Michigan drivers must carry:
● Personal Injury Protection (PIP)
● Property Protection (PPI)
● Residual Bodily Injury and Property Damage Liability (BI/PD) coverage
Michigan Minimum Insurance Requirements
119
Split limits of 50/100/10
● $50,000 per accident for one person injured or killed
● $100,000 per accident for two or more people injured or killed
● $10,000 per accident for property damage to others
Minimum liability limits
120
● Single limit of $1,000,000 while picking up and transporting passenger
● Split limits of 50/100/25 while waiting for passenger’s ride request
limits differ for drivers who work for a transportation network company (TNC)
121
● Must include the names of people on the policy
● Must be kept in car or on a device, available to be viewed upon request
Proof of Insurance
122
misdemeanor
○ up to 1 year in prison, and/or
○ $1,000 fine
Presenting false information for proof of insurance is a
123
civil infraction
○ appear before court, and/or
○ license suspension
Failing to provide proof of insurance is a
124
● Residual market for MI auto insurance
● Provides insurance for high-risk individuals
● Encourages private insurance for policyholders who can qualify for it
Michigan Automobile Insurance Placement Facility (500.3301)
125
no-fault insurance. This includes three primary coverages:
- Personal Injury Protection (PIP)
- Property protection insurance (PPI)
- Residual Liability Insurance (Bodily injury and property damage - BI/PD)
No-Fault Automobile Coverage (500.3101)
Michigan law requires all owners of motor vehicles registered in the state to carry
126
Personal Injury Protection
(PIP)
127
Property Protection Insurance
(PPI)
128
Residual Liability Insurance
(Bodily Injury and Property Damage - BI/PD)
129
Covers medical expenses and certain other costs related to injuries sustained in an accident.
Personal Injury Protection (PIP)
130
● Funeral expenses between $1,750 and $5,000 (depending on the policy)
● 85%of lost income for up to 3 years
○ these benefits expire if the injured person dies before the 3 years are up
○ note: if the insured is over 60, and would not be eligible for work loss
benefits, he may waive this coverage in exchange for a lower premium
● Up to $20 per day (for up to 3 years) for the reasonable cost of miscellaneous
services that the injured person would have done himself, for no pay, but which
he can no longer perform because of the injury (e.g. cooking meals, cleaning,
running errands, etc.
Before:
PIP coverage was unlimited in Michigan. PIP also paid for:
131
● Unlimited PIP coverage (this is the default option, and provides the same
coverage that a policy issued before July 2020 would have provided; but
policyholders can choose a lower limit)
● $500,000 limit
● $250,000 limit
● $50,000 limit (only available for drivers who are on Medicaid)
● Opt-out of PIP coverage (only for people who have qualified health insurance
for themselves and all relatives who live with them)
Funeral benefits remain the same, except for those who opt out of PIP.
After:
Michigan policyholders can choose from the following coverage options:
132
is a mandatory component of Michigan's no-fault auto insurance system. It provides coverage for property damage caused by a motor vehicle, with specific limitations and conditions.
Property Protection Insurance (PPI)
133
$1 million per accident for damages your vehicle causes to another person's stationary property.
Examples include:
Buildings (e.g., homes, garages).
Fences.
Poles.
Parked vehicles.
Government Property:
Includes damages to public property such as roads, bridges, traffic signs, and other infrastructure.
PPI covers up to
134
damage to other moving vehicles. For example:
In a collision between two moving vehicles, your PPI coverage does not apply.
Damage to your own vehicle is covered under optional collision/comprehensive coverage, not PPI.
PPI does not cover
135
In general, no-fault insurance protects the policyholder from being sued
when he causes damage. However, there are certain cases where an
injured person is allowed to sue the insured. This can happen if the
insured:
● Causes an accident in which someone is killed or seriously injured
● Is involved in an accident in a different state or with someone who
lives in a different state
Residual Liability Coverage
136
20/40/10:
● $20,000 for bodily injury or death to one person per accident
● $40,000 for bodily injury or death to two or more persons in one accident
● $10,000 for damage or destruction of property of others per accident
Before:
A driver’s residual liability coverage must have limits of at least
137
50/100/10:
● $50,000 for bodily injury or death to one person per accident
● $100,000 for bodily injury or death to two or more persons in one accident
● $10,000 for damage or destruction of property of others per accident
Drivers will automatically be offered coverage of $250,000/$500,000, but can choose
lower limits if they sign a form.
