No-Fault, Collision, and Comprehensive Insurance: What’s the Difference?
What’s the best insurance coverage for your vehicle?
Well, for starters, there’s one major insurance coverage you’ll need as it’s required by Michigan law: no-fault insurance.
Just because no-fault insurance is legally required doesn’t mean that the other two insurance coverages aren’t equally important and necessary.
When weighing in on what coverage is best for you, consider the major differences between no-fault, collision, and comprehensive insurance.
No-Fault Insurance
It’s illegal to drive without insurance. Michigan law requires all drivers to have no-fault insurance.
This applies to you and whomever you allow to drive your vehicle.
According to the Michigan Department of Insurance and Financial Services (DIFS), no-fault insurance will provide the following coverage:
- Coverage for your medical expenses, lost wages, and replacement services
- “Payment for damage your car does to someone else’s property, other than a car.”
- Coverage for a lawsuit and liability against you
Michigan doesn’t require you to have other auto insurance coverage aside from no-fault for your vehicle.
However, please keep in mind that no-fault insurance will not provide the coverage that is given for a collision or comprehensive policy.
This means that you will be responsible for the cost of damages to your car whether you’re at fault or not in an accident.
According to DIFS, “You can, however, sue the at-fault driver to recover up to $1,000 for damages to your car which he or she caused, and which are not covered by your insurance.”
Collision Insurance
Collision Insurance will provide coverage for damages to your vehicle due to an accident or collision with another vehicle or object (trees, poles, potholes, etc.)
This coverage is not required by law. However, without it, you will have to cover the cost of repairs to your vehicle.
You should also know that collision insurance requires you to pay a deductible.
However, if you have broad collision and you are not at fault in the event of an accident, your deductible is waived.
A deductible is how much you will have to spend out of pocket before your insurance will cover the cost of repairs and damage.
Difference Between Broad and Basic Collision Insurance
Broad Collision:
The company will pay collision damages to the insured vehicle regardless of who is responsible for the accident.
However, if the driver of the insured vehicle was more than 50% the cause of the accident, your deductible would apply. If you are not at fault, the company will waive your deductible.
Basic Collision:
The company will pay collision damages to the insured vehicle regardless of who is responsible for the accident.
However, the deductible will always apply. If you are found not at fault, in the state of Michigan, you are entitled to go after the at fault party’s insurance for up to $1,000 in mini-tort coverage.
Comprehensive Insurance
Comprehensive insurance provides auto coverage for situations not involving a collision with a car or object such as:
- Damage from a fire
- Explosions
- Earthquakes
- Floods
- Riots
- Theft
- Vandalism
- Falling objects
Comprehensive insurance also requires a deductible.
The most common claim we see under comprehensive insurance is for glass. If you have a stone chip or a cracked windshield, this is a comprehensive claim.
What You Can Do
All three of these insurance coverages are equally important.
You will need to purchase no-fault insurance regardless because it’s required by Michigan law.
You don’t have to purchase collision and comprehensive insurance unless a car lender or financer requires this coverage for you to purchase/lease the car.
It would be beneficial to have collision and comprehensive insurance because you’ll have some coverage to help ease the burden of unexpected car repairs and loss.
If you’re still unsure about what auto insurance coverage is right for you, feel free to contact one of our agents and we’ll be glad to help!
