Out of State Residents and Michigan Insurance - When Do You Need Coverage?


As the holiday season winds down, and college students begin to return to campus for another semester, I am reminded of an issue I hear about often, and one that is quite often misunderstood related to out-of-state residents and Michigan No-Fault Insurance. The typical situation I hear of is when a college student, who is technically a resident of another state, gets into a car accident driving a car registered and insured in their “home” state.

Many people assume that if their motor vehicle is insured somewhere (i.e. in another state) that the coverage will apply in Michigan; unfortunately, this is seldom the case. Michigan maintains one of the more complex automobile no-fault regulation schemes in the country and, as a result, it contains some rules and regulations that are widely unknown, but still, carry very harsh penalties to out-of-state drivers if they are deemed “uninsured”.

One such regulation relates to whether an out of state resident needs to maintain a Michigan No-Fault Insurance policy while operating a motor vehicle in the Michigan. The other relates to whether or not said vehicle must be registered in Michigan and, if so, when must the vehicle actually be registered.

In relation to whether or not the out-of-state driver must maintain a No-Fault Insurance policy, the decisive factor to whether not insurance is required is how long the vehicle will be operated in the Michigan over the upcoming year. Specifically, MCL 500.3102(1) maintains that a nonresident owner and/or registrant of a motor vehicle cannot operate a motor vehicle to be operated for “an aggregate of more than 30 days of any calendar year” unless they maintain a valid No Fault Insurance policy. More simply put, if the out-of-state driver intends on using the vehicle in Michigan for more than 30 days, it must maintain a Michigan No-Fault Insurance policy. Note also that this does not mean that the vehicle cannot be insured as well in the person’s “home” state.

In relation to whether and/or a when a motor vehicle must be registered with the State of Michigan, again the key factor is how long the vehicle will be operated in the state. Specifically, MCL 257.243(4) maintains that out-of-state owners of any vehicle subject to registration under the No-Fault Act must resister said vehicle if it is to be operated for a period exceeding 90 days. Failure to resister one’s vehicle in Michigan pursuant to this rule constitutes a civil infraction and can lead to monetary penalties.

These two rules often run in tandem and carry very serious consequences in Michigan. The first of these consequences if potential criminal sanctions. MCL 500.3102(2) makes the offense of driving without insurance a misdemeanor offense punishable by up to 1-year imprisonment, a fine between $200 and $500, or both.

Beyond the potential criminal sanctions, being labeled as an uninsured driver can also carry severe consequences if said driver is ever involved in a motor vehicle collision in the State of Michigan. Notably, there exist two very serious consequences for the “uninsured” driver if they are involved in a motor vehicle collision. First, the uninsured driver is prohibited from filing a lawsuit for pain and suffering damages, no matter how seriously they are injured even if the collision was not their fault. Second, uninsured drivers cannot recover or apply for personal injury protection (PIP) benefits secondary to the collision. This means that the uninsured driver could be personally liable for all of their own medical bills from collision and will not be able to recover any lost wages or other allowable expenses associated with their treatment and care. In addition to the above consequences, an uninsured driver may also be held liable for the other party’s pain and suffering damages, damage to that person’s vehicle, or that party’s medical bills secondary to the collision.

In sum, if an out of state driver intends to operate a vehicle in Michigan for more than 30 days a year, the vehicle needs to maintain an insurance policy that applies in the State of Michigan. Moreover, if the vehicle is going to be used in Michigan for more than 90 days per year, it also needs to be registered with the State of Michigan. Although no one ever wishes or predicts they will be involved in a motor vehicle collision, completion of these two steps ensures that if tragedy strikes, your rights will be protected.

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