Michigan Car Insurance: The Advantages and Disadvantages?

Answer 1

Have you ever been in a car accident? Even if you haven't, in all likelihood if you asked 1,000 people about the insurance process for a car accident they would tell you that first they must determine who is At Fault. Well, in thirty-four of the fifty states, they'd be correct. But the rest of the union does not utilize this Tort system for determining insurance payouts. Instead they use the “No Fault” system. Rather than spend needless hours of litigation determining who was “at fault” for the accident, the no fault system allows each driver's own insurance company to cover the costs of their accidents (injuries and damage) up to certain limits. To many, this may seem unfair, but it produces quicker payments and a far less strained process. Living in a no fault system requires a different approach to buying Michigan car insurance, so here are a few advantages and disadvantages to this method.

There are two forms of no-fault insurance: quantitative and qualitative threshold. The state of Michigan utilizes the qualitative model which states what categories of injuries are considered significant enough to require a tort (cases of death and permanent disability, for instance). Unlike the quantitative model, this removes incentive for wreck victims to inflate the damages/injuries suffered from an accident. No fault insurance produces quicker payments from accidents and the process is as simple as notifying your insurance provider of the claim and receiving a prompt payout. The idea behind the system is to lower premium costs by avoiding expensive litigation. The driver who is determined to be at fault for the accident then has his/her rates raised as a means of punishment. Proponents of the system argue that people cause accidents at the same rate as they are victims to them, thus the system evens itself out eventually. However, others debate this point.

Many perceive the greatest weakness to the no fault system to be the relative lack of punishment for drivers who cause accidents. Rather than having to fork over a substantial settlement (as would be the case in the Tort system), they get off relatively easily with a higher insurance payment. In fact, the no fault system limits victims in their ability to seek recompense unless the case is “extremely serious.” Another weakness of the qualitative model is that due to broad interpretations of the law, it can often lead to over-compensation for injuries.

Unlike the Tort model, no fault insurance does not require a driver to be found at fault for there to be insurance payouts. This enables those who are in an accident to be compensated at a much quicker rate than the standard Tort system, which could require months of litigation. However, may believe this leads to over-compensation and lack of proper punishment to those who cause accidents. When buying Michigan car insurance you must carefully consider this system. Rather than your insurance having to cover other's expenses, it will now be your own. Be sure to purchase a plan sufficient enough to cover you in case of an accident.