Insurance attorney answers frequently asked questions about the importance and function of the collision coverage portion of your car insurance
It might not be the most exciting talk at cocktail parties, but when people find out I've been an insurance lawyer for nearly two decades, they always ask me about what insurance they should have to best protect them. And then the crazy fact patterns and questions begin.
Today - minus the crazy fact patterns - I'd like to answer a question I get a lot about collision coverage insurance: What exactly is collision coverage, and how does it cover your accident-related vehicle damage:
Q. Why is collision coverage important?
A. Collision coverage insurance pays to repair your vehicle if it was damaged in an auto accident. In Michigan, where I practice law, without collision coverage, there's nearly no other way of paying for the vehicle damage repair costs, except for the first $1,000 of vehicle damage which is paid by the mini tort law.
Michigan is unlike many pure tort states where an auto accident victim can sue for all of his or her losses, including the costs for all vehicle damage. In Michigan, if you have no collision coverage, you cannot seek reimbursement from the wrongdoer driver who caused the automobile accident.
It sounds unfair at first, until you remember that Michigan is a No Fault state. The owner of a damaged vehicle is prohibited from suing the driver who caused the motor vehicle accident for the full amount of the repair costs, because Michigan's No-Fault law has essentially "abolished" the at fault driver's responsibility for damages to a motor vehicle, according to MCL 500.3135(3)(e)).
But keep in mind, when an at-fault driver is driving without Michigan No Fault insurance, then that driver can be sued and held personally liable for the full amount of vehicle damage. In some cities, such as Detroit, over half of all drivers are now driving uninsured.
Q. Is collision coverage required as part of my car insurance policy?
A. No. Unlike Michigan No-Fault auto insurance, collision coverage insurance is optional coverage, which means it is not required. (See MCL 500.3101 and 500.3037) However, for the reasons discussed above, our attorneys strongly recommend that you purchase collision coverage. Without it, you will have to pay out-of-pocket for most (if not all) of the vehicle repair costs.
Q. What about the different types of collision coverage?
A. There are four types of collision coverage insurance available to Michigan drivers:
- Broad form collision coverage: Pays for vehicle damage resulting from an auto accident "regardless of fault," i.e., whether the operator or driver was at fault in causing the accident. With this coverage, the deductible is "waived" and therefore, no deductible must be paid when the operator or driver of the covered vehicle was 50% or less at fault.
- Standard collision coverage: The main difference between standard and broad is the deductible. With standard, the deductible must still be paid even if the damaged vehicle's operator or driver was not at fault. Benefits are payable regardless of fault (just as with broad form collision coverage).
- Limited collision coverage without a deductible: Pays for vehicle damage resulting from an auto accident. No deductible must be paid when the operator or driver of the covered vehicle was 50% or less at fault, in causing the accident. However, if the operator or driver was more than 50% at fault in causing the accident, then this coverage provides no benefits or coverage; and the vehicle's owner will be forced to pay out-of-pocket for the majority (or all) repair costs for vehicle damage.
- Limited collision coverage with a deductible: Limited collision coverage provides no benefits or coverage; and the vehicle's owner will be forced to pay out-of-pocket for the majority (or all) of the repair costs for his or her accident-related vehicle damage.
- For more information, you can order our free guide, "What auto insurance is right for me?"