What Does "No Fault" Actually Mean?


You were in a car accident a few weeks ago and the police determined it was your fault.  You reported the accident to your insurance agent and your insurance company has already paid to repair your car.  Just when you thought you had put the accident behind you, you receive a letter from the other driver’s insurance company.  Your heart sinks as you read their request for your insurance information.  You’re confused because, in the back of your mind, you’re cautiously confident that Michigan is a “no-fault” state for auto insurance.  But what does “no-fault” actually mean in Michigan?  And what recourse does the other driver have when you caused the accident?

Let’s keep it simple.  In Michigan, a driver cannot sue you for damage you caused to their vehicle, with a couple of minor exceptions (discussed below).  Each driver is responsible for insuring their vehicle on their own policy for physical damage (commonly referred to as comprehensive and collision coverages), whether caused by themselves or other drivers, if they choose to do so.  Therefore, regardless of whether another driver side swipes us at an intersection or we steer ourselves into a guard rail, we rely on our own insurance policy to pay for the damage to our vehicle.  Irrespective of who was at-fault in the accident, each driver goes back to their own insurance policy to claim the damage to their vehicle (hence the phrase “no-fault”).

There is, however, an exception to the no-fault rule.  The exception is referred to as “mini-tort,” which allows a driver to sue the at-fault driver for damage to their vehicle that is not covered by their own collision insurance.  The amount that can be recovered in this way is limited to $1,000.  This is generally used to reimburse the not at-fault driver for the collision deductible they paid on their own policy or to help cover their out-of-pocket costs to repair their vehicle if they didn’t carry collision coverage. 

Looking back to our opening example, the “love letter” you received from the other driver’s insurance company is generally seeking to recover the collision deductible that the other (not at-fault) driver paid on their insurance policy.  So did this accident just become up to $1,000 more expensive for you?  Probably not.  Most insurance policies include an optional coverage called “mini-tort liability,” which will cover your liability to the other driver for their out-of-pocket costs due to damage you caused to their vehicle.  Without this coverage, you would be paying your own deductible and the not at-fault driver’s deductible under the mini-tort exception to the no-fault rule.  Simple, right?  Please call us if you have any questions - we'd be happy to explain how this coverage applies on your policy.   

This article was written by Brian Boer.  Please send comments or questions to Brian at brian.boer@boerinsurance.com.