On the Property & Casualty exam, the personal automobile policy is tested through the lens of how a state regulates auto insurance—and Michigan regulates it unlike anywhere else. Michigan is a no-fault state, dramatically reshaped by the 2019 reform law (effective July 2, 2020) that ended mandatory unlimited medical coverage and introduced consumer PIP medical choice. This guide gives you the national policy framework, then makes Michigan's no-fault system the centerpiece.

The standard policy framework

The personal automobile policy is divided into lettered parts so each protection is clearly labeled:

• Part A — Liability (bodily injury and property damage, plus duty to defend).
• Part B — Medical Payments.
• Part C — Uninsured/Underinsured Motorists.
• Part D — Coverage for Damage to Your Auto (Collision; Other Than Collision).
• Part E — Duties After an Accident or Loss.
• Part F — General Provisions.

An insured includes the named insured, resident spouse, resident relatives, and permitted users of your covered auto. Liability limits are written as split limits (e.g., 50/100/10) or a Combined Single Limit (CSL). Physical damage pays Actual Cash Value (ACV). Michigan layers its no-fault statute over this structure rather than discarding it—so the lettered parts still apply, then state rules override key pieces.

Michigan's no-fault system

Michigan operates under the No-Fault Act (Insurance Code Chapter 31, around §§ 500.3101 et seq.). After most crashes, an insured's own policy pays medical and certain economic losses regardless of fault, and the right to sue another driver for pain and suffering is limited to cases meeting a statutory threshold (death, permanent serious disfigurement, or serious impairment of body function).

A Michigan no-fault policy is built from three required pieces, often summarized as PIP + PPI + Residual BI/PD:

• PIP (Personal Injury Protection) — pays the insured's medical/rehab expenses, wage loss (commonly cited as up to 85% of lost income for up to 3 years, subject to a monthly maximum), replacement services, and a survivor's loss benefit.
• PPI (Property Protection Insurance) — pays for damage the insured's vehicle does to buildings and properly parked vehicles in Michigan, commonly up to $1,000,000.
• Residual bodily injury / property damage liability — the traditional liability coverage for when the insured can still be sued.

PIP medical CHOICE — the reform's signature change

Before July 2020, every Michigan driver had to carry unlimited lifetime PIP medical. The reform lets most drivers select a PIP medical cap. The commonly cited levels are:

Choosing a lower cap reduces the PIP medical premium and, for sub-unlimited levels, generally removes the MCCA assessment for that vehicle. If the driver makes no selection, the policy defaults to unlimited.

The MCCA — distinctly Michigan

The Michigan Catastrophic Claims Association (MCCA) is a reinsurance mechanism unique to Michigan. It reimburses auto insurers for PIP medical costs above a high per-claim threshold (a figure that the MCCA resets periodically and is commonly in the $640,000+ range), making truly catastrophic, lifetime medical claims viable. It is funded by a per-vehicle assessment passed through to policyholders. Drivers who keep unlimited PIP pay the assessment; those who select lower caps generally do not. Expect at least one question naming the MCCA as the catastrophic-claims backstop.

Liability limits and the residual market

The reform raised Michigan's default residual bodily injury liability limits, commonly cited as 50/100 ( $50,000 per person / $100,000 per accident), with $10,000 property damage in Michigan. Drivers may choose lower limits—commonly cited as 20/40—or higher limits such as 250/500 (verify exact options). Property damage liability for out-of-state accidents follows traditional liability rules.

When the standard market won't write a driver, the residual market is the Michigan Automobile Insurance Placement Facility (MAIPF), which assigns hard-to-insure risks to carriers.

UM/UIM and physical damage

• Uninsured/Underinsured Motorists (UM/UIM) pay for bodily injury when the at-fault driver has no or too little insurance, or flees. In Michigan, UM/UIM is optional (not state-mandated) but commonly recommended.
• Collision covers impact/overturn; Michigan offers broad-form, standard, and limited collision options that affect when the deductible applies.
• Other Than Collision (Comprehensive) covers fire, theft, vandalism, flood, hail, falling objects, and animal strikes. Remember: hitting an animal is comprehensive (Other Than Collision), not collision.

Key Michigan numbers to memorize

Common exam traps

• Saying unlimited PIP is still mandatory. Since July 2020, drivers choose a PIP medical level; unlimited is only the default.
• Forgetting the MCCA. It is the Michigan-specific reinsurance pool for catastrophic PIP medical claims.
• Confusing PPI with PD liability. PPI pays for damage to Michigan buildings/parked vehicles; residual PD covers other liability.
• Assuming you can always sue. Pain-and-suffering suits require meeting the threshold (e.g., serious impairment of body function).
• Classifying an animal strike as collision. It is Other Than Collision.
• Treating UM as mandatory. In Michigan, UM/UIM is optional.

Quick recap

For the P&C exam, the Michigan auto policy is the standard lettered-part PAP wrapped in Michigan's no-fault law, reshaped by the 2019 reform (effective July 2, 2020). A policy combines PIP (medical/wage loss/replacement services), PPI (up to $1,000,000 for Michigan property), and residual BI/PD liability. The reform's signature change is PIP medical choice—$50,000 (Medicaid), $250,000, $500,000, unlimited (the default), or an opt-out for those with qualifying health coverage—replacing the old mandatory unlimited benefit. The MCCA reinsures catastrophic PIP medical costs above a high threshold via a per-vehicle assessment. Default residual liability is commonly 50/100 (lower 20/40 available), suits require meeting the serious-impairment threshold, and the residual market is the MAIPF. Anchor on "PIP choice + MCCA + no-fault threshold," and the hardest Michigan auto questions become manageable.