MCL 500.3009: Michigan Auto Liability Limits, Forms, and Exclusions

Michigan’s auto liability insurance minimum limits are $250,000 per person and $500,000 per accident for bodily injury, plus $10,000 for property damage.¹ Those figures have applied to every policy issued or delivered in Michigan since July 2, 2020, when they replaced the long-standing $20,000/$40,000 floor as part of the state’s no-fault reform. You can choose lower bodily injury limits, but only by signing a specific form, and you can never drop below $50,000 per person and $100,000 per accident. The property damage minimum is fixed at $10,000 no matter what tier you pick.

What the Default Limits Cover

MCL 500.3009(1) sets three separate floors. The first two apply to bodily injury or death: at least $250,000 for injuries to any one person in a single accident, and at least $500,000 total when two or more people are hurt in the same accident. The third is $10,000 for damage to another person’s property in any accident.¹

These limits protect you when you injure someone else or damage their property. They are separate from the personal injury protection (PIP) and property protection insurance required by MCL 500.3101, which cover your own medical bills and lost wages regardless of fault.² One boundary worth knowing: the $10,000 property damage coverage matters most out of state. Within Michigan, vehicle-to-vehicle property damage runs through the mini-tort system under MCL 500.3135, which caps the at-fault driver’s insurer at $3,000 toward uninsured vehicle damage.³

Choosing Lower Bodily Injury Limits

Subsection (5) lets you reduce bodily injury coverage below the standard $250,000/$500,000, but not below $50,000 per person and $100,000 per accident.¹ The $10,000 property damage minimum is not reducible.

The math matters. A serious collision can generate medical bills, lost wages, and pain-and-suffering claims well past $50,000. If your policy caps at $50,000 per person and a jury awards $300,000, the remaining $250,000 comes out of your pocket. Lower limits mean lower premiums, but they leave your personal assets exposed to any judgment that exceeds them.

If you never complete the required selection form, the default holds. The Michigan Department of Insurance and Financial Services has confirmed that for both new applications and renewals, the $250,000/$500,000 limits apply whenever the policyholder has not submitted a signed and completed bodily injury selection form.⁴

How the Selection Form Has To Be Completed

Reducing your limits requires a specific form issued by the Director of the Department of Insurance and Financial Services. Under subsection (7), the form must warn you about the risks of lower coverage, give you a way to acknowledge that you received a list of all available liability options with their prices, and provide space for your signature.¹

MCL 500.3107e sets out how the form can be delivered and completed. Your insurer can hand it to you in person, mail it first class, or send it electronically. You can respond in one of three ways:

Mark and sign a paper form yourself.
Give verbal instructions, in person or by phone, for someone to mark and sign on your behalf. That conversation must be recorded and the recording kept by the person who took the instructions. If a dispute arises later, the law presumes the selection was not effective, and the insurer must prove otherwise with the recording.
Mark the form and provide an electronic signature under Michigan’s Uniform Electronic Transactions Act.⁵

Subsection (8) closes the loop. If a policy is issued or renewed and the named insured has not made an effective choice under subsection (5), the $250,000/$500,000 limits apply automatically.¹ A missing signature, an unrecorded phone call, or a form that was never actually delivered can all invalidate the selection and leave the higher limits in force.

Excluding a Named Driver

Subsection (2) lets you exclude a specific person from your auto liability coverage. The exclusion has to name the individual and be authorized by the insured.¹ This is often used when a household member has a suspended license or a record that would sharply raise premiums, though the statute does not limit exclusions to household members.

For the exclusion to be valid, a specific warning must appear on the face of the policy, the declarations page, the policy certificate, and the certificate of insurance. The required language reads: “Warning—when a named excluded person operates a vehicle all liability coverage is void—no one is insured. Owners of the vehicle and others legally responsible for the acts of the named excluded person remain fully personally liable.”¹

The warning is precise for a reason. When an excluded person gets behind the wheel and causes an accident, the insurer pays nothing to anyone. The vehicle owner remains personally liable for every injury and every dollar of property damage, and in a serious crash that exposure can run into hundreds of thousands of dollars.

Notice When Coverage Is Deleted

Subsection (3) permits a liability policy to exclude coverage as provided in MCL 500.3017 and MCL 500.3018. Subsection (4) adds a consumer protection step: if an insurer deletes any coverage from a policy under MCL 500.3101, it must send the insured documentary evidence of the deletion.¹ If you receive that kind of notice, confirm with your insurer that what remains still meets your needs and the statutory minimums.

Penalties for Driving Without the Required Coverage

Operating a vehicle in Michigan without the required insurance is a misdemeanor. A conviction carries a fine between $200 and $500, up to one year in jail, or both. The same penalty applies to anyone who knowingly drives a vehicle whose owner or registrant lacks the required coverage.⁶

A court finding that you drove without insurance also triggers administrative consequences through the Secretary of State. Your license can be suspended until you obtain coverage, and you will not be able to renew, transfer, or purchase a new vehicle registration until you prove you are insured and pay a reinstatement fee. Those consequences stack on top of the fine and any jail time, making a lapse in coverage far more expensive than the premium would have been.

1
Michigan Legislature. Michigan Compiled Laws 500.3009 – Automobile Liability or Motor Vehicle Liability Policy; Limits; Exclusion of Named Person; Notice; Documentary Evidence of Deleted Coverages
2
Michigan Legislature. Michigan Compiled Laws 500.3101 – Security for Payment of Benefits Required
3
Michigan Legislature. Michigan Compiled Laws 500.3135
4
State of Michigan. Auto Insurance Reform FAQ
5
Michigan Legislature. Michigan Compiled Laws 500.3107e
6
Michigan Legislature. Michigan Compiled Laws 500.3102