After:
Drivers must have coverage of at least
138
optional insurance coverages that protect you if you are involved in an accident with a driver who either lacks adequate insurance or has no insurance at all.
What is Uninsured/Underinsured Motorist (Reg 500.1502) in Michigan?
139
injuries to an insured person
caused by someone who does not have the liability coverage to pay for them
Uninsured/Underinsured Motorist – pays for
140
damages to your vehicle after a collision with another vehicle or an inanimate object
Collision – pays for
141
damages to your vehicle that are caused by
something other than a car accident, such as fire, vandalism, animals, theft,
etc.
Comprehensive – pays for
142
UM/UIM would only kick in
in extreme cases, when a person’s no-fault coverage is not enough
Note: since most injuries in MI fall under no-fault coverage,
143
if you have UM/UIM coverage for more than one car, or on
more than one policy, stacking would allow you to combine those available
coverages to cover losses, if needed.
Policy holders may NOT stack UM/UIM coverage in MI.
Stacking
144
On a repair estimate, the insurer must clearly list any replacement parts not made by original manufacturer
After market Parts
145
Insurer must notify insured of cancellation:
● 10 days in advance for nonpayment of
premiums
● 30 days in advance for any other reason
Cancellation
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Personal Auto Policy
(PAP)
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A policy that combines liability insurance with other optional coverages
The Personal Auto Policy (PAP)
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● Individuals and residing family members
● People driving car with owner’s permission
● Four-wheeled vehicles under 10,000 lb
Remember: insurable interest is required (i.e. auto owners, lessors, or lenders).
PAP policies can cover:
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● Property damage
● Bodily injury
● Legal defense
Insurer must defend policyholder against liability claims, in or out of court.
What is covered? (PAP)
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punitive damages.
PAPs will not pay
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If Junior takes the family car out for a joyride, hits the mayor’s car, and is sued, your PAP will cover the car repairs and any injuries the mayor may have, but it will not pay any punitive damages a judge might assign to teach him a lesson.
PAP Example
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● Declarations Page
● Six Sections:
1.Part A Liability
2.Part B Medical Payments
3. Part C Uninsured Motorist
4. Part D Coverage for Damage to Your Auto
5. Part E Duties After an Accident or Loss
6. Part F General Provisions
● Endorsements
PAP Sections
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Liability
1. Part A
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Medical Payments
2. Part B
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Uninsured Motorist
3. Part C
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Coverage for Damage to Your Auto
4. Part D
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Duties After an Accident or Loss
5. Part E
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General Provisions
6. Part F
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● Named insured’s name and address
● Policy period
● Applicable insurance coverages and their limits
● Deductible
● “Loss payees” (all parties to be indemnified when losses occur)
● Make, model, and VIN of insured automobiles
● Endorsements added to the policy
Declarations Page
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bank can recover its investment in the vehicle if Eduardo wrecks it
If Eduardo buys a car with the help of an auto loan, the bank that financed his loan
may require that he add it as a loss payee on his auto policy. This ensures that the
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● Fixed: one specific, predetermined amount
● Per Claim Basis: insured is responsible for paying this amount on every claim
Note: Deductibles typically only apply to Collision and Comprehensive coverages, not Liability.
Auto Insurance Deductibles:
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A car that the insured owns or has leased for 6 months
Owned
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Any activity involving the car
The Use Of
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Being in or on a vehicle, getting in or out, getting on or off, sitting on, or leaning
against the vehicle
Occupying
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Bodily harm, sickness, or disease, or the resulting death
● Does not include mental distress or psychological trauma
Bodily Injury
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Destruction of, or physical damage to, tangible property
● Includes the loss of use of damaged property
Property Damage
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1. The car specified on declarations page
2. A newly acquired auto
3. A trailer that the insured owns
4. A temporary substitute for car or trailer listed on dec page, due to:
a. breakdown
b. repair
c. servicing
d. loss
e. destruction
Your Covered Auto:
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Any new or used vehicle that the insured gets during the current policy period
● Must weigh less than 10,000 lbs
● May not be covered under another insurance policy.
