Third party insurance in Michigan is the at fault driver’s bodily injury liability coverage, also known as residual liability insurance.
If a crash causes death, serious impairment of body function, or permanent serious disfigurement, an injured person may be able to bring a third party claim against that coverage.
These claims are often how pain and suffering and certain losses beyond No Fault benefits are pursued in serious accident cases.
Michigan No-Fault benefits do not always cover everything after a serious car accident. When another driver caused the crash, you may also have a third party claim against that driver’s insurance for pain and suffering and other losses that go beyond your own first party benefits.
Also known as bodily injury liability insurance or residual liability insurance, third party insurance is required for Michigan drivers and must be carried in at least the minimum amounts required by law. In serious injury cases, that coverage may provide access to compensation that No Fault benefits alone do not fully cover.
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ToggleIn Michigan, third party insurance is the at-fault driver’s bodily injury liability coverage, also referred to as residual liability insurance. It is the liability coverage that may apply when an injured person brings a claim against the negligent driver for damages the driver is legally obligated to pay, including pain and suffering and, in some cases, excess economic losses beyond No-Fault benefits. Michigan’s No-Fault Act preserves tort liability for noneconomic loss only in cases involving “death, serious impairment of body function, or permanent serious disfigurement” under MCL 500.3135.
Third party insurance is mandatory in Michigan. Drivers must carry bodily injury liability coverage with minimum limits set by law, including:
Michigan law also provides that a driver “may choose to purchase lower limits” of $50,000 and $100,000 if that option is properly selected under MCL 500.3009(5).
In practical terms, third party insurance is the coverage that stands behind the at-fault driver when a lawsuit or claim is brought for damages after a serious crash. Because this coverage is tied directly to the driver’s legal liability under Michigan law, it plays a central role in serious injury cases that go beyond the No-Fault system.
In Michigan, when an at-fault driver causes a crash resulting in bodily injury or death, third party insurance covers the driver’s legal liability for damages owed to the injured person. This may include pain and suffering compensation and certain economic losses that go beyond No-Fault benefits, subject to the limits of the driver’s bodily injury liability policy.
If you or a family member were injured in a car accident and the at-fault driver is found liable, that driver’s insurance may pay, up to the policy limits, for the following:
Third party insurance does not replace your own No-Fault PIP benefits. Your medical expenses, wage loss, and other first-party insurance benefits are still paid through your own policy, regardless of who caused the crash.
It also does not cover property damage such as theft, vandalism, or weather-related losses. Those types of claims fall under comprehensive coverage, not liability insurance.
Most importantly, third party insurance does not automatically pay every claim. It only applies when the at-fault driver is legally responsible and the case meets Michigan’s legal requirements for recovery.
Third party insurance and comprehensive coverage are often confused, but they protect against very different risks. One applies when you are responsible for injuring someone in a crash. The other applies to damage to your own vehicle from non-collision events.
Should I get comprehensive or third party car insurance in Michigan?
In Michigan, most drivers should carry both. Third party insurance provides liability coverage if you cause a crash that injures someone. Comprehensive coverage, by contrast, applies to non-collision losses such as theft, vandalism, fire, or weather-related damage. Because they cover completely different situations, they are not interchangeable.
Do you need third party insurance if you have comprehensive insurance in Michigan?
Yes. Michigan law requires drivers to carry third party insurance regardless of whether they have comprehensive coverage. Third party insurance protects you if you are legally responsible for injuries in a crash, while comprehensive coverage only applies to damage to your vehicle that is not caused by a collision.
You cannot bring a third party claim after every car accident in Michigan. The law only allows these claims in certain situations.
In practical terms, this means minor injuries are not enough. The injury must affect your ability to live your normal life in a meaningful way.
When these requirements are met, a third party claim may allow you to pursue compensation beyond what is available through No-Fault benefits.
A serious impairment of body function is more than a minor or temporary injury. It means the injury has had a real impact on how you live your normal life.
Michigan law defines a serious impairment as an injury that meets all of the following requirements under MCL 500.3135:
There is no fixed time requirement for how long the impairment must last. The focus is on how the injury has changed the person’s life compared to before the accident, based on the specific facts of the case.
In most third party claims, the insurance company does not simply accept liability and pay what is owed. These cases are often contested, and insurers routinely look for ways to limit or deny the claim.
Some of the most common defenses include:
Michigan law requires drivers to carry bodily injury liability coverage with minimum limits of $250,000 and $500,000, although lower limits of $50,000 and $100,000 may be selected in certain cases.
But the minimum is not always enough.
Drivers who cause serious car accidents can still be held legally responsible for pain and suffering and excess lost wages. In many cases, they may also be responsible for medical expenses that are not fully covered by No-Fault benefits.
As a result of Michigan’s No-Fault reforms, the financial risk to drivers is higher than it has been in years. Serious injury cases can involve damages that reach hundreds of thousands or even millions of dollars.
If your liability coverage is too low to cover those damages, you may be personally responsible for the difference. That can include your home, income, savings, and other assets.
Given the liability risks drivers face under Michigan’s No-Fault law, we recommend carrying bodily injury liability limits of at least $500,000 and, in many cases, $1 million.
What happens in the days after a crash often determines how strong a third party claim will be.
The cases that hold up are the ones where the injury is taken seriously from the beginning. People get proper medical care, they follow through, and there is a clear record of what the injury is and how it affects their life. When that is missing, insurance companies take advantage of it.
I have seen too many claims undermined by things that could have been avoided early on. Delayed treatment, inconsistent care, or casual conversations with an insurance adjuster can all be used later to minimize what the person has gone through.
These cases are not decided by what actually happened. They are decided by what can be proven. And that starts long before any claim is filed.
First-party insurance refers to benefits paid by your own insurance company, such as medical expenses and wage loss under Michigan’s No-Fault system. Third-party insurance is the at-fault driver’s liability coverage and applies when you pursue damages from the person who caused the crash. The key difference is that first-party benefits are paid regardless of fault, while third-party claims are based on fault.
Yes, but only if the injury meets Michigan’s legal threshold. Pain and suffering damages are only available in cases involving death, serious impairment of body function, or permanent serious disfigurement. If that threshold is met, the at-fault driver’s insurance may be responsible for those damages.
It can, but only in certain situations. Most medical expenses are covered first through No-Fault benefits. A third-party claim may apply to medical costs that exceed available coverage or are not otherwise paid.
No. Third party insurance is liability coverage for injuries caused in a crash. Theft, vandalism, and similar losses are typically covered under comprehensive insurance, not third party liability coverage.
Yes. Michigan law requires drivers to carry bodily injury liability coverage. Comprehensive coverage does not replace that requirement and only applies to damage to your vehicle from non-collision events.
In most cases, you have three years from the date of the accident to file a third-party claim. If you miss that deadline, you may lose your ability to recover damages, even if your claim is otherwise valid.
The injury must meet Michigan’s legal threshold. This includes death, serious impairment of body function, or permanent serious disfigurement. Minor injuries that do not affect your normal life typically do not qualify.
If you were injured in a car accident and another driver was at fault, it is important to understand how third party insurance applies to your case. These claims can become complicated quickly, especially when insurance companies begin disputing fault or the seriousness of an injury.
To get clear answers about your situation, speak with an experienced Michigan car accident attorney who can evaluate your case and explain your legal options under Michigan law.
If you have questions about a potential third party claim, we are here to help you understand your options and what your case may be worth before you make any decisions.
