What Makes GAP, Liability, Collision, and Comprehensive Car Insurance Different?
You may purchase a car insurance policy, hoping never to use it. However, if you are involved in an accident, this coverage can make the difference between whether or not you receive medical care or get your vehicle fixed. To ensure you have suitable types of coverage, you must know what each is and what is legally required.
Michigan insurance laws require you to have a set minimum coverage. Specifically, new regulations require you to have no-fault insurance in place. Failure to have this coverage can result in a fine, jail time and suspension of your license.
Major Components of an Auto Insurance Policy
A single auto insurance policy can have multiple components. In Michigan, you are required to carry minimum amounts of the following three coverages:
- Liability insurance
- Property protection insurance
- Personal injury protection coverage
You can also choose to add additional coverage, such as collision or comprehensive coverage. Before deciding, you should know what expenses each type of insurance covers and when.
Michigan law requires you to maintain liability insurance with policy limits of 50/100/10 or more. This means that your policy must have limits of at least:
- $50,000 bodily injury per person
- $100,000 bodily injury per accident
- $10,000 property damage per accident
Because of the no-fault laws in Michigan, you are more likely to use this insurance for an out-of-state accident. However, your liability policy will come into the picture if you are involved in a serious in-state accident where medical costs exceed the other driver’s PIP limits.
In states without no-fault laws, medical care is billed to the liability insurance company of the at-fault driver.
Personal Injury Protection Insurance
States with no-fault laws mandate drivers carry PIP insurance. This portion of your policy replaces liability coverage for in-state accidents. It pays for personal medical expenses regardless of who is at fault. PIP insurance has several other benefits, such as paying for lost wages and a death benefit.
You will file a claim with your PIP provider for any medical bills relating to an accident, regardless of fault.
Michigan offers several options for PIP coverage, including:
- $250,000 (with or without exclusions)
Two lower tiers are also available for drivers who meet specific personal health insurance requirements. They are:
- $50,000 (Medicaid recipients only)
- Opt-out (drivers with health insurance that explicitly covers car accident injuries)
Property Protection Insurance
Michigan drivers are also required to carry property protection insurance. This pays for damages to fixed objects if you hit them. Some examples include road signs, parked vehicles, and mailboxes. Coverage limits of up to $1 million are available.
If you are involved in an accident with another vehicle or a stationary object, your collision coverage pays for repairs to your vehicle. In most cases, you can have work performed on your car at any approved repair facility, including dealerships.
Collision policies usually have a deductible or the amount you must pay out of pocket before the policy starts paying. Therefore, you should choose a deductible amount you can afford to pay if you are involved in an accident.
Collision insurance only pays for vehicle damages related to an accident. Your comprehensive policy pays if it is damaged in another way, such as storm damage or a tree falling on it. Deductibles typically range from zero to $1,000 per claim.
Each policy is written individually; however, most comprehensive policies cover car damages related to the following or similar situations:
- Theft or vandalism
- Falling objects (such as a tree limb)
- Hitting an animal on the road
- Explosions or fire
- Damage from animals nesting in vehicle
In some accidents, a vehicle is considered a total loss by your insurance company. This means the costs to repair it exceeds its current value. In this situation, the collision payout may be lower than what you have left on your auto loan. GAP insurance makes up the difference, so you aren’t making payments on a car that is no longer driveable.
GAP insurance is not required by law; however, it may be required by your finance company. Ask whether or not you need this coverage when taking out a car loan or lease agreement.
The Difference Between Liability, GAP, Collision and Comprehensive Car Insurance
The primary difference between these portions of an auto policy is what damages they cover.
- Liability: Pays medical expenses for yourself or others in an at-fault accident (PIP covers your personal medical costs regardless of fault)
- Collision: Pays for repairs to your vehicle after an accident
- Comprehensive: Pays for vehicle repairs in certain situations, such as hitting an animal or repairing hail damage
- GAP: This covers the difference between the insurance payout and any money you owe on your vehicle.
Liability protection is legally required in most states, including Michigan. However, the other portions of your policy — collision, comprehensive, and GAP coverage — are typically optional.
The Importance of Having a Complete Insurance Policy
You should always carry at least the minimum coverage required by law. Failure to do so can have serious legal consequences. However, despite Michigan’s robust insurance laws, these amounts may not be sufficient to pay for medical expenses or property damage after an accident. Therefore, it is crucial to have a comprehensive policy package in place.
Since all claims are filed through your personal insurance policy, you want to ensure that your coverage is sufficient to cover all related expenses. If you exceed your policy limits and the other driver is at-fault, you may be able to seek payment for additional costs through his insurance policy. In some cases, you can also recover compensation for pain and suffering. However, this can be a complex and lengthy process.
It is advisable to speak with an experienced accident attorney familiar with Michigan’s no-fault laws. Schedule a free case evaluation to get an unbiased and knowledgeable opinion on whether or not you can file for compensation through the other driver’s insurance.
What To Do if Another Driver Does Not Have Insurance
Just because you are responsible and carry an adequate amount of insurance does not mean that every driver on the road does the same. According to a 2021 study by the Insurance Research Council, roughly one in eight drivers are uninsured. When you look at only Michigan drivers, that figure jumps to more than one in four. Considering that information, there is a good chance you will encounter an uninsured driver on the road.
If you are involved in an accident with a driver that is either uninsured or underinsured, you have some protections. Because Michigan is a no-fault state, you will file for coverage through your insurance company regardless of who caused the accident. Maintaining comprehensive PIP coverage ensures your medical care and any necessary property repairs are paid for.
Get Professional Legal Guidance After An Accident
There are no requirements for hiring an attorney after an auto accident. However, it can be beneficial. For example, if your insurance company denied your claim or offered an insufficient settlement, you were injured by an uninsured driver or the cost of caring for your injuries exceeds your policy limits, an attorney may be able to help.
Mike Morse Law Firm has been serving Michigan drivers for over 20 years. Our experienced team has the depth and breadth of knowledge to help you. Contact our office for a free case evaluation. We’ll review the information and provide an unbiased opinion.