Get The Truth About Auto Insurance Coverage in Michigan
There are many articles discussing if and when to contact an attorney concerning an automobile accident case. They often speak about what to do after an accident, like the need to call the insurance carrier, get the police report, and call an attorney. All good advice. But what gets lost in all these straightforward articles are…….should I have gotten some legal advice before the accident? What do I mean? Some of the most important decisions you will make is usually given the least amount of thought or advice from an attorney. What kind of coverage should I get and how should I title the car.
I am doing a series of articles to give you at least a working knowledge of auto insurance in Michigan. These series of articles are not meant to be exhaustive and not be all and know of all, but it will give you enough information to help you make the very important decisions about insurance and give you more than a jingle or a slogan. They are as follows:
- Collision Coverage (Included; See Below)
- Personal Injury Protection
We are bombarded daily with television ads for automobile insurance. There is the Gecko for GEICO, the General, the discount double check, Flo from Progressive, Mayhem, the statue of Liberty people, and “We Are Farmers”, and the newly created “hoopsters”, just to mention a few. Most TV ads are 30 seconds long and most of the ads are mostly fluff or fun and imply that there is no difference besides costs, which they do not advertise. There is some hint that there may be some difference between the companies on coverage, but do not tell you how they are different or what your choices are and or how that does in fact effect price and coverage.
State Farm® Commercial - "Meet The Hoopers"
The fact of the matter is that: This being the case you tend to believe there is no difference between policies and/or are at the mercy of the automobile insurance agent selling you the insurance to tell you what you need know. You usually do not sit down with the agent to go over coverage; you just know I need some coverage before I am legal to drive the car off the lot. A price is quoted, a premium is paid a binder issued and a policy which you never read, until there is a wreck, is sent to you. Even after the wreck you do not understand it.
“ALL INSURANCE CONTRACTS ARE COMPLICATED AND IMPOSSIBLE FOR THE LAY PERSON TO READ AND UNDERSTAND.”
Many of decisions you will make about insurance or do not make but are made are important. You really need to know, before the wreck what you have and what is covered. You will be weighing the different types of protection and weighing the costs and coverage even if you do not know it.
Understanding Collision Coverage in Michigan
First the basic’s. What is coverage? Coverage are the things your insurance company will pay. What is exclusion, an exclusion are the things your insurance company will not pay. There are three basic types of coverage in an automobile insurance policy. Collision, Personal Injury Protection and Liability protection.
Lets start with collision coverage. You would think Collision insurance would be the most straight forward of all the different coverage in your policy. I get in a wreck; my car gets fixed or replaced. If I am not at fault then the other guy pays to fix or replace my car. WRONG. How can the above statement be wrong? Simple, the contract of insurance and the Michigan No Fault Act make it complicated. For you young drivers, people who have moved from out of State and now live in Michigan, or those of you who have never been in an accident, be aware as a general rule, with a few exceptions, I will list out below, if you did not buy Collision Insurance for your car and you are in an accident, the damage to or loss of the vehicle will be your responsibility alone, not the at fault driver (that’s why they call it no-fault).
That’s right if you did not pay for collision insurance (pay to play) you get nothing. You can lose your car in an accident, your fault or not and you still have the note to pay to the bank or dealership and you get nothing. Seems harsh but that is the law and it is strictly enforced.
As I stated there are few exceptions:
- If the person who is at fault, that caused the damage has NO INSURANCE AT ALL, you can sue the at fault party for the all the damage to your car. (he did not pay to play)
- You can sue the At Fault Party up to a maximum of $1,000. This is sometimes called Mini-Tort.
- Your car was parked and not moving, and you did not park the car in such a manner as to be dangerous, then you can sue the at Fault party for the damage to your car.
Collision insurance can be expensive, especially if you live in a Metropolitan area. Thus you must decide, is the value of my car worth it, can I pay the bank note if I am hit (you will need to pay it off, before you borrow for a new car, because your credit will take a big hit if you do not), will I need the money to get another car if it is damaged or destroyed in an auto accident. To help you with your decision to buy collision or not to buy, you need to know if you do buy insurance and it is damaged or destroyed what will I really get. First of all there is the deductible; this is the amount you pay before the insurance company pays. For example If you have a deductible of $500 then the first $500 worth of damage is paid by you. (remember you might be able to get some money via the Mini Tort. Sometimes your insurance company helps you get the money from the other drive, sometimes they do not.)
You have the right to have your car repaired at any licensed facility. Many facilities will waive the deductible to get your business and some insurance companies will waive the deductible if you go to one of their approved repair facilities. You should look in your policy and what does my company do? Can the deducible be waived? If so when and which repair facilities do they use if any. If your car is destroy and the repairs to the vehicle are greater than the value of the vehicle it is considered “totaled”. That means that you will paid for the “actual cash value” of the vehicle. That means the value of the car less the depreciation and less the deductible. So if your car is “upside down” which means that the car has less value than the loan, you are in big trouble. Your settlement check will go to the lien holder, ie the bank, and if the settlement check is less than the loan, then you are out the car and still owe the bank. Whooo. Yes: this happens a lot. And what does totaled mean: The devil is in details:
I had a case with a client who had an insurance company that advertises a lot. She was in a wreck, her car was not damaged very much, but her car did not have lot of “value” but it ran and was the transportation for the family. She had a high loan on the vehicle because that was the only way she could buy a car. Like I said the damage was not very much, like $3,000.00 for damage to a van sliding door. The car had a value of $3,750 and a loan of $6,000, so if Mr. Geico repaired the damage to the sliding door she was on her way, car fixed RIGHT-NO. Mr. Geico said, well you have a deductible of $1,000 so the cost of repair is more than value of the car after the deductible so here is a check for $2,500 your car is totaled. Oh, buy the way we sent the check to the bank so now you owe then $4,000.00. But I have no car, said the client, I will pay the deductible of $1,000 and please repair the car. NO said the insurance company, under our policy it is totaled, we paid, and since the car is totaled we now own the car. Which they did, and sold the car at auction and they got $1,500.00. So the insurance company turned a $2,500 repair bill into only $1,000 loss for them. IT’S customer got NO CAR, SUED BY THE BANK, UNABLE TO BUY ANOTHER CAR BECAUSE HER CREDIT WAS, WELL POOR. And if you think this was bad and do not like it, you can go to arbitration (see the contract) and your fee to go to arbitration is $1,000.00.
So you really need to have the insurance agent give you a model insurance policy first and then have it reviewed by an attorney. I know, it takes time, it is a pain, “I just want to be on the road and legal”. What you don’t know can hurt you. Seems stupid, but not all insurance companies are the same and you will not know the difference by looking at an ad or even talking to an agent.
Remember the AGENT almost all of the time DOES NOT REPRESENT YOU. The agent is there as the companies salesman. If you have a wreck or a loss, you can call him, but, you will soon be working with the claims department and they are not so nice. Your agent will be understanding but will do nothing. The Claims department trumps sales. The insurance company, already has your money, now clams, is going to save their money. All the tv ads seems to make you think the agent is a nice guy or lady but in the end it is the contract and the law. When you are in a wreck, that’s all that matters.