Know the Law – No-fault & out-of-state accidents

Summer is almost here, which means Michigan families will traveling out-of-state on vacation and to visit family and friends. Unfortunately, some of these travelers will be involved in car accidents in another state, whether in their own vehicle or a rental car.

The question then becomes: does their Michigan no-fault insurance policy cover their out-of-state crash?

Generally, the answer to this question is “yes.” Michigan no-fault insurance typically covers the insured party and passengers in a car accident that takes place in the United States (including U.S. territories and possessions) or in Canada. For coverage to apply, the injured person must be: 1) a named insured under policy, or 2) a spouse or relative of a named insured, who is domiciled in the same household or an occupant of a vehicle involved in the accident

If the injured person is not a named insured on the policy and is not a relative domiciled with the insured party, to make a claim for no-fault benefits: 1) the injured person must have been occupying the vehicle and 2) the vehicle owner must be insured under a policy that specifically covers the vehicle involved in the accident.

Does Michigan no-fault insurance apply to accidents involving rental cars? Again, the answer in general is “yes,” a no-fault policy applies even when the insured party is not operating his or her own vehicle, and this includes rental cars. As long as there is a no-fault policy in place that covers the injured person, any medical expenses will be paid. This basically means that, for any car-accident related medical costs to be covered, the extra insurance that’s offered at the rental-car counter doesn’t really need to be purchased.

However, take note that a personal auto insurance typically does not cover two items when it comes to rental cars: 1) property damage or 2) theft. So persons renting a vehicle may want to buy the supplemental insurance that’s offered at the rental-car counter to cover these two things.

In the end, travelers should always review their Michigan auto insurance policy before heading out-of-state. And if you are uncertain about your no-fault coverage, contact your insurance agent for answers.

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