● May not be used for the transport of goods and materials (with some
exceptions)
● Automatically gets the broadest coverage provided to any one car listed in
policy
Newly Acquired Auto
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Insured has 14 days to report newly acquired auto
Adding Newly Acquired Autos
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10 to 30 days.
Comprehensive and Collision coverage:
● Can be added within 4 days of getting new car
● Automatically applies for first 4 days with $500 deductible
Note: These grace periods can vary by insurer
However: most states and insurers actually require that you report any new auto
within
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● Not for insured’s own injuries or damages
● Covers the insured’s liability for the injuries or property damage of others
● Defense in court is included, if necessary
Part A– Liability Coverage
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Establishes what the insurer will do for the insured if the insured becomes liable for
losses
Insuring Agreement
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● Pay liability costs, up to policy limits
● Covers injury or damage caused by “your covered auto” or any car the insured
drives with permission
● Settle or defend liability lawsuits
● Insurer reserves the right to settle liability cases out of court
Insuring Agreement, If the insured becomes liable will cover:
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1. The named insured and family members living in the same household
2. Someone using covered auto with permission
Covered Person:
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Split Limits
Most auto mobile insurance policies describe the amount of liability coverage in a series of three numbers called
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● Maximum per-occurrence limit
● Includes bodily injury AND property damage
Combined Single Limit
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the insured owns
Coverage is “primary” if it involves a car
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the insured does not own
Coverage is “secondary” if it involves a car
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Since it was Micah’s car, his coverage is primary, and Nancy’s coverage is secondary.
Nancy’s insurance will pay any damages that Micah’s policy does not pay.
For example…
Say Nancy borrows Micah’s car and then gets into an accident with it. Micah’s
insurance will pay first, not Nancy’s.
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If you meet your home state’s requirements, it is assumed you meet the requirements of any other state.
Out of State Provision
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● Assist policyholder with a variety of accident-related expenses
● Not subject to liability limits
Part A (liability) – Supplementary Payments
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● Lost wages (due to court hearings): up to $250/day
● Expenses due to insurer’s request such as retrieving accident reports or
records, copy fees
● Bail bonds: up to $250
● Accrued interest after a judgment is entered
● Premiums on appeal bonds and attachment bonds
Assist policy holder with a variety of accident-related expenses
Part A– Supplementary Payments May include:
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● Intentional damage or injuries (e.g. vehicular assault)
● Property owned or being transported by the insured
● Damages incurred under the scope of employment, except domestic employees ineligible for workers’ comp
Auto Liability coverage does NOT include:
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not cover the laptop, even
though someone else owns it.
For example…
Imagine Emily gets into an accident while returning her friend’s laptop, and the laptop is destroyed in the collision. Emily’s liability coverage will
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● Properties rented to or used by the insured (not including rented dwellings or
private garages)
● Hired vehicles transporting people or goods (i.e. taxis)
● Company-owned business vehicles
● Damagesor injuries caused while repairing, servicing, parking, or storing
vehicles (i.e. mechanics, valets, vehicles released to storage facility)
● Vehicles taken without permission
Auto Liability coverage also excludes:
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● Designed to indemnify the insured for his own injuries, regardless of fault
● Covers bodily injury only (usually not property damage)
● Mandatory in some states
No-Fault Insurance
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own insurer for his injury, even though it was Megan’s fault!
For example...
So, if Megan rear-ends Bob and causes him a severe neck injury, Bob will have to file a claim with his
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● Provides coverage for the insured
● Pays medical expenses of the insured et al, no matter who caused them
● Applies when anyone considered an insured under the policy is occupying or
struck by auto or trailer designed for public roads
● Includes vehicle-pedestrian accidents
is a form of no-fault insurance
Part B- Medical Payments
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● Says the insurer will pay for medical and funeral costs when an insured (i.e.
anyone considered insured under the policy) is injured in an auto accident
● Covers eligible medical payments for up to three years
● Applies a single limit for each person per incident
Common limits: $500, 1,000, $2,000, $5,000, etc.
