What are some of the extra (optional) auto insurance coverages I can buy?
Some drivers choose to purchase additional coverages or purchase higher coverage limits for the mandatory coverages. These additional coverages and limits are optional and should be purchased based on your own circumstances. You can also learn more about these optional coverages in the publications listed in the previous section. The most common optional coverages are:
Physical Damage for Your Car (Collision and/or Comprehensive)
Your basic no-fault policy does not pay to repair or replace your car if it is damaged. Therefore, if you want to have your vehicle covered if it is damaged or stolen you must purchase collision and/or comprehensive coverage. Collision coverage pays to repair or replace your vehicle if it is damaged in an accident and is available with or without a deductible. Comprehensive coverage pays if your car is stolen, collides with an animal, or is accidentally damaged by falling objects, fire, flood, or vandalism. You can purchase both of these coverages with deductibles in an effort to reduce the cost of your insurance.
There are three different collision coverage options to choose from. You can learn more about these options by reading our consumer publication: The Three Types of Collision Coverage.
When deciding whether to purchase physical damage coverage on your car, you need to consider what the coverage would cost in comparison with how much you could actually receive if the car is damaged. You may decide not to buy collision coverage, to buy a lower cost type of collision coverage, or to change the amount of your deductible.
In addition, although Michigan law does not require you to carry Comprehensive and Collision coverages on your vehicle, your lender will likely require you carry these coverages if you financed your vehicle. The loan documents will specify what coverages must be maintained and how proof of coverage is to be submitted to the lender.
Uninsured and/or Underinsured Motorists Insurance (UM/UIM)
Uninsured motorist coverage is an optional coverage that compensates you for pain and suffering and excess wage loss if you are injured in a hit and run accident or if an uninsured motorist strikes you. Underinsured motorist coverage compensates you for any difference between what the court awards you for pain and suffering caused by an insured driver and the maximum you are able to collect from that person and/or his or her insurance carrier.
Residual Bodily Injury Liability Insurance - Increased Limits
Many people choose to purchase increased limits of residual bodily injury liability insurance coverage. In the event of a serious accident, your liability may be more than the minimum 20/40/10 liability coverage you are required to purchase. To protect themselves, many people buy extra liability coverage (for example, $50,000 for each person, $100,000 for each accident, and up to $25,000 for property damage). You may wish to speak to your agent about other coverage combinations available through your insurance company.
Limited Property Damage Liability Insurance ("Mini-Tort")
Insurance companies also offer "mini-tort" coverage. Under Michigan law, if you are 50% or more at fault in an accident, you can be sued for up to $1,000 in damages to another person's vehicle that is not covered by collision insurance. Many consumers purchase this additional liability coverage to protect themselves from this specific liability.
Towing and Rental Car Coverage
Towing and Rental Car Coverage is an optional coverage available from most insurance companies as an additional coverage on an automobile insurance policy. This coverage generally covers or reimburses the cost of towing and/or a rental car for covered events (accident, breakdown, flat tire, etc.). The cost is usually small in relation to the total policy premium.
Alternatively, many insurance agencies offer memberships into clubs that offer these types of benefits to their members. These clubs generally offer limited reimbursement for the same types of events. The memberships may also offer additional benefits, and the membership fees vary greatly.
You can learn more about each of these optional coverages in our publication: Brief Explanation of Michigan No-Fault Insurance. You can also obtain additional information by reviewing: A Consumers Guide to No-Fault Automobile Insurance in Michigan, Your Guide to Auto Insurance For Michigan Consumers, and Road Service Club Memberships.