Last Updated on June 17, 2025 by The Insurance Pros

Exceptions to Michigan No-Fault Insurance: What Drivers Need to Know

A directional sign with arrows labeled “His Fault,” “Her Fault,” “Their Fault,” and “Not Me,” symbolizing blame in accident situations under Michigan no-fault insurance.Michigan requires no-fault auto insurance for all registered vehicles. In most cases, each driver’s insurance company pays for their vehicle damage and medical expenses regardless of who caused the accident. But there are some important exceptions every Michigan driver should understand.

🚘 What Is Michigan’s No-Fault Insurance Rule?

Under Michigan law, if you’re involved in a car accident, you typically do not sue the other driver for vehicle damage or injuries. Instead, each driver’s policy covers their losses. However, the law makes room for specific exceptions where you can file a claim or even sue another driver.

📌 Exception 1: Damage to a Legally Parked Vehicle

If your vehicle is legally parked and struck by another driver, you may file a property damage claim against the at-fault driver’s insurance policy. In this rare case, the other insurer, not yours, may pay for repairs.

📌 Exception 2: Mini-Tort Claim (Up to $3,000)

When you are less than 51% at fault in a crash, Michigan’s mini-tort law allows you to file a small claim against the at-fault driver to recover up to $3,000 for vehicle damage. Your contribution can help cover your insurance deductible or repairs not fully reimbursed by your insurer.

You can do your part by filing a mini-tort claim through the other driver’s insurer or by taking the matter to small claims court. You’ll need an accident report, repair estimates, and proof of your deductible.

🔗 Learn more about how to file a mini-tort claim at the link “How to file a mini-tort claim.” 

📌 Exception 3: Driving Without Insurance

If you’re driving without valid auto insurance and cause a crash, you lose protection under Michigan’s No-Fault system. The injured party can sue you directly for medical bills, lost wages, and pain and suffering. This type of suit is known as a Michigan Financial Responsibility Judgment.

Until the judgment is satisfied, the court may order your driver’s license suspended.

⚖️ What does a Michigan Financial Responsibility Judgment mean?

If the court finds you liable and uninsured, you may be subject to the following restrictions:

  • Your driver’s license will be suspended until the debt is paid.
  • You must apply for a restricted license that limits the vehicles you may legally drive.
  • You are required to file a partial payment agreement with the injured party outlining payment terms.
  • You must obtain a special financial responsibility insurance policy.

🛡️ What Is Financial Responsibility Insurance?

Michigan requires uninsured at-fault drivers to carry one of two insurance types to regain driving privileges:

  • Owner’s Policy: Covers vehicles registered in your name.
  • Operator’s Policy: Covers you when driving vehicles not registered in your name.

These policies come with higher premiums and strict documentation requirements. Insurers must file proof of insurance with the state, which can take a week before your restricted license is valid.

📣 Final Thoughts & Next Steps

No-fault insurance may simplify claims, but it doesn’t protect you from every situation. Understanding Michigan’s exceptions can help you avoid unexpected legal or financial consequences. If you’ve had a lapse in coverage or want to verify your protection limits, now’s the time to act.

👉 Get a free Michigan auto insurance quote today or call 248-277-4505 to speak with a licensed local agent.