The Part B insuring agreement:
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1. The named insured or a family member
2. Any person occupying “your covered auto”
“Insured” covered person
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● Accidents where an insured is occupying a vehicle with fewer than four wheels
● Autos rented or leased for hire
● Autos used without permission (or reasonable belief of permission)
● Commercial vehicles covered by a Business Auto Policy (BAP)
● Vehicles located for use as a residence
● Injuries sustained under scope of employment (if covered by Workers’ Comp)
Medical payments begin only after Personal Injury Protection (PIP) coverage is fully exhausted.
Common Exclusions to Medical Payments:
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Personal Injury Protection (PIP)
Medical payments begin only after ________ ______ __________ (___) coverage is fully exhausted.
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● Covers bodily injuries caused by people with insufficient or no insurance
● Coverage for physical damage can be added by endorsement
Part C– Uninsured/Underinsured Motorist Coverage
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1. Driver with no liability insurance
2. Driver whose insurer won’t pay
3. Hit-and-run driver
Uninsured Motorist (UM):
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Driver who does not have enough insurance to pay for all damages
Underinsured Motorist (UIM):
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Insurer agrees to pay for an “insured’s” injuries or damages caused by driver of an
uninsured vehicle.
“Insured”:
● The named insured or a family member
● Anyone in a “covered auto” with permission
Part C Insuring Agreement:
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● The insured’s own auto that is not listed in the policy
● Government vehicles
● Off-road vehicles (but only while not on public roads)
● Vehicles used as a premises
● Covered autos that are rented or used for hire (although the interpretation of
this phrase varies)
● Cars used without reasonable belief that permission was granted
Exclusions to UM/UIM Coverage:
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● Protects the insured’s financial interest in her car
● Two types: Collision and Other Than Collision
● Often required by finance companies
Part D– Physical Damage, Damage to your Auto
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● Pays for damage to insured’s vehicle caused by collision or rollover
○ a car that has been tipped or rolled over is known as an “upset vehicle”
● Applies even when insured is at-fault
● Includes “your covered auto” and any “non-owned” car the insured is driving
(unless the insured borrows it frequently: then it is not covered)
Part D– Collision Coverage
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ACV of the car at the time of collision
Payment After a Collision Total damage: insurer pays
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to repair the car with similar materials
Payment After a Collision Partial damage: insurer pays
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$30/day, up to $900 (previous versions of
the policy offered lower amounts: $20/day, up to $600)
Payment After a Collision Transportation (car rental) expenses:
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Comprehensive Coverage
Part D– Other Than Collision also called
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● Covers damages not caused by collision or overturn
● Essentially “open-peril” coverage, minus exclusions
Part D– Other Than Collision (comprehensive coverage)
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● Theft
● Hail, water, or flood
● Windstorm
● Fire
● Vandalism
● Explosion
● Earthquake
● Riot/Civil unrest
● Missiles or falling objects
● Contact with birds or animals
Comprehensive Coverage Covered perils:
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● Total damage: insurer pays ACV of the car at the time of collision
● Partial damage: insurer pays to repair the car with similar materials
● Transportation (car rental) expenses: $30/day, up to $900
Payment After a Loss Same as Collision Coverage:
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● Normal wear and tear
● Freezing
● Mechanical or electrical breakdown
● Tire damage
● Government or civil confiscation
● Losses to non-owned autos taken without permission
● Losses involving any racing or speed event or facility
● Stereo equipment and electronics (unless permanently installed, then subject
to limits)
● War and nuclear events
Exclusions for Damage to Your Auto
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Covers injuries to the insured et al. caused by an accident, no matter who was at
fault.
Personal Injury Protection (PIP)
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● Fewer lawsuits
● Helps contain rising automobile insurance costs
● First party rather than third party claims
● Quicker reimbursements
● Pays up to the policy limit without recourse
Advantages of No-Fault PIP:
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● The insured and members of household, whether in the insured’s or another
vehicle
● Children of the insured while on a school bus
● Certain passengers without their own PIP
● Licensed drivers who drive the insured’s vehicle with permission
PIP pays for the bodily injuries of:
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● Medical costs, sometimes up to a set percentage
● Lost wages (percentage of wages before injury)
● Medical transportation expenses
● In-home caregivers
● Death benefits
After a covered accident, PIP will pay:
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primary
PIP is _______ coverage
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secondary
Medical Payments is _________ it pays after PIP is exhausted
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restricts
PIP ________ insured’s right to go to court
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● Report all accidents
● Cooperate with insurer’s investigation, settlement, and any court proceedings
● Promptly send the insurer copies of all pertinent legal papers
● Submit to a physical examination if insurer requests
● Submit to examination under oath (EUO) and verify that your statements are
true and accurate
● Authorize the insurer to obtain medical reports
● Authorize the insurer to obtain other pertinent records
● Provide proof of loss if insurer requests
Part E: Duties After an Accident or Loss
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● Part C–Uninsured/Underinsured Motorist
● Part D–Damage to Your Auto
The insured has additional duties if policy includes:
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1. Notify the police in the event of hit-and-run
2. If filing a lawsuit, forward legal documents to the insurer
Additional Duties for UM/UIM Claims
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1. Protect covered vehicles from further loss
2. Promptly notify the police in the event of theft
3. Allow insurer to inspect and appraise damaged vehicles
Additional Duties for Collision or Comprehensive Claims
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● During the policy period
● Within the United States, its territories and possessions, and Canada
○ Territories and possessions include Guam, Puerto Rico, military bases,
embassies, etc.
○ Mexico is not part of the policy territory
● During shipment between ports in the policy territory
PAP coverage only applies to accidents and losses that occur:
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written and signed endorsement.
Policy cannot be changed or waived without a
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● Changes to the number, type, or use of automobiles
● Changes in coverage, deductibles, or limits
● Address changes
● Changes in covered persons
For policies spanning more than one year, insurers may annually review the premium
rate for the following year.
Insurer may increase premiums immediately for:
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● Enforces subrogation
● If insured is paid by both the insurer and at-fault party, excess funds must be
paid back to the insurer
Subrogation does not apply to Part D Physical Damage.
Insurer’s Rights to Recover Payment
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Lets the insured suspend coverage and premium payments for a specified period of
time.
Popular PAP Endorsements
Suspension of Insurance
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● Pays for towing expenses, plus labor charges from the scene of the damage
● Per occurrence limit
Towing and Labor
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● Liability and medical payments coverage for non-owned vehicles
● Covers non-owned vehicles carrying people or property for a fee
● Coverage only applies to the named insured
Extended Non-Owned Coverage
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Provides extra coverage for valuable equipment that is not covered in standard policy
Customized Equipment
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Lets the policyholder add specialized vehicles to the policy, such as motorcycles,
motorhomes, mopeds, etc
Miscellaneous Vehicle Coverage
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Provides liability, medical payments, and UM/UIM insurance for people who have no car, but who often borrow other people's vehicles
Non-Owner Coverage
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Survivors' Benefits
Personal Injury Protection Coverage - Michigan (500.3108)
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If a person is killed in a motor vehicle accident, their dependents (such as spouse, children, or others who were financially dependent on the deceased) can receive benefits.
Eligibility for Survivors’ Benefits:
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Income Replacement:
Survivors are eligible for 85% of the deceased person’s lost income from the time of the accident. This is the same as the income replacement benefit provided to injured persons under PIP.
This benefit is paid for up to 3 years following the accident.
Replacement Services:
If the deceased was providing household services (e.g., childcare, cleaning, maintenance), survivors are entitled to replacement services of up to $20 per day.
This benefit is also available for up to 3 years following the accident.
No Fault Requirement:
As with other PIP benefits, the survivor’s claim is not dependent on who was at fault in the accident. If the individual was injured or killed in a motor vehicle accident, survivors are entitled to the benefits regardless of fault.
Survivors’ Benefits, Types of Benefits Provided:
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This endorsement adds a lessor to the definition of “insured” on the schedule of the endorsement, allowing the lessor to receive benefits under
the Business Auto Policy.
Lessor– Additional Insured and Loss Payee (endorsements)
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This endorsement adds residual liability coverage for a car the insured drives regularly but does not own, such as a company car. Note that it does not include the other required coverages in Michigan—PIP and PPI—but only residual liability. Coverage only applies to the insured and his or her spouse.
Extended Non-owned Coverage– Vehicles Furnished or
Available for Regular Use– Michigan
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applies the state’s laws and regulations that may be slightly different from what is on the standard ISO auto policy form. This endorsement is typically attached to every personal auto policy sold in Michigan, so make sure you read the policy carefully before working on the claim.
Amendment of Policy Provisions– Michigan
